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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


Form 10-K

|  |  |                                                                                     
|- |  | ------------------------------------------------------------------------------------
|x |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended September 30, 2003

or

|  |  |                                                                                         
|- |  | ----------------------------------------------------------------------------------------
|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From  to

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Commission File Number 333-82540




IPC ACQUISITION CORP.

(Exact name of registrant as specified in its charter)


|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Delaware                                                       |  | 74-3022102                       
|                                                               |  |                                  
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)
|                                                               |  |                                  
|88 Pine Street, Wall Street Plaza, New York, NY                |  | 10005                            
|                                                               |  |                                  
|(Address of principal executive offices)                       |  | (Zip Code)                       

Registrants telephone number, including area code: (212) 825-9060

Securities registered pursuant to Section 12(b) of the Act:
None

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. o

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act) Yes o No x

The common stock of the registrant is not publicly traded. Therefore, the
aggregate market value of the common stock is not readily determinable.

As of November 30, 2003, 14,724,380 shares of common stock, par value $0.01 per
share, were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
Certain exhibits are incorporated by reference in Item 15 of this report.



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TABLE OF CONTENTS



|                                                  |                                                                                                         |  |  |  |  |  |  | 
|------------------------------------------------- | ------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                           
|                                                  | Item 1. Business                                                                                       
|                                                  | Item 2. Properties                                                                                     
|                                                  | Item 3. Legal Proceedings                                                                              
|                                                  | Item 4. Submission of Matters to a Vote of Security Holders                                            
|PART II                                          
|                                                  | Item 5. Market for Registrants Common Equity and Related Stockholder Matters                          
|                                                  | Item 6. Selected Financial Data                                                                        
|                                                  | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations          
|                                                  | Item 7A. Quantitative and Qualitative Disclosures About Market Risk                                    
|                                                  | Item 8. Financial Statements and Supplementary Data                                                    
|                                                  | Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure           
|                                                  | Item 9A. Controls and Procedures                                                                       
|PART III                                         
|                                                  | Item 10. Directors and Executive Officers of the Registrant                                            
|                                                  | Item 11. Executive Compensation                                                                        
|                                                  | Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|                                                  | Item 13. Certain Relationships and Related Transactions                                                
|                                                  | Item 14. Principal Accountant Fees and Services                                                        
|PART IV                                          
|                                                  | Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K                              
|Exhibit Index                                    
|SIGNATURES                                       
|Exhibit 12.1 - Ratio of Earnings to Fixed Charges
|Exhibit 14.1 - Code of Ethics                    
|Exhibit 23.1 - Consent of Ernst & Young LLP      
|Exhibit 23.2 - Notice Re: Arthur Andersen Consent
|Exhibit 31.1 - 302 Certification                 
|Exhibit 31.2 - 302 Certification                 
|Exhibit 32.1 - 906 Certification                 
|Exhibit 32.2 - 906 Certification                 



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IPC ACQUISITION CORP.
FORM 10-K
For the Fiscal Year Ended September 30, 2003
INDEX

|          |          |            |                                                                                                |  |    |    |      |  | 
|--------- | -------- | ---------- | ---------------------------------------------------------------------------------------------- |  | -- | -- | ---- |  | 
|          |          |            |                                                                                                |  |    |    | Page
|          |          |            |                                                                                                |  |    |    |     
|Part I.   |          |            |                                                                                                |  |    |    |      | 
|          | Item 1.  |            | Business                                                                                       |  |    | 1  |     
|          | Item 2.  |            | Properties                                                                                     |  |    | 10 |     
|          | Item 3.  |            | Legal Proceedings                                                                              |  |    | 11 |     
|          | Item 4.  |            | Submission of Matters to a Vote of Security Holders                                            |  |    | 11 |     
|Part II.  |          |            |                                                                                                |  |    |    |      | 
|          | Item 5.  |            | Market for
Registrants Common Equity and Related Stockholder Matters                          |  |    | 12 |     
|          | Item 6.  |            | Selected Financial Data                                                                        |  |    | 12 |     
|          | Item 7.  |            | Managements Discussion and Analysis of Financial Condition and Results of Operations          |  |    | 14 |     
|          | Item 7A. |            | Quantitative and Qualitative Disclosures About Market Risk                                     |  |    | 31 |     
|          | Item 8.  |            | Financial Statements and Supplementary Data                                                    |  |    | 32 |     
|          | Item 9.  |            | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure           |  |    | 68 |     
|          | Item 9A. |            | Controls and Procedures                                                                        |  |    | 68 |     
|Part III. |          |            |                                                                                                |  |    |    |      | 
|          | Item 10. |            | Directors and Executive Officers of the Registrant                                             |  |    | 69 |     
|          | Item 11. |            | Executive Compensation                                                                         |  |    | 72 |     
|          | Item 12. |            | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |  |    | 75 |     
|          | Item 13. |            | Certain Relationships and Related Transactions                                                 |  |    | 76 |     
|          | Item 14. |            | Principal Accountant Fees and Services                                                         |  |    | 77 |     
|Part IV.  |          |            |                                                                                                |  |    |    |      | 
|          | Item 15. |            | Exhibits, Financial Statement Schedules, and Reports on Form 8-K                               |  |    | 78 |     
|          |          | Signatures |                                                                                                |  | 83 |   





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PART I




Item 1. Business

Overview

Our primary business is the design, manufacture, installation and service
of turret systems for the trading operations of the financial community, which
includes investment and commercial banks, foreign exchange and commodity
brokers and dealers, market exchanges, mutual and hedge fund companies, asset
managers and insurance companies. Turrets are specialized telephone systems
that are designed for high reliability and provide users instant access to
hundreds of dedicated telephone lines that are directly connected to other
trading partners and customers. Traders, brokers and salespersons occupy desks
known as trading positions from which they trade various financial instruments
including stocks, bonds, currencies, and futures using turrets. We are the
leader in the turret industry, based on our base of approximately 110,000
turrets and related equipment installed in trading positions worldwide. We also
install and service the cabling infrastructure and networks within buildings
that connect voice and data communications devices for traders and others in
the global financial, trading and exchange trading industries, as well as sell
network voice and data services to customers primarily in the financial
community. Our customers include Deutsche Bank, JPMorgan Chase, Morgan Stanley,
Goldman Sachs, UBS Paine Webber, Citigroup/Smith Barney, Bank of
America, Lehman Brothers, Wachovia and Dresdner Bank. We have offices in 18
major financial centers and our installed base of turret systems is located in
47 countries, with the majority located in the United States. As of September
30, 2003, we provide maintenance, service and support to more than 669
customers.

We manage our business through three major operating divisions called
Trading Systems, Information Transport Systems, or I.T.S., and Network
Services. For the fiscal year ended September 30, 2003, Trading Systems
accounted for approximately 76% of our revenues and approximately 97% of our
net income, I.T.S. accounted for approximately 20% of our revenues and
approximately 14% of our net income and our Network Services division, which
was created in April 2003, accounted for approximately 4% of our revenues and
approximately (11)% of our net income.

Our operations include both domestic and international sales. For the
fiscal year ended September 30, 2003, domestic sales accounted for
approximately 76% of our total consolidated revenues and international sales
accounted for approximately 24% of our total consolidated revenues. Sales in
the United Kingdom accounted for approximately 16% of our total consolidated
revenues, or approximately 67% of our international revenues during this
period.

For the fiscal year ended September 30, 2003, we had a working capital
surplus of approximately $45.6 million, net income of approximately $4.0
million and an accumulated deficit of approximately $5.2 million. For the
period from November 15, 2001 (date of initial capitalization) to September 30,
2002, we had a working capital surplus of approximately $43.5 million, a net
loss of approximately $9.2 million and an accumulated deficit of approximately
$9.2 million. For the fiscal year ended September 30, 2001, our predecessor had
a working capital deficit of approximately $52.2 million, a net loss of
approximately $12.8 million and an accumulated deficit of approximately $32.7
million.

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, registration statements and amendments to those filings
are filed with the Securities and Exchange Commission and are available free of
charge on our website at www.ipc.com under the Investors and Media caption as
soon as reasonably practicable after we electronically file such material with
or furnish it to the Securities and Exchange Commission. Our filings are also
available to the public at the website maintained by the Securities and
Exchange Commission at www.sec.gov.

History

Our business was established in 1973 as Interconnect Planning Corporation
to provide telephone equipment specifically designed for the financial trading
community. The business originally went public in 1983. In 1986, it was
acquired by Contel Corporation and became known as Contel IPC. Shortly
thereafter, Contel IPC opened our current manufacturing facility in the United
States and commenced operations in the United Kingdom. In 1990, Contel was
acquired by GTE, and in October 1991, GTE sold the business to Richard and
Peter Kleinknecht and others who renamed the business IPC Information Systems,
Inc. In October 1994, IPC Information Systems, Inc. completed an initial public
offering, and in April 1998, Citicorp Venture Capital Ltd. acquired the
business. In December 1998, we purchased the assets of Reuters Voice Systems, a
business unit of Reuters Group PLC, which included 9,000 trading positions. In
June 1999, we acquired V-Band Corporation, which included 17,000 trading
positions. In June 2000, IPC Information Systems, Inc. was acquired by Global
Crossing Ltd., and in July 2001, Global Crossing sold our Asian operations to
Asia Global Crossing Ltd. In November 2001, IPC Acquisition Corp. was
incorporated by a group led by GS Capital Partners 2000, L.P., or GSCP 2000,
and other private equity funds affiliated with Goldman, Sachs & Co., to acquire
IPC Information Systems from Global Crossing Ltd. and its affiliates. IPC
Acquisition Corp. did not have any assets or operations prior to its
acquisition of IPC Information Systems. In December 2001, Global Crossing and
its affiliates sold IPC Information Systems to IPC Acquisition Corp. In March
2002, we purchased the international customer base and related assets of

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the turret business of Hitachi, Ltd., which included approximately 1,800
positions. In April 2003, we acquired Gains International (US) Inc. and Gains
International (Europe) Limited, which provide voice and data services to the
financial community, from GSCP 2000 and other private equity funds affiliated
with Goldman, Sachs & Co. In
August 2003, we invested in Purple Voice Holdings Limited, or Purple
Voice, which will allow us to provide users such as
researchers, analysts, and retail brokers who are based off the main trading
floor with seamless access to audio broadcasts, intercom calls, group calls and
hoot and holler applications, an open broadcast system that allows
users to communicate with other users located around the world,
regardless of the users location. IPC Information Systems, Inc., a Delaware
corporation, is expected to convert to a Delaware limited liability company.

Trading Systems

Our Trading Systems division designs, manufactures, sells, installs and
maintains turret systems. Our turret systems can support up to 4,000 trading
positions and 23,000 telephone lines, and can be networked to build one
integrated trading floor across multiple sites. The largest trading floor that
currently uses our products has approximately 2,500 trading positions and
approximately 14,600 telephone lines. These turret systems incorporate a
proprietary design, including many features designed to increase trader
productivity, such as:



| |  |  | expanded access to telephone lines;                                                          
| | - |  | ---------------------------------------------------------------------------------------------
|
| |  |  | rapid call completion;                                                                       
|
| |  |  | high voice quality;                                                                          
|
| |  |  | built-in redundancy;                                                                         
|
| |  |  | trader mobility;                                                                             
|
| |  |  | personalized call button layouts; and                                                        
|
| |  |  | the ability to implement system upgrades via software changes as opposed to hardware changes.

We anticipate that the continuing emphasis on disaster recovery and
contingency planning will lead to increased purchases of new turret systems and
related services by our customers.

Industry Overview

The turret systems industry is characterized by a small number of
manufacturers who have developed highly specialized voice communications
systems sold primarily to companies in the financial community. Traders require
highly reliable, non-blocking simultaneous access to multiple lines which
cannot be provided by traditional telephone systems used by companies. Turret
systems must be highly reliable because of the time-sensitive nature of trading
activity and the high potential opportunity cost of a service outage. As a
result, product reliability is one of the most significant factors in choosing
among turret system vendors. Other factors include service quality and the
ability to provide a standardized technology platform on a global basis. We
believe our market leadership is based on our success in meeting customer
requirements.

We have found that demand for new turret systems is primarily
event-driven. We believe the key events that drive demand are:



| |  |  | physical facility moves of trading positions;                
| | - |  | -------------------------------------------------------------
|
| |  |  | customer decisions to upgrade technology;                    
|
| |  |  | the standardization of trading platforms worldwide; and      
|
| |  |  | the addition of new trading positions due to customer growth.

Facility moves are triggered primarily by:



| |  |  | beneficial real estate pricing or lease/sublease arrangements;
| | - |  | --------------------------------------------------------------
|
| |  |  | merger and acquisition activity among firms;                  
|
| |  |  | obsolescence of trading facilities; and                       
|
| |  |  | headcount changes beyond current facility capacity.           

Disaster recovery and contingency planning have gained increasing
importance among our customers and we anticipate increased growth in this area.
In addition, categories such as derivatives, the emergence of new specialty
firms such as sector-focused hedge funds, and the expansion of firms
internationally drive new purchase orders for turret systems. Demand is also
fueled by customer decisions to upgrade technology and standardize trading
platforms worldwide.

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Organizational Structure

Trading Systems has five major focus areas:



| |  | Advanced Communication Systems.We provide highly reliable voice
communications between institutional traders, their trading
counterparties and their associated middle and back office support
personnel. We believe our flagship Alliance MX trading platform, which
is the back office system that manages voice communications from turret
users, is currently the industrys most widely used platform and is used
by a majority of our customers. To meet evolving client needs, we also
offer turrets and other products that integrate voice, data, and video
at the trading position utilizing Voice over Internet Protocol, or VoIP,
technology. VoIP is the method by which voice communication is delivered
from one computer to another over a network. Our VoIP turret, known as
the IQMXTM system, is the first turret in the industry to utilize VoIP
technology. As of September 30, 2003, we have delivered approximately
13,000 IQMX positions.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Application Development.We develop software applications that
integrate our turret systems into our customers business environments.
Our applications are a strategic extension of our turret systems,
providing value-added solutions that help to automate trading
activities. In addition, we have published our application program
interface, or API, to allow third-party software vendors to deploy
software solutions that interoperate with our turret systems.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| 
| |  | Rich Media Delivery.Rich Media Delivery allows users to access
Internet Protocol, or IP, based media services, including broadcast
television and streaming online programming on the turret. Enabled by
broadband IP connectivity, we believe Rich Media services are beginning
to change the way people communicate and access information. We address
this market opportunity through our TraderVision desktop video
application that runs on our IQMX.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| 
| |  | Professional Services.Our project management, field service and
development organizations provide a variety of customized services to
our customers to support the needs of their complex trading floors.
Customized product and application developments coordinated through an
experienced staff of more than 90 professionals, with significant
experience in trading communications.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| 
| |  | Service and Support.Global service and support are an important part
of Trading Systems value. Our 24-hour-a-day, 7-day-a-week global
operations organization supports clients in 36 countries through both
contract-based maintenance services and on an as-needed basis. Often
these services involve teams of dedicated on-site personnel. Because of
the mission-critical nature of our products, our service standards are
higher than those typically offered for other commercial products. We
also receive service revenue through moves, adds and changes, or MACs,
of existing trading positions.                                                                                                                                                                                                                                                                                                                                                     

In June 2003, we launched a new service called Managed Services, which is
a suite of services that can manage trading floor voice operations and all
associated infrastructure worldwide. Through Managed Services, we can custom
design a customers services suite to operate in tandem with their own
resources, internal business processes and user needs.

IPC Managed Services products include:



| |  | IPC Trader Voice Service.IPC Trader Voice Service can deliver a
single trading floor communications solution globally. We can assume
responsibility for the day-to-day operations of voice trading systems
and related equipment to ensure a uniform user experience worldwide that
is backed by a premium level of service.             
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | IPC Connectivity Service.IPC Connectivity Service can simplify the
complexity of circuit management while maintaining carrier diversity so
that customers can stay in control of trading floor connectivity. We can
design, provision, coordinate site installation and provide
button-to-button testing for all voice and data circuits.
| 
| |  | IPC Hoot and Holler Service.IPC Hoot and Holler Service is a secure,
high quality conference solution that can support specialized design
requirements for hoot and holler applications. We can manage the entire process from network
design through on-going monitoring and maintenance.                                               

Competition

In the worldwide market for turret systems, our principal competitor is
Syntegra, an affiliate of British Telecom. While we and Syntegra are the two
largest providers of turret equipment and service worldwide, there are smaller
competitors that have historically achieved strong market shares in their
respective domestic markets. These competitors include Etrali S.A., an
affiliate of France Telecom, Hitachi Ltd., and Siemens A.G. In the future, we
expect additional competition from start-up entities and others that are
developing both equipment and software based products and service offerings,
including call center systems and

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other telephony software and equipment focused on deployment over the
Internet. Although competitive pricing pressures could cause us to lose market
share to these companies, we believe we are able to compete effectively due to
the high quality of our products, our experience and reputation for providing
outstanding service, our ability to provide a standardized technology platform
on a global scale and our investment in research and development that focuses
on new products and technologies. It has been those competitive strengths that
have enabled us to be the industry leader in the turret market.

Products and Services

Our Trading Systems division designs, manufactures, installs and maintains
turret systems, highly specialized telephone systems that are used by traders,
brokers and other salespersons in the financial trading industry to trade
financial instruments, including stocks, bonds, currencies and futures. Within
the trading operations of the financial community, traders, brokers and
salespeople occupy desks known as trading positions from which they trade
various financial instruments including stocks, bonds, currencies, and futures.
A variety of equipment is located on top of these desks to enable traders to
obtain information and communicate when making trades. This equipment includes
computers, market data screens and turrets (known in Europe as dealerboards).

Key features of our turret systems include:



| |  |  | Reliability.On a trading floor, a lost connection could result in a
lost transaction, and the outage of the entire telecommunications system
would mean that the traders would not be able to make transactions in
response to real time market conditions, which could be damaging to a
trading firm from a financial and reputational perspective. Our turret
systems are designed with redundant equipment and circuitry that have
parallel internal transmission paths to ensure that no single failure
within the system can cause a failure of the entire system.                                                                                                                                                                                                                     
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Call Capacity.Our turret systems are designed to allow every user to
be on one or more telephone lines simultaneously without blocking other
calls or the degrading of call setup speed. A typical turret system has
two handsets for conversation and a number of speaker channels available
for monitoring a large number of telephone lines. The turret system also
allows many connections to be in progress simultaneously. For example, a
broker may have a buyer on the left handset and a seller on the right
handset while monitoring speaker channels for other trading activity.
The Tradenet MX and the Alliance MX systems, discussed below, are
designed to support up to 23,000 telephone lines in simultaneous use by
up to 2,000 and 4,000 trading positions, respectively.
|
| |  |  | User Programmability and Mobility.Our turret systems allow each
trader to customize the system with personal speed-dial and direct
connections and associated displays, and to store personal settings in
memory in the systems backroom switching equipment. A trader can access
his customized settings from any other turret on the system at the same
location or at any remote network-linked location.                                                                                                                                                                                                                                                                                                                                                                               

Our turret systems products and services include:



| |  |  | VoIP Desktop Turret Systems.We believe our VoIP turret systems,
branded IQMX, will simplify and expand a traders ability to access and
integrate information from all sources  voice, video and data  on one
platform and enhance the opportunities for creating new tools and
advanced network services that accommodate traders needs for instantly
accessible and readily managed information from all sources. The IQMX
includes four basic modules:
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|

| |  |  | The Control Moduleis the primary building block of the turret
system. It includes controls for two handsets, a telephone keypad,
ten soft keys and 30 dynamic buttons per page. These give end-users
access to as many as 600 lines.                                                                                                                                  
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The Application Moduleis designed around a high-resolution,
full color touch screen. The module includes 40 on-screen dynamic
buttons per page, eight soft keys and the equivalent of a Slimline
ClearDealTM 8-channel speaker module. The application module is
capable of delivering new services, including broadcast television,
streaming media and the Internet.
|
| |  |  | The 4-Channel Speaker Moduleconsists of four programmable
channels, volume control knobs and a speaker. Additional speakers can
be added to support up to 32 channels per position.                                                                                                                                                                                   
|
| |  |  | The Button Moduleincludes 30 hard buttons that may access up
to 600 lines across multiple pages and an integrated 8-channel
speaker module.                                                                                                                                                                                                                           

Customers can combine these modules for flexibility to meet a traders button
and speaker requirements.

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| |  |  | Voice Trading SystemsDesktop Trading Consoles.We have developed a
variety of desktop trading consoles including:
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | ICMX.The ICMX is a VoIP intercom module built for the Alliance
MX platform. It extends intercom functionality to managers, support
staff and other non-traders, providing hands-free communication
between sites, a unified numbering plan, group calls and all calls
and support for hoot and holler applications.                                                                                      
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | MX Slimline.MX Slimline consoles offer the same basic features
and functions as our IQMX turret offering, with more traditional
network connections as opposed to VoIP.                                                                                                                                                                                                                                  
|
| |  |  | Slimline ClearDeal.The Slimline ClearDeal speaker is similar
in operation to the IQMX 4-channel speaker, but with a capacity of 8
speaker channels. Like the MX Slimline turret, the ClearDeal does not
make use of VoIP technology.                                                                                                                                                                     
|
| |  |  | TradePhone MX.The TradePhone MX is a multi-button telephone
that is designed to operate with both the Tradenet MX and the
Alliance MX switching platforms. This product is targeted at support
personnel located off the trading floor who communicate directly with
traders. The TradePhone MX is a cost effective solution that provides
the functionality of a turret system in a scaled down version.
|
| |  |  | ExchangeFone II.Specialized products such as our ExchangeFone
II telephone system were designed specifically for exchange floors
and work with our Alliance MX voice trading system and the Tradenet
MX.                                                                                                                                                                                                 



| |  |  | Voice Trading SystemsBackroom Switching Platforms.We have developed
a variety of backroom switching platforms. Our backroom switching
platforms include:
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Tradenet MX.Introduced in 1992, Tradenet MX is our first
digital system. The fully digital proprietary system, based on a
fault tolerant switch is not vulnerable to isolated component
failure. Its distributed architecture design provides reliability by
harnessing the computing power of multiple SUN® Microsystems SPARC
microprocessors throughout the system and provides rapid and easily
programmable switching of voice calls. Tradenet MX is designed to
allow software upgrades without major hardware upgrades, which
enables us to respond rapidly to market developments or to a
customers request.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Alliance MX.Introduced in 1997, the Alliance MX offers all of
the same functionality as the Tradenet MX but provides higher density
configurations, four times the switching bandwidth, universal slots,
on-demand selective recording and a simplified power distribution
system.                                                                                                                                                                                                                                                                                                                                   
|
| |  |  | Alliance VS/MX.Alliance VS/MX is the backroom switching
platform offered to small offices with up to 32 traders. The Alliance
VS/MX system chassis is housed in a reduced size cabinet and plugs
into a standard electrical outlet. Alliance VS/MX is a digital
connectivity panel with universal slots which enables it to provide
traditional voice functions and gives it the ability to act as a
gateway to the data network.                                                                                                                                                                                    
|
| |  |  | Alliance MX Integrated Recorder.One integral part of the
trading environment is call recording. It can resolve problem trades,
reduce liability insurance premiums and train new recruits. By
incorporating the recording function into the Alliance MX system,
Trading Systems offers increased recording capacity, plus advanced
features such as trader-initiated recording, call marking for quick
retrieval, selective recording and trader-controlled playback with
quick access to the last 10 calls.                                                                                                         



| |  |  | Integrated Software Applications.We have developed software
applications to complement our turret systems:
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | TradeSmart CTI.Computer Telephony Integration, or CTI, is the
method by which computers communicate with telephone systems. The
TradeSmart CTI is a suite of software applications that allows
traders and their support staff to enhance their productivity,
profitability and effectiveness. These applications allow traders to,
among other things, prioritize incoming calls to maximize
profitability, as well as provide a call log history that gives
traders information on the nature of incoming calls.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Application Programming Interface.API enables clients
programming staff and third-party vendors to develop integrated
applications for our voice trading systems. Many customers have
comprehensive, in-house programming staffs to build all of their
trading floor applications. We complement them by providing a
Software Developers Kit, or SDK, a tool that allows developers to
write software applications that access the Alliance MX turret
system.                                                   

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| |  |  | Custom-Developed Applications.Our professional services
department is dedicated to delivering customers solutions that
enhance their trading systems. These solutions may include elements
from the TradeSmart CTI standardized product offerings, as well as
customized software that solves specific business problems.
Custom-developed applications extend the functionality of the
Alliance MX turret systems and integrate the turret system with other
applications running on the trading desk.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Purple Voice.IPC UK Holdings Limited, or IPC UK, one of our
subsidiaries, entered into a series of transactions with Purple Voice, a business-to-business IP software
company that provides VoIP solutions to the financial community. As a
result of these transactions, which closed on August 1, 2003:                                                                                                                                                                                              
|

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | IPC UK acquired approximately 40% of the currently
outstanding common shares (calculated on a non-diluted basis) of
Purple Voice, together with a warrant for additional shares from
certain minority shareholders of Purple Voice, for approximately
$120,000;                                    
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | IPC UK invested $1.0 million in a 7% secured convertible
note, due September 2007, issued by Purple Voice, which is
convertible into 49% of Purple Voices share capital on a fully
diluted basis;                                                                                                 
|
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | the remaining shareholders of Purple Voice granted a call
option to IPC UK, which permits IPC UK to acquire the remaining
issued share capital of Purple Voice for an aggregate amount of
$0.8 million, plus an earn-out of up to $9.0 million, dependent on
certain revenue targets being met; and
|
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | IPC Information Systems, Inc. and Purple Voice entered
into an agreement under which IPC Information Systems, Inc. has
been appointed Purple Voices exclusive reseller worldwide.                                                                                                                 
|
| | With our
recent investment in Purple Voice, we will provide
users such as researchers, analysts, and retail brokers who are based
off the main trading floor with seamless access to audio broadcasts,
intercom calls, group calls and hoot and holler broadcasts regardless
of the users location. Purple Voice software operates on standard
personal computers over existing corporate data networks and
integrates
with our turret systems via the Alliance MX switch.



| |  |  | TradeCentral Applications Platform and IP-Video.We have also
developed video applications to complement our turret systems. The first
applications were launched in June 2002:
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|

| |  |  | TraderVision Streaming Video.TraderVision is a video
application that allows traders to access media services, including
broadcast television and streaming online programming via the IQMX
applications module. Up to 30 channels are supported.   
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | TradeCentralApplications Platform.TradeCentral is the
platform used to operate applications on the IQMX applications
module. It also permits third-party software vendors to deploy
software solutions that operate on our IQMX applications module.
|

| |  |  | Turret System Installation, Maintenance and Support.The installation
of a turret system involves extensive planning to ensure that all
materials and labor are coordinated to be completed on-time and within
budget. Detailed analysis is performed, defining all required features
and lines. The cabling infrastructure is installed and tested prior to
delivery of backroom switching equipment. The desktop consoles are
installed and the complete system is rigorously tested. In addition to
turret system installation, we provide contractual maintenance services
to our customers, which provide us with recurring revenue which in the
fiscal year 2003 accounted for $88.5 million, or 43.9% of Trading
Systems total revenues of $201.5 million.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Sales and Marketing

Our Trading Systems sales efforts are organized on a global basis to
promote relationships with, and to provide enhanced services to, customers that
have significant global operations. The organization is managed through three
regions. The regions and associated direct offices include:



| |  |  | The Americas, which include Atlanta, Boston, Chicago, Cincinnati,
Connecticut, Dallas, Houston, Los Angeles, Minneapolis, New Jersey, New
York, Philadelphia, San Francisco and Toronto;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Europe, the Middle East and Africa, or EMEA, which includes London, Frankfurt and Milan; and                                                                                            
|
| |  |  | Asia Pacific, which includes Hong Kong, Singapore, Sydney and Tokyo.                                                                                                                    

6



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##### Table of Contents



Distributors are used in emerging markets, in territories where the
installed base does not support a direct presence and where language and
cultural differences require a local presence. Key areas covered by
distributors include:



| |  |  | Latin and South America, including Argentina, Brazil, the Caribbean,
Chile, Mexico and Venezuela;                                        
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | EMEA, including Italy, Portugal, Russia, Saudi Arabia, Scandinavia,
South Africa, Spain, Sweden, Turkey and the United Arab Emirates; and
|
| |  |  | Asia, including India, Indonesia, Japan, Korea, Malaysia, New
Zealand, Philippines, Taiwan and Thailand.                                 

Accounts are classified as either global or regional. Global accounts are
assigned a global account director to manage and coordinate account activity on
a global basis. Regional account managers are assigned to both global and
regional accounts to support local selling efforts. This approach allows the
sales management team to coordinate account strategies across regions in order
to provide a seamless support infrastructure for global financial institutions.
Customers designated as global accounts benefit from standard pricing, volume
purchase agreements and a single point of contact for their global
communications requirements.

We manage our business through the Sales Information System, or SIS, that
tracks and forecasts five quarters of customer demand on a job-by-job basis.
This system is used by our sales and finance departments to project quarterly
results, and by our manufacturing department to assist in schedule production
and procurement.

An SIS report is maintained for each direct office or distributor. It is
updated and managed on a bi-weekly basis through the regional sales
organizations. The results and the overall performance of the business are
consolidated automatically and reviewed at a monthly business review by our
sales, finance, operations, manufacturing and engineering departments.

Information Transport Systems

Our I.T.S. division provides physical connectivity within buildings among
both voice and data communications devices, including turret systems, telephone
switching equipment, traditional telephone systems, facsimile machines,
computer networks and video conference facilities. The I.T.S. organization
targets its business towards medium to large companies in the New York
metropolitan area. I.T.S. also bundles its services with Trading Systems
products so that customers, construction consultants and general contractors
can benefit from a turnkey trading floor solution from a single vendor. Because
information and communications systems are missioncritical functions, many
customers prefer that the same company installs and maintains their turret
systems and the cabling that supports them.

Industry Overview

Integrated high-speed internal data communications networks are critical
to many companies. Companies are installing increasingly complex computing
environments centered around local area networks, or LANs, and wide area
networks, or WANs, that connect networked desktop personal computers and
workstations, printers, telecommunications equipment, file servers and
facsimile machines. As network requirements have grown and network designs have
become more complex, many companies have chosen to outsource their LAN/WAN
design, installation and maintenance needs to independent specialists.

Organizational Structure

Our I.T.S. division has two major focus areas:



| |  |  | Structured Cabling Systems.Providing a customer with cabling
infrastructure includes several distinct phases: network design,
documentation, installation, certification and ongoing service and
maintenance. I.T.S. offers its cabling infrastructure customers design
input on various system elements, including diversity of cable routing,
uninterruptible power systems, security safeguards and cable management
systems. I.T.S. has narrowed its focus on the higher margin components
of design, installation and support of LANs, WANs and data connectivity
and reduced its involvement in the more competitive and lower margin
cabling infrastructure projects. I.T.S. places special emphasis on the
testing and certification phases of the project because todays
high-speed networks demand that products be installed in accordance with
strict manufacturer specifications.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Network Maintenance and Support.I.T.S. offers a broad line of
post-installation maintenance and support services to customers for MACs
or as part of a technical services contract. These contracts provide
customers with access to a wide range of our technical and operational
resources, including network engineering analysis, on-site technical
support, help desk support, user training and network reconfiguration.
I.T.S. technicians maintain close relationships with their customer
counterparts to ensure service reliability.                                                                                                                                                                                                                                                                                                                                                 

7



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##### Table of Contents



Competition

We have many competitors in the I.T.S. business due to the highly
fragmented nature of the data networking market, which includes large public
telecommunications companies and privately held electrical providers. Although
a number of companies compete for parts of our I.T.S. business, such as cable
installation, we believe that our expertise and our ability to support the full
range of data network design and installation requirements of large national
and international customers enable us to compete effectively in this market.

Products and Services

Our I.T.S. division provides cabling infrastructure, design,
implementation and maintenance services for high speed data networks, including
LANs and WANs. This business line includes four major product and service
areas: (1) value-added services; (2) networking products; (3) cabling
infrastructure; and (4) network maintenance and support. Customers purchase
these products and services on a stand-alone basis or in bundled combinations.
All of our fiscal year 2003 I.T.S. revenue was from projects performed in the
New York City metropolitan area. In addition, I.T.S. has a core group of highly
skilled project managers and design engineers who are dispatched to manage
installation projects. Our I.T.S. division provides the following products and
services:



| |  |  | Value-Added Services.We provide a wide range of value-added
services, including network and trading room design, consulting,
engineering implementation, project management, staging and operational
testing of workstations and technology and operational outsourcing.                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Networking Products.We market and service a full line of third-party
manufactured networking products including LAN hubs, adapters, bridges,
routers, network management software and protocol converters. We are a
certified reseller of third-party networking products. We sell these
products on a stand-alone basis or fully installed, configured and
integrated with customer systems.                                                                                                                                                                                                                                                                                              
|
| |  |  | Cabling Infrastructure.Cabling infrastructure provides physical
connectivity within buildings among communications devices, including
turret systems, telephone switching equipment, traditional telephone
systems, facsimile machines, computer networks and video conference
facilities. Providing a customer with cabling infrastructure includes
several distinct phases: network design, documentation, installation,
certification and ongoing service and maintenance. We offer our cabling
infrastructure customers design input on various system elements,
including diversity of cable routing, uninterruptible power systems,
security safeguards and cable management systems.
|
| |  |  | Network Maintenance and Support.We offer a broad line of
post-installation maintenance and support services to customers for MACs or as
part of a technical services contract. These contracts provide customers with
access to a wide range of our technical and operational resources, including
network engineering analysis, on-site technical support, help desk support,
user training and network reconfiguration. These services provide us with a
recurring revenue stream, which in fiscal year 2003 accounted for $9.1 million,
or 17.1% of I.T.S. total revenues of $52.8 million.                                                                                             

Sales and Marketing

Through a coordinated sales and marketing effort with Trading Systems,
I.T.S. is able to position itself early in the contract bid process. Sales of
turret systems for a new or reconfigured trading floor have significantly more
lead time than bidding and contracting for cabling services. As a result,
I.T.S. often has knowledge regarding large projects in a customers pipeline
before its competition. The ability to market and sell the I.T.S. product into
the Trading Systems customer base is an important synergy that exists between
the two divisions. I.T.S. has one employee dedicated to sales, with
responsibility for developing and managing relationships with general
contractors and construction consultants.

Network Services

Industry Overview

Our Network Services division provides network voice and data services
primarily to the financial community over a global network linking many major
financial centers. The voice or data lines are provided to customers by linking
the customer sites to the nearest point of the global network. Network
Services, which has offices in New York and London, currently targets its
business towards companies in the United States and Europe and connects trading
counter-parties across six continents.

8



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##### Table of Contents



Competition

Competitors of our Network Services division generally are the large
telecommunications providers such as AT&T, MCI, Sprint, British Telecom, and
Deutsche Telecom, as well as specialist telecommunication providers such as
Global Crossing, Westcom, Etrali, Sector and Radianz. Management believes that
our Network Services division achieves a small market share when compared to
our competitors. This niche market for telecommunications providers is
extremely competitive, is highly price and performance sensitive and is subject
to risk from technology change.

Product and Services

The following are some of the products and services that our Network
Services division provides:



| |  |  | Ring Down.This service provides an instantaneous connection between
two parties.                                                                                                                      
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Hoot and Holler Broadcast.Hoot and Holler Broadcast is a dedicated
private network that allows multiple users to access a continuously open
network line.                                             
|
| |  |  | T1/E1.A T1/E1 is a digital transmission line used to link different
locations together.                                                                                                               
|
| |  |  | DS3.A DS3 is a high-speed digital transmission line used to link
different locations together. DS3 lines have traditionally been used by
our customers to support customer disaster recovery programs.
|
| |  |  | Corporate Virtual Private Network.Provides a customer with
interoffice bandwidth used primarily to transfer data within a
customers office.                                                          

Customers

In general, our customers are concentrated primarily in the global
financial, trading and exchange trading industries. We also provide equipment
and services to commodity trading operations in non-financial firms.
Historically, almost all of our consolidated revenues have been derived from
sales to customers in the financial trading community. Our customers include
Deutsche Bank, JPMorgan Chase, Morgan Stanley, Goldman Sachs, UBS Paine Webber,
Citigroup/Smith Barney, Bank of America, Lehman Brothers, Wachovia and
Dresdner Bank, which were our top 10 customers for the 2003 fiscal year. These
customers accounted for approximately 61% of our total consolidated revenues in
the 2003 fiscal year. For the 2003 fiscal year, one customer accounted for approximately 21% of our total consolidated revenues. There were
no other customers in the 2003 fiscal year that accounted for more than 10% of
our total consolidated revenues and our total consolidated accounts
receivable balance at September 30, 2003. For the 2002 fiscal year, no single
customer accounted for more than 10% or more of our total
consolidated revenues.

Research and Development

Our research and development efforts are driven by our sales and product
management teams. Interoperability and integration of trading positions are a
strategic focus. We utilize our core competencies in voice communications
systems, application services and Rich Media delivery to provide solutions that
meet the evolving needs of our customers. We work closely with our customers to
understand their future requirements and invest in research and development to
ensure that our products address customer needs.

Historically, the research and development budget has represented 9% to
11% of new turret systems sales. The research and development budget is
determined annually through the evaluation of each product category and its
expected impact on revenue over the succeeding 24 months.

For the fiscal year ended September 30, 2001, the period from October 1,
2001 to December 20, 2001, the period from November 15, 2001 (date of initial
capitalization) to September 30, 2002 and the fiscal year ended September 30,
2003, we recorded expenses of $15.5 million, $3.5 million, $11.6 million and
$11.7 million, respectively, on research and development. As of September 30,
2003, we employed approximately 80 persons in the area of research, development
and product engineering.

Backlog

Our estimated consolidated order backlog was $39.4 million and $43.0
million at September 30, 2002 and 2003, respectively.

9



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Intellectual Property

We rely on a combination of patents, trade secrets, trademarks, copyrights
and other intellectual property rights, nondisclosure agreements and other
protective measures to protect our proprietary rights. We currently have 18
United States patents, including design patents. We also rely on unpatented
know-how and trade secrets and employ various methods, including
confidentiality agreements with employees and consultants, to protect our trade
secrets and know-how.

Environmental Matters

We are subject to various federal, state and local environmental laws and
regulations, including those governing the use, discharge and disposal of
hazardous substances in the ordinary course of our manufacturing process.
Although we believe that our current manufacturing operations comply in all
material respects with applicable environmental laws and regulations, there is
no assurance that environmental legislation may not in the future be enacted or
interpreted to create environmental liability with respect to our facilities or
operations.

Employees

As of September 30, 2003, we had 650 full-time non-union employees
worldwide with 590 associated with Trading Systems, 10 associated with I.T.S.
and 50 associated with Network Services. This includes 420 in North America,
180 in EMEA, and 50 in Asia. Of these, 75 were engaged in marketing and sales,
80 in research, 100 in manufacturing and 395 in branch operations, finance and
corporate administration.

As of September 30, 2003, approximately 370 of our United States workers
are represented by collective bargaining units, including approximately 330
workers who are retained under labor pooling agreements that IPC Information
Systems has entered into with Kleinknecht Electric Company, a New York
corporation, or KEC-NY, and Kleinknecht Electric Company, a New Jersey
corporation, or KEC-NJ, each a former affiliate of ours and companies owned by
one of our minority stockholders. Under these agreements, KEC-NY and KEC-NJ are
signatories to collective bargaining agreements with the union locals that
represent these employees. In addition, pursuant to these agreements, KEC-NY
and KEC-NJ are responsible for paying our employees, remitting payroll taxes
and making any required contributions to any union benefit plans covering the
employees. We reimburse KEC-NJ and KEC-NY for these expenses, pay them a total
fee of $50,000 per month and have agreed to indemnify them for liabilities
related to our employees. IPC Information Systems, Inc. has a standby letter of
credit in place in favor of KEC-NY and KEC-NJ in an amount of $1.5 million for
labor compensation and benefits related to these employees. The agreements also
require IPC Information Systems, Inc. to indemnify the shareholders of KEC-NJ
and KEC-NY for losses, up to $5.0 million, in the event we breach the agreement
or otherwise cause the shareholders to be subject to multi-employer pension
plan withdrawal liability under Title IV of the Employee Retirement Income
Security Act of 1974, as amended.

We have never experienced a work stoppage. Management believes that
current relations with labor are good and that existing union contracts will be
renewed.




Item 2. Properties

We have two product development facilities that are located in Fairfield,
Connecticut and Westbrook, Connecticut. Additionally, we lease our executive
offices in New York City, our branch offices and sales offices in the United
States, United Kingdom, Australia, Canada, Germany, Hong Kong, Italy, Japan,
and Singapore, and our network operating centers in New York City and
London. The 32,000 square foot Fairfield facility is leased and houses
the engineering organization. The 85,000 square foot Westbrook facility owned
by us is used for production, with 30,000 square feet designated for assembly
and testing, 30,000 square feet designated for warehousing and 25,000 square
feet designated for administrative purposes. The production facility is
scaleable and has sufficient capacity to meet the future anticipated demand.
Although we carry insurance, including business interruption insurance, and
have a disaster recovery plan on the Westbrook facility, a calamity at the
facility could have a material adverse effect on us.

Prior to the completion of the acquisition of IPC Information Systems, we
leased six floors at 67-73 Worship Street, London, England at an annual rate of
approximately £565,000, or $942,000, assuming an exchange rate of £1 to $1.667.
Of these six floors, we use one floor for office space and an affiliate of
Global Crossing uses five floors for telecommunications and networking
equipment. Under the lease, which expires in 2010, we remain liable to the
landlord for all six floors. Pursuant to the purchase agreement with Global
Crossing relating to our acquisition of IPC Information Systems, we entered
into a sublease for a portion of these premises with an affiliate of Global
Crossing and the landlord has consented to that sublease. Through September 30,
2003, Global Crossings affiliate has made all of its required sublease
payments.

10



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##### Table of Contents






Item 3. Legal Proceedings

Except as described below, we are not a party to any pending legal
proceedings other than claims and lawsuits arising in the ordinary course of
business. We believe these proceedings will not have a material adverse effect
on our financial condition or results of operations.

On June 27, 2000, an action was brought against several defendants,
including IPC Communications, Inc., in the United States District Court for the
Southern District of New York by two telecommunications cabling contractors
alleging that IPC Communications, Inc. violated federal antitrust and New York
state law by conspiring with the International Brotherhood of Electrical
Workers Local Union Number 3, AFL-CIO, and five electrical contractors to
exclude plaintiffs from telecommunications wiring and systems installation jobs
in the New York City metropolitan area. Subsequently, the complaint was amended
to add an additional plaintiff and an additional defendant contractor. We
believe the suit is without merit. However, there can be no assurance that the
resolution of this lawsuit will ultimately be favorable. Plaintiffs are seeking
injunctive relief and damages from the defendants, jointly and severally, in
excess of an aggregate of $75.0 million.

On September 8, 2003, an action was brought against several defendants,
including IPC Information Systems, Inc. and its President, in the United States
District Court for the Eastern District of New York by Advance Relocation &
Storage Co., Inc., a moving company. The complaint alleges that IPC Information
Systems, Inc. and 23 other defendants violated the Racketeer Influenced and
Corrupt Organizations Act and engaged in tortious interference with prospective
business advantage by preventing the plaintiff from obtaining work as a mover
in jobs performed in large commercial buildings in New York City. We believe
the suit is without merit and intend to vigorously defend against all claims
alleged against us in the complaint. Plaintiffs are seeking injunctive relief
and damages from the defendants, jointly and severally, in an aggregate amount
of approximately $7.0 million.




Item 4. Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of security holders during the fourth
quarter of fiscal year 2003.

11



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##### Table of Contents






PART II




Item 5. Market for Registrants Common Equity and Related Stockholder Matters

There is
no public trading market for our common stock. As of November 30, 2003, there were 26 shareholders of record of our common stock. To date, we
have not paid any dividends, but do expect to declare and pay a special cash
dividend of approximately $18.0 million by December 31, 2003 to all
shareholders of record of our outstanding common stock. The indenture
governing our senior subordinated notes and our amended and restated senior
secured credit facilities place restrictions on our ability to pay
dividends in the future.

On April 30, 2003, we issued 664,380 shares of common stock valued at
approximately $5.7 million to GSCP 2000 and other private equity funds
affiliated with Goldman, Sachs & Co. in connection with our acquisition of
Gains International (US), Inc. and Gains International (UK) Ltd. These shares
were sold in reliance upon Section 4(2) of the Securities Act of 1933, as
amended.




Item 6. Selected Financial Data

|                                                       |                                   |   |                  |       |            |   |             |      |             |   |            |       |             |   |             |       |        |   |        |       |   |   |        |       |   |   |       |       | 
|------------------------------------------------------ | --------------------------------- | - | ---------------- | ----- | ---------- | - | ----------- | ---- | ----------- | - | ---------- | ----- | ----------- | - | ----------- | ----- | ------ | - | ------ | ----- | - | - | ------ | ----- | - | - | ----- | ----- | 
|                                                       |                                   |   | Predecessors (1) |       |            |   |             |      |             |   |           
|                                                       |                                   |   |                  |       |            |   |             |      |             |   |           
|                                                       |                                   |   |                  |       |            |   | Period      |      |             |   |            |       |             |   |             |       | Period |   | Period |       |   |   |       
|                                                       |                                   |   | Fiscal           |       | from       |   | Period      |      |             |   |            |       | from        |   | from        |       |        |   |       
|                                                       |                                   |   | Year             |       | October 1, |   | from June   |      | Fiscal Year |   | October 1, |       | November    |   | Fiscal Year
|                                                       |                                   |   | Ended            |       | 1999 to    |   | 15, 2000 to |      | Ended       |   | 2001 to    |       | 15, 2001 to |   | Ended      
|                                                       |                                   |   | September        |       | June       |   | September   |      | September   |   | December   |       | September   |   | September  
|                                                       |                                   |   | 30, 1999         |       | 14, 2000   |   | 30, 2000    |      | 30, 2001    |   | 20, 2001   |       | 30, 2002    |   | 30, 2003   
|(dollars in millions)                                  |                                   |   |                  |       |            |   |             |      |             |   |            |       |             |  
|Statement of Operations Data:                          |                                   |   |                  |       |            |   |             |      |             |   |            |       |             |   |             |       |        |   |        |       |   |   |        |       |   |   |       |      
|Total revenue                                          |                                   | $ | 265.7            |       |            | $ | 174.5       |      |             | $ | 103.7      |       |             | $ | 279.7       |       |        | $ | 58.8   |       |   | $ | 232.8  |       |   | $ | 264.8 |      
|Cost of goods sold (depreciation shown separately) (2) |                                   |   | 159.3            |       |            |   | 102.5       |      |             |   | 79.8       |       |             |   | 164.6       |       |        |   | 32.8   |       |   |   | 161.1  |       |   |   | 149.5 |      
|Depreciation and amortization                          |                                   |   | 0.7              |       |            |   | 0.5         |      |             |   | 0.2        |       |             |   | 0.8         |       |        |   | 0.2    |       |   |   | 0.8    |       |   |   | 1.9   |      
|                                                       |                                   |   |                  |       |            |   |             |      |             |   |            |       |             |   |             |       |        |   |        |       |   |   |        |       |   |   |       |      
|                                                       | Gross profit                      |   |                  | 105.7 |            |   |             | 71.5 |             |   |            | 23.7  |             |   |             | 114.3 |        |   |        | 25.8  |   |   |        | 70.9  |   |   |       | 113.4 | 
|Research and development expense                       |                                   |   | 9.8              |       |            |   | 8.9         |      |             |   | 4.0        |       |             |   | 15.5        |       |        |   | 3.5    |       |   |   | 11.6   |       |   |   | 11.7  |      
|Selling, general and administrative expenses           |                                   |   | 36.9             |       |            |   | 29.5        |      |             |   | 12.2       |       |             |   | 33.5        |       |        |   | 17.1   |       |   |   | 34.6   |       |   |   | 47.3  |      
|Depreciation and amortization                          |                                   |   | 7.8              |       |            |   | 6.6         |      |             |   | 13.8       |       |             |   | 47.8        |       |        |   | 10.5   |       |   |   | 14.3   |       |   |   | 19.4  |      
|                                                       |                                   |   |                  |       |            |   |             |      |             |   |            |       |             |   |             |       |        |   |        |       |   |   |        |       |   |   |       |      
|                                                       | Operating income (loss)           |   |                  | 51.2  |            |   |             | 26.5 |             |   |            | (6.3  | )           |   |             | 17.4  |        |   |        | (5.4  | ) |   |        | 10.4  |   |   |       | 35.0  | 
|Interest expense, net                                  |                                   |   | (20.3            | )     |            |   | (16.1       | )    |             |   | (5.7       | )     |             |   | (27.9       | )     |        |   | (6.0   | )     |   |   | (21.5  | )     |   |   | (25.1 | )    
|Other income (expense), net (3)                        |                                   |   | 0.4              |       |            |   |            |      |             |   | (17.8      | )     |             |   | 2.0         |       |        |   |       |       |   |   | (0.3   | )     |   |   | 2.0   |      
|                                                       |                                   |   |                  |       |            |   |             |      |             |   |            |       |             |   |             |       |        |   |        |       |   |   |        |       |   |   |       |      
|                                                       | Income (loss) before income taxes |   |                  | 31.3  |            |   |             | 10.4 |             |   |            | (29.8 | )           |   |             | (8.4  | )      |   |        | (11.3 | ) |   |        | (11.5 | ) |   |       | 11.9  | 
|Income tax provision (benefit) (3)                     |                                   |   | 12.2             |       |            |   | 4.1         |      |             |   | (9.9       | )     |             |   | 4.4         |       |        |   | (0.3   | )     |   |   | (2.3   | )     |   |   | 7.9   |      
|                                                       |                                   |   |                  |       |            |   |             |      |             |   |            |       |             |   |             |       |        |   |        |       |   |   |        |       |   |   |       |      
|Net income (loss)                                      |                                   | $ | 19.1             |       |            | $ | 6.3         |      |             | $ | (19.9      | )     |             | $ | (12.8       | )     |        | $ | (11.0  | )     |   | $ | (9.2   | )     |   | $ | 4.0   |      
|                                                       |                                   |   |                  |       |            |   |             |      |             |   |            |       |             |   |             |       |        |   |        |       |   |   |        |       |   |   |       |      
|Statement of Cash Flow Data:                           |                                   |   |                  |       |            |   |             |      |             |   |            |       |             |   |             |       |        |   |        |       |   |   |        |       |   |   |       |      
|Cash provided by operating activities                  |                                   |   | 38.5             |       |            |   | 51.1        |      |             |   | 18.9       |       |             |   | 33.3        |       |        |   | 15.2   |       |   |   | 32.5   |       |   |   | 19.4  |      
|Cash provided by (used in) investing activities        |                                   |   | (12.3            | )     |            |   | (2.8        | )    |             |   | (1.1       | )     |             |   | (9.4        | )     |        |   | (1.9   | )     |   |   | (352.2 | )     |   |   | (0.5) |      
|Cash provided by (used in) financing activities        |                                   |   | (48.9            | )     |            |   | (47.0       | )    |             |   | (16.3      | )     |             |   | (23.4       | )     |        |   | (15.1  | )     |   |   | 343.6  |       |   |   | (17.6 | )    
|Other Data:                                            |                                   |   |                  |       |            |   |             |      |             |   |            |       |             |   |             |       |        |   |        |       |   |   |        |       |   |   |       |      
|EBITDA (4)                                             |                                   |   | 60.1             |       |            |   | 33.6        |      |             |   | 7.7        |       |             |   | 68.1        |       |        |   | 5.4    |       |   |   | 25.1   |       |   |   | 58.3  |      
|Ratio of earnings to fixed charges (5)                 |                                   |   | 2.5x             |       |            |   | 1.6x        |      |             |   |           |       |             |   |            |       |        |   |       |       |   |   |       |       |   |   | 1.4x  |      
|Deficiency of earnings to cover fixed charges (5)      |                                   |   |                 |       |            |   |            |      |             |   | (29.8      | )     |             |   | (8.4        | )     |        |   | (11.3  | )     |   |   | (11.5  | )     |   |   |      |      

|                                    |  |                  |       |      |  |      |       |      |  |      |       |   |  |   |       |  |  |   |       | 
|----------------------------------- |  | ---------------- | ----- | ---- |  | ---- | ----- | ---- |  | ---- | ----- | - |  | - | ----- |  |  | - | ----- | 
|                                    |  | Predecessors (1) |       |      |  |      |       |      |  |     
|                                    |  |                  |       |      |  |      |       |      |  |     
|                                    |  | September 30,   
|                                    |  |                 
|                                    |  | 1999             |       | 2000 |  | 2001 |       | 2002 |  | 2003
|(dollars in millions)               |  |                  |       |      |  |      |       |      |  |     
|Balance Sheet Data (at period end): |  |                  |       |      |  |      |       |      |  |      |       |   |  |   |       |  |  |   |       | 
|Cash                                |  | $                | 4.9   |      |  | $    | 3.2   |      |  | $    | 4.5   |   |  | $ | 25.3  |  |  | $ | 25.8  | 
|Net working capital                 |  |                  | 70.1  |      |  |      | (6.3  | )    |  |      | (52.2 | ) |  |   | 43.5  |  |  |   | 45.6  | 
|Total assets                        |  |                  | 226.3 |      |  |      | 531.4 |      |  |      | 489.1 |   |  |   | 430.2 |  |  |   | 444.9 | 
|Long-term debt                      |  |                  | 222.7 |      |  |      |      |      |  |      |      |   |  |   | 214.6 |  |  |   | 204.5 | 
|Total debt                          |  |                  | 242.7 |      |  |      |      |      |  |      |      |   |  |   | 221.1 |  |  |   | 205.0 | 
|Stockholders equity                |  |                  | (87.3 | )    |  |      | 318.6 |      |  |      | 244.0 |   |  |   | 137.0 |  |  |   | 147.2 | 

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(1)  Predecessors refers to the company as it operated (a) on a stand-alone basis through June 14, 2000 as IPC Information Systems, Inc. and (b) through December 20, 2001 following the acquisition of IPC Information Systems, Inc. by Global Crossing. Accordingly, the financial statements from June 15, 2000 through December 20, 2001 reflect the changes and adjustments for purchase accounting as well as changes as a result of ownership under Global Crossing. Accordingly, the financial
statement periods are presented in the following manner:



| | (a) |  | Fiscal Year 1999  for the period from October 1, 1998 to September 30, 1999, IPC Information Systems, Inc. operated as an independent company.                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | Fiscal Year 2000  for the period from October 1, 1999 to June 14, 2000, IPC Information Systems, Inc. operated as an independent company. On June 15, 2000, IPC Information Systems, Inc. was acquired by Global Crossing. The period from June 15, 2000 to September 30, 2000 is shown as a separate column as a result of the change in ownership.                                                                                                                                                                                                                   
|
| | (c) |  | Fiscal Year 2001  for the period from October 1, 2000 through September 30, 2001, IPC Information Systems, Inc. operated under Global Crossings ownership.                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | (d) |  | Fiscal Year 2002  for the period from October 1, 2001 to December 20, 2001, IPC Information Systems, Inc. operated under Global Crossings ownership. IPC Acquisition Corp. was formed and initially capitalized on November 15, 2001 and had no assets or operations until it acquired IPC Information Systems on December 20, 2001. The period from October 1, 2001 through December 20, 2001 and the period from November 15, 2001 (date of initial capitalization) through September 30,
2002 are shown as separate columns as a result of the change in ownership.
|
| | (e) |  | Fiscal Year 2003  for the period from October 1, 2002 through September 30, 2003, we have operated as an independent company.                                                                                                                                                                                                                                                                                                                                                                                                                                          

(2)  For the period from June 15, 2000 through September 30, 2000, cost of goods sold reflects fair value inventory adjustments of $24.9 million associated with the purchase accounting treatment of the acquisition of IPC Information Systems, Inc. by Global Crossing in June 2000. Fiscal year ended September 30, 2001 cost of goods sold reflects fair value inventory adjustments of $10.7 million associated with the purchase accounting treatment of the acquisition of IPC Information
Systems, Inc. by Global Crossing in June 2000. We had no operations prior to our acquisition of IPC Information Systems from Global Crossing on December 20, 2001. For the period from November 15, 2001 (date of initial capitalization) through September 30, 2002, costs of goods sold reflects fair value inventory adjustments of $34.3 million associated with the purchase accounting treatment of the acquisition of IPC Information Systems in December 2001.

(3)  In accordance with Statement of Financial Accounting Standards No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment to FASB Statement No. 13, and Technical Corrections, effective for fiscal years beginning after May 15, 2002, any gain or loss on extinguishment of debt that was classified as an extraordinary loss in prior periods shall be reclassified. Accordingly, the $10.6 million extraordinary loss on retirement of debt in the period June 15, 2000 to September
30, 2000 has been reclassified as an approximately $17.8 million
expense under Other income (expense), net and as a tax
benefit of approximately $7.3 million under Provision (benefit) for income taxes.

(4)  EBITDA represents earnings before interest, taxes, depreciation and amortization. We believe that EBITDA helps investors more meaningfully evaluate and compare the results of our operations from period to period. We believe that our investors, as debt investors and not equity investors, are primarily focused on EBITDA rather than net income, as it is a useful indicator of operating performance and cash generated from operations exclusive of working capital changes.

Our management uses EBITDA as a measurement of operating performance because it assists us in comparing performance on a consistent basis as it removes the impact of our recent changes in ownership, including different capital structures and asset bases, from our operating results. Management also uses EBITDA as one of its core measures for planning and forecasting overall consolidated company and individual business division expectations and for evaluating actual results
against such expectations. We have consistently included EBITDA in presentations to our board of directors and investors to enable them to have the same consistent measurement basis of operating performance used by management. We also use EBITDA as a valuation methodology in assessing the fair value of our reporting divisions for required impairment testing. Further, we use EBITDA measurements for our compensation plans and overall strategy. The most significant component of
the financial targets of our management incentive plan are measured
and bonuses are paid based on achievement of such EBITDA targets and
our overall strategy is directed towards pursuing development
opportunities intended to increase EBITDA and/or the valuation
multiple of EBITDA our businesses would command on a fair value
basis.

However, EBITDA is not a measurement prepared in accordance with generally accepted accounting principles. In addition, other companies in our industry may calculate EBITDA differently than we do. Significant factors not captured by EBITDA include trends in our period over period revenue, profitability measured by gross margin and effective tax rate. The following table sets forth a reconciliation of EBITDA to net income for the periods indicated:

|                                    |  |                  |      |            |  |             |      |             |  |            |       |             |  |             |       |        |  |        |       |   |  |   |      |   |  |   |      | 
|----------------------------------- |  | ---------------- | ---- | ---------- |  | ----------- | ---- | ----------- |  | ---------- | ----- | ----------- |  | ----------- | ----- | ------ |  | ------ | ----- | - |  | - | ---- | - |  | - | ---- | 
|                                    |  | Predecessors (1) |      |            |  |             |      |             |  |           
|                                    |  |                  |      |            |  |             |      |             |  |           
|                                    |  |                  |      |            |  | Period      |      |             |  |            |       |             |  |             |       | Period |  | Period |       |   |  |  
|                                    |  |                  |      |            |  | from        |      | Period      |  |            |       |             |  | from        |       | from   |  |        |       |  
|                                    |  | Fiscal Year      |      | October 1, |  | from June   |      | Fiscal Year |  | October 1, |       | November    |  | Fiscal Year
|                                    |  | Ended            |      | 1999 to    |  | 15, 2000 to |      | Ended       |  | 2001 to    |       | 15, 2001 to |  | Ended      
|                                    |  | September        |      | June 14,   |  | September   |      | September   |  | December   |       | September   |  | September  
|                                    |  | 30, 1999         |      | 2000       |  | 30, 2000    |      | 30, 2001    |  | 20, 2001   |       | 30, 2002    |  | 30, 2003   
|(dollars in millions)               |  |                  |      |            |  |             |      |             |  |            |       |             |  |            
|Statement of Operations Data:       |  |                  |      |            |  |             |      |             |  |            |       |             |  |             |       |        |  |        |       |   |  |   |      |   |  |   |      | 
|Net income (loss)                   |  | $                | 19.1 |            |  | $           | 6.3  |             |  | $          | (19.9 | )           |  | $           | (12.8 | )      |  | $      | (11.0 | ) |  | $ | (9.2 | ) |  | $ | 4.0  | 
|Depreciation and amortization       |  |                  | 8.5  |            |  |             | 7.1  |             |  |            | 14.0  |             |  |             | 48.6  |        |  |        | 10.7  |   |  |   | 15.1 |   |  |   | 21.3 | 
|Interest expense, net               |  |                  | 20.3 |            |  |             | 16.1 |             |  |            | 5.7   |             |  |             | 27.9  |        |  |        | 6.0   |   |  |   | 21.5 |   |  |   | 25.1 | 
|Loss on retirement of debt          |  |                  |     |            |  |             |     |             |  |            | 17.8  |             |  |             |      |        |  |        |      |   |  |   |     |   |  |   |     | 
|Income tax provision (benefit), net |  |                  | 12.2 |            |  |             | 4.1  |             |  |            | (9.9  | )           |  |             | 4.4   |        |  |        | (0.3  | ) |  |   | (2.3 | ) |  |   | 7.9  | 
|                                    |  |                  |      |            |  |             |      |             |  |            |       |             |  |             |       |        |  |        |       |   |  |   |      |   |  |   |      | 
|EBITDA                              |  | $                | 60.1 |            |  | $           | 33.6 |             |  | $          | 7.7   |             |  | $           | 68.1  |        |  | $      | 5.4   |   |  | $ | 25.1 |   |  | $ | 58.3 | 
|                                    |  |                  |      |            |  |             |      |             |  |            |       |             |  |             |       |        |  |        |       |   |  |   |      |   |  |   |      | 

(5)  The ratio of earnings to fixed charges is computed by dividing earnings by fixed charges. For this purpose, earnings include net income (loss) before taxes and fixed charges (adjusted for interest capitalized during the period). Fixed charges include interest, whether expensed or capitalized, amortization of deferred financing fees and the portion of rental expense that is representative of the interest factor in these rentals. For the period from June 15, 2000 to September
30, 2000, earnings were insufficient to cover fixed charges by $29.8 million because of the inclusion of the inventory fair value step-up in cost of sales of $24.9 million and the amortization of the goodwill of $6.2 million from the acquisition of IPC Information Systems, Inc. by Global Crossing in June 2000. For the year ended September 30, 2001, earnings were insufficient to cover fixed charges by $8.4 million because of the inclusion of the inventory fair value step-up in cost of
sales of $10.7 million and the amortization of goodwill of $21.1 million from the acquisition of IPC Information Systems, Inc. by Global Crossing in June 2000. For the period from October 1, 2001 to December 20, 2001, earnings were insufficient to cover fixed charges by $11.3 million because of the year end intercompany charge of $6.9 million, the inclusion of $2.5 million of other bonus amounts and goodwill amortization of $4.7 million resulting from the ownership of IPC
Information Systems by Global Crossing. For the period from November 15, 2001 (date of initial capitalization) to September 30, 2002, earnings were insufficient to cover fixed charges by $11.5 million because of the inclusion of the fair value step-up of inventory in cost of sales of $34.3 million resulting from the acquisition of IPC Information Systems in December 2001.

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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion of our financial condition and
results of operations with our consolidated financial statements and related
notes included elsewhere in this filing.

Some of the matters discussed in this filing include forward-looking
statements. Statements that are predictive in nature, that depend upon or refer
to future events or conditions or that include words such as expects,
anticipates, intends, plans, believes, estimates, thinks, and
similar expressions are forward-looking statements. These statements involve
known and unknown risks, uncertainties and other risk factors, including but
not limited to those described in our Registration Statement on Form S-1 (No.
333-103264), that may cause our actual results and performance to be materially
different from any future results or performance expressed or implied by these
forward-looking statements.

Although we believe that these statements are based upon reasonable
assumptions, we can give no assurance that our goals will be achieved. Given
these uncertainties, prospective investors are cautioned not to place undue
reliance on these forward-looking statements. These forward-looking statements
are made as of the date of this filing. We assume no obligation to update or
revise them or provide reasons why actual results may differ.

Overview

Our primary business is the design, manufacture, installation and service
of turret systems for the trading operations of the financial community, which
includes investment and commercial banks, foreign exchange and commodity
brokers and dealers, market exchanges, mutual and hedge fund companies, asset
managers and insurance companies. Turrets are specialized telephone systems
that are designed for high reliability and provide users instant access to
hundreds of dedicated telephone lines that are directly connected to other
trading partners and customers. Traders, brokers and salespersons occupy desks
known as trading positions from which they trade various financial instruments
including stocks, bonds, currencies and futures using turrets. We are the
leader in the turret industry, based on our base of approximately 110,000
turrets and related equipment installed in trading positions worldwide. We also
install and service the cabling infrastructure and networks within buildings
that connect voice and data communications devices for traders and others in
the global financial, trading and exchange trading industries, as well as sell
network voice and data services to customers primarily in the financial
community.

Our major operating divisions are Trading Systems, I.T.S., and Network
Services. Trading Systems reports (1) sales of turret systems to distributors
and direct sales and installations of turret systems as Product sales and
installations, and (2) revenue from turret system maintenance, including
annual and multi-year service contracts, and from MACs to existing turret
system installations as Service.

I.T.S. reports (1) revenue from the design, integration and implementation
of cabling infrastructure projects, including local and wide area networks, and
from sales of intelligent network products, such as hubs, bridges and routers,
as Product sales and installations and (2) revenue from on-site maintenance
of customer cable infrastructures and from the provision of outsourcing
services for the support, expansion and upgrading of existing customer networks
as Service. Network Services records the sale of voice and data services as
Service.

Revenue from product sales and installations is recognized upon completion
of the installation or, for contracts that are completed in stages and include
contract specified milestones, upon achieving such contract milestones, and
delivery and customer acceptance of a fully functional system has
occurred. Revenue from
sales to distributors is recognized upon shipment. Customers are generally
progress-billed prior to the completion of the installations. The revenue
related to these advance payments is deferred until the system installations
are completed or specified milestones are attained. Costs incurred on
uncompleted contracts and
stages are accumulated and recorded as inventory awaiting installation. In
addition, contracts for annual recurring turret and I.T.S. services are
generally billed in advance, and are recorded as revenue ratably (on a monthly
basis) over the contractual periods. Revenue from MACs to turret systems is
recognized upon completion, which generally occurs in the same month or the
month following the order for services. Revenue from our Network Services
division, which provides voice and data services to the financial community, is
billed in advance and recorded ratably (on a monthly basis) over the
contractual period, which generally range from three months to one year.

Cost of
revenue for our Trading Systems and I.T.S.
divisions includes the costs of equipment sold, the costs of parts
used for service of the equipment, labor to install the equipment
sold, labor to provide service, warehouse and project management
costs and the depreciation of the equipment in our manufacturing and
assembly facility. Cost of revenue for our Network Services division
includes the costs to lease local and long distance circuits and
depreciation of the equipment.

Our revenues and operating results fluctuate significantly from
period to period. Given the relatively large sales price of our trading systems
and our recognition of revenue only upon completion of installations or
specified contract milestones, a limited number of system installations may
account for a substantial portion of revenues in any particular period. As a
result of

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these and other factors, we could experience significant fluctuations
in revenues and operating results in future periods. In addition, our customers
are concentrated in the global financial, trading and exchange trading
industries and our revenues will likely decline during periods of economic downturn
that impact those sectors.

Our Strategy

The key elements of our strategy are to:



| |  |  | Generate revenue growth through replacement sales, technology
upgrades and trading floor expansions.Regular turnover of our installed
base is driven primarily by customers facility moves, mergers or
consolidations and the development of new trading markets and products.
Additionally, other factors, such as customer business initiatives,
including global trading platform standardization, regulatory
developments, and customer expansion affect turnover, as customers
require more flexible, efficient and technologically advanced turret
systems. By developing new systems, such as IQMX, that address these
factors in a timely, proactive fashion, we believe we can increase
overall turnover rates, as customers are motivated to replace older,
less-advanced equipment with our latest most-advanced product offerings.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Expand the addressable market by developing new products and services
and capitalizing on new trends.We believe there is an opportunity to
increase our revenues by strategically broadening our product portfolio,
enhancing our technology architecture and addressing new developments in
the marketplace. Examples of our efforts include:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|

| |  |  | Providing voice, data and video communications.The
introduction of our IQMX product with expansion modules provides the
ability to communicate by exchanging text (such as Chat and Instant
Messaging programs) and video (such as popular desktop video
conferencing systems) as quickly and easily as the communications
systems currently allow traders to do so with voice. By creating a
communications system that utilizes IP to deliver communications, and
by combining this delivery methodology with the expansion modules
that support exchanging text and video in addition to voice, we
eliminate the need for our customers to purchase stand-alone
equipment to deliver these solutions and leverage our installed base,
service and delivery capabilities and desktop presence.                                                                                                                                                                                                                                                                                                                         
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Developing applications.Application integration and
development is driven by the need to create a seamless and efficient
work environment in much the same way that increasingly sophisticated
call centers were developed in the mid-1990s. We have demonstrated
our capability in this market through sales of our CTI products which
allow telephony devices to communicate with computers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  |  | Increasing our penetration of disaster recovery and contingency
planning markets.We intend to further penetrate the growing disaster
recovery and business continuity market. We believe we can
effectively leverage our leading market position and customer
relationships to drive future business in this area from both
existing customers and emerging third-party providers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  |  | Penetrating middle office support positions.In June 2002, we
released the ICMX, a VoIP intercom module, and a member of our IQMX
family of turret products. The ICMX extends intercom functionality by
providing hands-free communication between sites, a unified numbering
plan, group calls and all calls and support for hoot and holler
applications. Compact in size and with features designed specifically
for support functions of a trading floor, we believe the ICMX will
position us to penetrate a large number of trading support positions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  |  | Increase our product offerings.With the acquisition of Gains
International (US) Inc. and Gains International (Europe) Limited in April 2003,
we created a new business division called Network Services. Our Network
Services division provides
network voice and data services that connect traders across six
continents. In addition, in June 2003, we launched a suite of services under
the name Managed Services. Managed Services are a set of premium, specialized
services that deliver fully managed connectivity to trading floors worldwide.
We believe we can provide these services to customers in combination with sales
of our turrets. With several different service products being offered, we
believe we can provide complete service to our customers trading floors
worldwide. Also, with our investment in Purple Voice in August 2003, we will
provide users such as researchers, analysts, and retail brokers who are based
off the main trading floor with seamless access to audio broadcasts, intercom
calls, group calls and hoot and holler broadcasts regardless of the users
location.



| |  |  | Increase our market share through organic growth and opportunistic
acquisitions.We intend to continue to increase our market share by (1)
converting customers from competitors systems to our own, (2) further
expanding into currently under-penetrated markets, (3) winning
competitive bids for new installation opportunities, and (4) expanding
geographically into areas where we are not already a market leader. We
plan to achieve these objectives through a combination of expanding our
direct presence, continuing our new product development efforts and
making strategic acquisitions and/or alliances.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |  |  | Continue and leverage our track record of service excellence.We
believe our high level of customer service differentiates us from our
competition, positions us to capture more revenue from our existing
client base by providing value-added services, and allows us to maintain
our pricing and profitability.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Recent Events

We expect to declare and pay a
special cash dividend of approximately $18.0 million by December 31,
2003 to all shareholders of record of our outstanding common stock.

Comparison of the Year Ended September 30, 2003 (FY 2003) to the Year Ended
September 30, 2002 (FY 2002) and FY 2002 to the Year Ended September 30, 2001
(FY 2001).

The amounts presented below for the fiscal year ended September 30, 2002
represent the sum of the amounts separately reported for the pre-IPC
Information Systems acquisition period from October 1, 2001 to December 20,
2001 and the post-IPC Information Systems acquisition period from December 21,
2001 to September 30, 2002.

The following table sets forth, as a percentage of consolidated revenue,
our consolidated statements of operations for the periods indicated. The
following table also presents, as a percentage of division revenue, our
statements of operations for our three major operating divisions for the
periods indicated. The following table does not present our statement of
operations for our Network Services division for FY 2002 and FY 2001 as it was
created in April 2003.

|                                                    |  |         |     |         |  |         |     |          |  |         |     |         |  |         |     |          |  |        |     |         |  |         |     |          |  |  |     |   |  |         |   |  |  |  |     |    |  |  |     |    |  |  |     |   |  |  |   | 
|--------------------------------------------------- |  | ------- | --- | ------- |  | ------- | --- | -------- |  | ------- | --- | ------- |  | ------- | --- | -------- |  | ------ | --- | ------- |  | ------- | --- | -------- |  |  | --- | - |  | ------- | - |  |  |  | --- | -- |  |  | --- | -- |  |  | --- | - |  |  | - | 
|                                                    |  | FY 2003 |     | FY 2002 |  | FY 2001
|                                                    |  |         |     |         |  |        
|                                                    |  | Consol- |     | Trading |  |         |     |          |  | Network |     | Consol- |  | Trading |     |          |  |        |     | Network |  | Consol- |     | Trading  |  |  |     |   |  | Network
|                                                    |  | idated  |     | Systems |  | I.T.S.  |     | Services |  | idated  |     | Systems |  | I.T.S.  |     | Services |  | idated |     | Systems |  | I.T.S.  |     | Services
|                                                    |  |         |     |         |  |         |     |          |  |         |     |         |  |         |     |          |  |        |     |         |  |         |     |         
|Revenue:                                            |  |         |     |         |  |         |     |          |  |         |     |         |  |         |     |          |  |        |     |         |  |         |     |          |  |  |     |   |  |         |   |  |  |  |     |    |  |  |     |    |  |  |     |   |  |  |   | 
|Product sales and installations                     |  |         | 59  | %       |  |         | 56  | %        |  |         | 83  | %       |  |         |    |          |  |        | 66  | %       |  |         | 64  | %        |  |  | 73  | % |  |         |  |  |  |  | 65  | %  |  |  | 63  | %  |  |  | 73  | % |  |  |  | 
|Service                                             |  |         | 41  | %       |  |         | 44  | %        |  |         | 17  | %       |  |         | 100 | %        |  |        | 34  | %       |  |         | 36  | %        |  |  | 27  | % |  |         |  |  |  |  | 35  | %  |  |  | 37  | %  |  |  | 27  | % |  |  |  | 
|                                                    |  |         |     |         |  |         |     |          |  |         |     |         |  |         |     |          |  |        |     |         |  |         |     |          |  |  |     |   |  |         |   |  |  |  |     |    |  |  |     |    |  |  |     |   |  |  |   | 
|                                                    |  |         | 100 | %       |  |         | 100 | %        |  |         | 100 | %       |  |         | 100 | %        |  |        | 100 | %       |  |         | 100 | %        |  |  | 100 | % |  |         |  |  |  |  | 100 | %  |  |  | 100 | %  |  |  | 100 | % |  |  |  | 
|                                                    |  |         |     |         |  |         |     |          |  |         |     |         |  |         |     |          |  |        |     |         |  |         |     |          |  |  |     |   |  |         |   |  |  |  |     |    |  |  |     |    |  |  |     |   |  |  |   | 
|Cost of goods sold (depreciation
shown separately): |  |         |     |         |  |         |     |          |  |         |     |         |  |         |     |          |  |        |     |         |  |         |     |          |  |  |     |   |  |         |   |  |  |  |     |    |  |  |     |    |  |  |     |   |  |  |   | 
|Product sales and installations                     |  |         | 36  | %       |  |         | 27  | %        |  |         | 77  | %       |  |         |    |          |  |        | 48  | %       |  |         | 43  | %        |  |  | 66  | % |  |         |  |  |  |  | 38  | %  |  |  | 32  | %  |  |  | 62  | % |  |  |  | 
|Service                                             |  |         | 21  | %       |  |         | 20  | %        |  |         | 17  | %       |  |         | 55  | %        |  |        | 19  | %       |  |         | 18  | %        |  |  | 24  | % |  |         |  |  |  |  | 21  | %  |  |  | 20  | %  |  |  | 23  | % |  |  |  | 
|Depreciation and amortization                       |  |         | 1   | %       |  |         | 1   | %        |  |         |    |         |  |         | 6   | %        |  |        | 1   | %       |  |         | 1   | %        |  |  |    |   |  |         |  |  |  |  | 1   | %  |  |  | 1   | %  |  |  |    |   |  |  |  | 
|                                                    |  |         |     |         |  |         |     |          |  |         |     |         |  |         |     |          |  |        |     |         |  |         |     |          |  |  |     |   |  |         |   |  |  |  |     |    |  |  |     |    |  |  |     |   |  |  |   | 
|                                                    |  |         | 58  | %       |  |         | 48  | %        |  |         | 94  | %       |  |         | 61  | %        |  |        | 67  | %       |  |         | 62  | %        |  |  | 90  | % |  |         |  |  |  |  | 59  | %  |  |  | 52  | %  |  |  | 85  | % |  |  |  | 
|                                                    |  |         |     |         |  |         |     |          |  |         |     |         |  |         |     |          |  |        |     |         |  |         |     |          |  |  |     |   |  |         |   |  |  |  |     |    |  |  |     |    |  |  |     |   |  |  |   | 
|Gross profit                                        |  |         | 42  | %       |  |         | 52  | %        |  |         | 6   | %       |  |         | 39  | %        |  |        | 33  | %       |  |         | 38  | %        |  |  | 10  | % |  |         |  |  |  |  | 41  | %  |  |  | 48  | %  |  |  | 15  | % |  |  |  | 
|                                                    |  |         |     |         |  |         |     |          |  |         |     |         |  |         |     |          |  |        |     |         |  |         |     |          |  |  |     |   |  |         |   |  |  |  |     |    |  |  |     |    |  |  |     |   |  |  |   | 
|Research and development                            |  |         | 4   | %       |  |         | 6   | %        |  |         | 0   | %       |  |         | 0   | %        |  |        | 5   | %       |  |         | 6   | %        |  |  | 0   | % |  |         |  |  |  |  | 6   | %  |  |  | 7   | %  |  |  | 0   | % |  |  |  | 
|Selling, general and
administrative expense         |  |         | 18  | %       |  |         | 20  | %        |  |         | 4   | %       |  |         | 41  | %        |  |        | 18  | %       |  |         | 20  | %        |  |  | 7   | % |  |         |  |  |  |  | 12  | %  |  |  | 13  | %  |  |  | 6   | % |  |  |  | 
|Depreciation and amortization                       |  |         | 7   | %       |  |         | 9   | %        |  |         | 1   | %       |  |         | 1   | %        |  |        | 9   | %       |  |         | 10  | %        |  |  | 1   | % |  |         |  |  |  |  | 17  | %  |  |  | 22  | %  |  |  | 1   | % |  |  |  | 
|                                                    |  |         |     |         |  |         |     |          |  |         |     |         |  |         |     |          |  |        |     |         |  |         |     |          |  |  |     |   |  |         |   |  |  |  |     |    |  |  |     |    |  |  |     |   |  |  |   | 
|Income (loss) from operations                       |  |         | 13  | %       |  |         | 17  | %        |  |         | 1   | %       |  |         | (3  | %)       |  |        | 2   | %       |  |         | 2   | %        |  |  | 2   | % |  |         |  |  |  |  | 6   | %  |  |  | 6   | %  |  |  | 8   | % |  |  |  | 
|Other income (expense):                             |  |         |     |         |  |         |     |          |  |         |     |         |  |         |     |          |  |        |     |         |  |         |     |          |  |  |     |   |  |         |   |  |  |  |     |    |  |  |     |    |  |  |     |   |  |  |   | 
|Interest expense, net                               |  |         | (9  | %)      |  |         | (12 | %)       |  |         | 0   | %       |  |         | 0   | %        |  |        | (9  | %)      |  |         | (11 | %)       |  |  | 0   | % |  |         |  |  |  |  | (10 | %) |  |  | (13 | %) |  |  | 0   | % |  |  |  | 
|Other income (expense), net                         |  |         | 1   | %       |  |         | 1   | %        |  |         | 0   | %       |  |         | 0   | %        |  |        | 0   | %       |  |         | 0   | %        |  |  | 0   | % |  |         |  |  |  |  | 1   | %  |  |  | 1   | %  |  |  | 0   | % |  |  |  | 
|                                                    |  |         |     |         |  |         |     |          |  |         |     |         |  |         |     |          |  |        |     |         |  |         |     |          |  |  |     |   |  |         |   |  |  |  |     |    |  |  |     |    |  |  |     |   |  |  |   | 
|Income (loss) before income taxes                   |  |         | 5   | %       |  |         | 6   | %        |  |         | 1   | %       |  |         | (3  | %)       |  |        | (8  | %)      |  |         | (10 | %)       |  |  | 2   | % |  |         |  |  |  |  | (3  | %) |  |  | (6  | %) |  |  | 8   | % |  |  |  | 
|Income tax expense (benefit)                        |  |         | 3   | %       |  |         | 4   | %        |  |         | 0   | %       |  |         | 1   | %        |  |        | (1  | %)      |  |         | (1  | %)       |  |  | 0   | % |  |         |  |  |  |  | 2   | %  |  |  | 2   | %  |  |  | 0   | % |  |  |  | 
|                                                    |  |         |     |         |  |         |     |          |  |         |     |         |  |         |     |          |  |        |     |         |  |         |     |          |  |  |     |   |  |         |   |  |  |  |     |    |  |  |     |    |  |  |     |   |  |  |   | 
|Net income (loss)                                   |  |         | 2   | %       |  |         | 2   | %        |  |         | 1   | %       |  |         | (4  | %)       |  |        | (7  | %)      |  |         | (9  | %)       |  |  | 2   | % |  |         |  |  |  |  | (5  | %) |  |  | (8  | %) |  |  | 8   | % |  |  |  | 
|                                                    |  |         |     |         |  |         |     |          |  |         |     |         |  |         |     |          |  |        |     |         |  |         |     |          |  |  |     |   |  |         |   |  |  |  |     |    |  |  |     |    |  |  |     |   |  |  |   | 

Revenue.

The following table sets forth our consolidated revenue and our revenue as
reported for our three major operating divisions.

|                                |       |   |              |         |         |   |          |         |          |   |         |         |         |  |          |    |          |   |         |         |  |   |         |         |  |   |        |        |  |  |   |   |  
|------------------------------- | ----- | - | ------------ | ------- | ------- | - | -------- | ------- | -------- | - | ------- | ------- | ------- |  | -------- | -- | -------- | - | ------- | ------- |  | - | ------- | ------- |  | - | ------ | ------ |  |  | - | - | -
|                                |       |   | Consolidated
|                                |       |   |             
|                                |       |   | FY 2003      |         | FY 2002 |   | $ Change |         | % Change |   | FY 2002 |         | FY 2001 |  | $ Change |    | % Change
|(dollars in thousands)          |       |   |              |         |         |   |          |         |          |   |         |         |         |  |          |   
|Product sales and installations |       | $ | 156,793      |         |         | $ | 192,194  |         |          | $ | (35,401 | )       |         |  | (18      | %) |          | $ | 192,194 |         |  | $ | 181,267 |         |  | $ | 10,927 |        |  |  | 6 | %
|Service                         |       |   | 107,963      |         |         |   | 99,370   |         |          |   | 8,593   |         |         |  | 9        | %  |          |   | 99,370  |         |  |   | 98,430  |         |  |   | 940    |        |  |  | 1 | %
|                                |       |   |              |         |         |   |          |         |          |   |         |         |         |  |          |    |          |   |         |         |  |   |         |         |  |   |        |        |  |  |   |  
|                                | Total |   | $            | 264,756 |         |   | $        | 291,564 |          |   | $       | (26,808 | )       |  |          | (9 | %)       |   | $       | 291,564 |  |   | $       | 279,697 |  |   | $      | 11,867 |  |  |   | 4 | %
|                                |       |   |              |         |         |   |          |         |          |   |         |         |         |  |          |    |          |   |         |         |  |   |         |         |  |   |        |        |  |  |   |  

|                                |       |   |                 |         |         |   |          |         |          |   |         |         |         |  |          |     |          |   |         |         |  |   |         |         |  |   |        |        |  |  |    |   |  
|------------------------------- | ----- | - | --------------- | ------- | ------- | - | -------- | ------- | -------- | - | ------- | ------- | ------- |  | -------- | --- | -------- | - | ------- | ------- |  | - | ------- | ------- |  | - | ------ | ------ |  |  | -- | - | -
|                                |       |   | Trading Systems
|                                |       |   |                
|                                |       |   | FY 2003         |         | FY 2002 |   | $ Change |         | % Change |   | FY 2002 |         | FY 2001 |  | $ Change |     | % Change
|(dollars in thousands)          |       |   |                 |         |         |   |          |         |          |   |         |         |         |  |          |    
|Product sales and installations |       | $ | 113,057         |         |         | $ | 154,690  |         |          | $ | (41,633 | )       |         |  | (27      | %)  |          | $ | 154,690 |         |  | $ | 138,165 |         |  | $ | 16,525 |        |  |  | 12 | %
|Service                         |       |   | 88,482          |         |         |   | 85,704   |         |          |   | 2,778   |         |         |  | 3        | %   |          |   | 85,704  |         |  |   | 82,851  |         |  |   | 2,853  |        |  |  | 3  | %
|                                |       |   |                 |         |         |   |          |         |          |   |         |         |         |  |          |     |          |   |         |         |  |   |         |         |  |   |        |        |  |  |    |  
|                                | Total |   | $               | 201,539 |         |   | $        | 240,394 |          |   | $       | (38,855 | )       |  |          | (16 | %)       |   | $       | 240,394 |  |   | $       | 221,016 |  |   | $      | 19,378 |  |  |    | 9 | %
|                                |       |   |                 |         |         |   |          |         |          |   |         |         |         |  |          |     |          |   |         |         |  |   |         |         |  |   |        |        |  |  |    |  

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|                                |       |   |                  |        |         |   |          |        |          |   |         |        |         |  |          |    |          |   |        |        |  |   |        |        |  |   |        |        |   |  |     |     |   
|------------------------------- | ----- | - | ---------------- | ------ | ------- | - | -------- | ------ | -------- | - | ------- | ------ | ------- |  | -------- | -- | -------- | - | ------ | ------ |  | - | ------ | ------ |  | - | ------ | ------ | - |  | --- | --- | --
|                                |       |   | I.T.S.          
|                                |       |   |                 
|                                |       |   | FY 2003          |        | FY 2002 |   | $ Change |        | % Change |   | FY 2002 |        | FY 2001 |  | $ Change |    | % Change
|(dollars in thousands)          |       |   |                  |        |         |   |          |        |          |   |         |        |         |  |          |   
|Product sales and installations |       | $ | 43,736           |        |         | $ | 37,504   |        |          | $ | 6,232   |        |         |  | 17       | %  |          | $ | 37,504 |        |  | $ | 43,102 |        |  | $ | (5,598 | )      |   |  | (13 | %) 
|Service                         |       |   | 9,059            |        |         |   | 13,666   |        |          |   | (4,607  | )      |         |  | (34      | %) |          |   | 13,666 |        |  |   | 15,579 |        |  |   | (1,913 | )      |   |  | (12 | %) 
|                                |       |   |                  |        |         |   |          |        |          |   |         |        |         |  |          |    |          |   |        |        |  |   |        |        |  |   |        |        |   |  |     |    
|                                | Total |   | $                | 52,795 |         |   | $        | 51,170 |          |   | $       | 1,625  |         |  |          | 3  | %        |   | $      | 51,170 |  |   | $      | 58,681 |  |   | $      | (7,511 | ) |  |     | (13 | %)
|                                |       |   |                  |        |         |   |          |        |          |   |         |        |         |  |          |    |          |   |        |        |  |   |        |        |  |   |        |        |   |  |     |    
|                               
|                                |       |   | Network Services
|                                |       |   |                 
|                                |       |   | FY 2003          |        | FY 2002 |   | $ Change |        | % Change |   | FY 2002 |        | FY 2001 |  | $ Change |    | % Change
|(dollars in thousands)          |       |   |                  |        |         |   |          |        |          |   |         |        |         |  |          |   
|Product sales and installations |       | $ |                 |        |         | $ |         |        |          | $ |        |        |         |  |         |    |          | $ |       |        |  | $ |       |        |  | $ |       |        |   |  |    |    
|Service                         |       |   | 10,422           |        |         |   |         |        |          |   | 10,422  |        |         |  |         |    |          |   |       |        |  |   |       |        |  |   |       |        |   |  |    |    
|                                |       |   |                  |        |         |   |          |        |          |   |         |        |         |  |          |    |          |   |        |        |  |   |        |        |  |   |        |        |   |  |     |    
|                                | Total |   | $                | 10,422 |         |   | $        |       |          |   | $       | 10,422 |         |  |          |   |          |   | $      |       |  |   | $      |       |  |   | $      |       |   |  |     |    |   
|                                |       |   |                  |        |         |   |          |        |          |   |         |        |         |  |          |    |          |   |        |        |  |   |        |        |  |   |        |        |   |  |     |    

Comparison of FY 2003 to FY 2002

Consolidated

We believe the overall decline in the global economy has caused our
customers to extend their planning and implementation cycles. While we expect
this downward trend to continue into the 2004 fiscal year, there can be no
certainty as to the degree or duration of this trend. We expect our fiscal year
2004 total consolidated revenues to be approximately $300 million; however, the
actual total consolidated revenues could be lower. For FY 2003, one customer accounted for approximately 21% of our total consolidated
revenues and approximately 25% of our
consolidated accounts receivable balance at September 30, 2003. There were no other customers in FY 2003 that accounted for more than
10% of total consolidated revenues and our total consolidated
accounts receivable balance at September 30, 2003. For FY 2002, no single customer accounted
for 10% or more of our total consolidated revenues.

Product sales and installations. The decrease in product sales and
installations revenue of $35.4 million in FY 2003 from FY 2002 was primarily
due to a higher volume of installation projects completed in FY 2002 compared
to FY 2003. There were thirty one large (greater than $2.0 million) and medium
(between $1.0 million and $2.0 million) installation projects completed in FY
2002 totaling $97.4 million compared to twenty one large and medium
installation projects completed in FY 2003 totaling $81.2 million. In addition,
small (less than $1.0 million) installation projects totaling $94.9 million
were completed in FY 2002 compared to $75.7 million in small installation
projects completed in FY 2003. We expect our fiscal year 2004 product sales and
installation revenue to be approximately $160.0 million.
However, customer commitments could be delayed due to budgetary
constraints, changes to real estate planning, M&A activity,
headcount rationalization or even technology considerations and actual
product sales and installation revenue could be lower.

Service. The increase in service revenue of $8.6 million in FY 2003 from
FY 2002 was primarily due to the addition of our Network Services division in
April 2003. We expect our fiscal year 2004 consolidated service revenue to be
approximately $140.0 million. However, customer commitments
could be delayed due to budgetary constraints, changes to real estate
planning, M&A activity, headcount rationalization or even technology
considerations and the actual service revenues could be lower.

Trading Systems

Product sales and installations. The decrease in product sales and
installations revenue of $41.6 million in FY 2003 from FY 2002 was primarily
due to a higher volume of installation projects completed in FY 2002 compared
to FY 2003. There were twenty four large and medium installation projects
completed in FY 2002 totaling $73.3 million compared to eighteen large and
medium installation projects completed in FY 2003 totaling $46.2 million. In
addition, small installation projects totaling $81.4 million were completed in
FY 2002 compared to $66.9 million in small installation projects completed in
FY 2003. We believe the decrease in both large and small installation projects completed in FY
2003 was primarily due to the decline in global economic conditions.

The change in our product sales and installations revenue in FY 2003 from
FY 2002 was not significantly affected by a change in the price of our
products; instead we believe it was affected more by the number and size of
turret systems purchased by our customers. Large projects are not numerous;
however, their occurrence causes fluctuations when comparing periods, as
revenue is not recognized until completion of the installation or achievement
of contract milestones. We believe the demand for new turret systems is
primarily event driven, the result of physical facility moves of trading
positions and the addition of new trading positions due to customer growth.
Large facility moves and mergers can also result in large installation
projects, which cause uneven revenue streams period over period.

Service. The increase in service revenue of $2.8 million in FY 2003 from
FY 2002 was primarily due to a higher volume of contract maintenance revenue in
FY 2003, offset by a decrease in non-contract MAC services when compared to FY
2002. The increase in maintenance revenue in FY 2003 was due to the expiration
of warranties on a higher amount of FY 2002 product sales and installation
revenue. We believe the decrease in MAC service revenue in FY 2003 was due to the current
economic conditions in the financial industry.

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##### Table of Contents



I.T.S.

Product sales and installations. The increase in product sales and
installations revenue of $6.2 million in FY 2003 from FY 2002 was primarily due
to the completion of three large and medium installation projects totaling
$35.0 million completed in FY 2003, compared to seven large and medium
installation projects totaling $24.0 million completed in FY 2002, offset by a
higher volume of small installation projects completed in FY 2002 totaling
$13.5 million compared to $8.7 million small installation projects completed in
FY 2003.

Service. The decrease in service revenue of $4.6 million in FY 2003 from
FY 2002 was primarily due to a large customer merger in the financial industry,
which resulted in continued but lower service requirements for that customer of
approximately $2.5 million. In addition, we believe the decline in service
revenue was also caused by the general decline in the real estate and
construction activities within our customer base.

Network Services

Service. Service revenue for our Network Services division was $10.4
million in FY 2003. We received no revenue from our Network Services division
in FY 2002 as it was created through the acquisition of the Gains entities in
April 2003.

Comparison of FY 2002 to FY 2001

Consolidated

Product sales and installations. The increase in product sales and
installations revenue of $10.9 million in FY 2002 from FY 2001 was primarily
due to an increase of $16.5 million from our Trading Systems division that was
partially offset by a decrease of $5.6 million from our I.T.S. division. As
expected, the uncertainty of the financial markets since the events of
September 11, 2001 caused consolidated revenues for the second half of FY 2002
to be lower compared to the first half of FY 2002. We believe this uncertainty,
combined with the overall decline in the global economy, caused our
customers to extend their planning and implementation cycles. For the FY 2002
and FY 2001, no single customer accounted for 10% or more of our total
consolidated revenues.

Service. The increase in revenue of $0.9 million in FY 2002 from FY 2001
was primarily due to an increase of $2.8 million from our Trading Systems
division that was partially offset by a decrease of $1.9 million from our
I.T.S. division.

Trading Systems

Product sales and installations. The increase in product sales and
installations revenue of $16.5 million in FY 2002 from FY 2001 was primarily
due to the completion of two large installation projects totaling $26.1 million
during FY 2002, while there were no installations of comparable size completed
in FY 2001. The change in our installation revenue in FY 2002 from FY 2001 was
not significantly affected by a change in the price of our products; instead,
we believe it was affected more by the number and size of turret systems
purchased by our customers.

We believe the demand for new turret systems was primarily event driven,
the result of physical facility moves of trading positions and the addition of
new trading positions due to customer growth. Large facility moves and mergers
can also result in large installation sales that can cause uneven revenue
streams year over year, as well as quarter over quarter.

Service.
The increase in service revenue of $2.8 million in FY 2002 from
FY 2001 was primarily due to growth of the existing customer base and the
purchase of the Hitachi, Ltd. trading system service base outside of Japan.
This increase was partially offset by the loss of service revenue from several
trading floors as a result of the events of September 11, 2001.

I.T.S.

Product sales and installations. The decrease in product sales and
installations revenue of $5.6 million in FY 2002 from FY 2001 was primarily due
to a higher number of small jobs completed in FY 2001, which generate less
installation revenue than large jobs. We believe this was caused by the general
decline in the construction, real estate, and general contracting industries.
The revenue associated with these large jobs was $13.2 million in FY 2002
compared to $16.9 million in FY 2001.

Service. The decrease in service revenue of $1.9 million in FY 2002 from
FY 2001 was primarily due to a large customer merger in the financial industry
in the second half of FY 2001, which resulted in continued but lower service
requirements for that customer in FY 2002.

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##### Table of Contents



Cost of Revenue.

The following table sets forth our consolidated cost of revenue and our
cost of revenue as reported for our three major operating divisions. Cost of
revenue for our Trading Systems and I.T.S. divisions includes the costs of
equipment sold, the costs of parts used for service of the equipment, labor to
install the equipment sold, labor to provide service, warehouse and project
management costs and the depreciation of the equipment in our manufacturing and
assembly facility. Cost of revenue for our Network Services division includes
the costs to lease local and long distance circuits and depreciation of the
equipment. Cost of revenue for FY 2002 and FY 2001 includes a charge resulting
from the amortization of the step-up in inventory of $34.3 million and $10.7
million, respectively, (relating to the acquisition of IPC Information
Systems). This purchase accounting inventory fair value step-up is a non-cash
GAAP adjustment that is recorded when a company is acquired as we were in
December 2001 and in June 2000. Since the adjustment has been fully recognized
in income as of September 30, 2002, the cost of inventory in FY 2003 was not
impacted by this adjustment, nor will this adjustment impact the 2004 fiscal
year or any subsequent fiscal years.

|                                |       |   |                           |         |      |  |         |    |      |   |          |         |         |  |      |    |         |  |      |     |          |   |         |         |  |  |    |    |      |   |         |         |  |  |    |    |   |  |    |    |  
|------------------------------- | ----- | - | ------------------------- | ------- | ---- |  | ------- | -- | ---- | - | -------- | ------- | ------- |  | ---- | -- | ------- |  | ---- | --- | -------- | - | ------- | ------- |  |  | -- | -- | ---- | - | ------- | ------- |  |  | -- | -- | - |  | -- | -- | -
|                                |       |   | Consolidated             
|                                |       |   |                          
|                                |       |   |                           |         |      |  | % of    |    |      |   |          |         | % of    |  |      |    |         |  |      |     |          |   | % of    |         |  |  |    |    | % of |   |         |         | 
|                                |       |   | FY 2003                   |         | Rev. |  | FY 2002 |    | Rev. |   | % Change |         | FY 2002 |  | Rev. |    | FY 2001 |  | Rev. |     | % Change
|(dollars in thousands)          |       |   |                           |         |      |  |         |    |      |   |          |         |         |  |      |    |         |  |      |    
|Product sales and installations |       | $ | 94,401                    |         |      |  | 60      | %  |      | $ | 138,474  |         |         |  | 72   | %  |         |  | (12  | %)  |          | $ | 138,474 |         |  |  | 72 | %  |      | $ | 106,252 |         |  |  | 59 | %  |   |  | 13 | % 
|Service                         |       |   | 55,122                    |         |      |  | 51      | %  |      |   | 55,481   |         |         |  | 56   | %  |         |  | (5   | %)  |          |   | 55,481  |         |  |  | 56 | %  |      |   | 58,349  |         |  |  | 59 | %  |   |  | (3 | %)
|Depreciation and amortization   |       |   | 1,876                     |         |      |  | 1       | %  |      |   | 1,031    |         |         |  | 0    | %  |         |  | 1    | %   |          |   | 1,031   |         |  |  | 0  | %  |      |   | 834     |         |  |  | 0  | %  |   |  | 0  | % 
|                                |       |   |                           |         |      |  |         |    |      |   |          |         |         |  |      |    |         |  |      |     |          |   |         |         |  |  |    |    |      |   |         |         |  |  |    |    |   |  |    |   
|                                | Total |   | $                         | 151,399 |      |  |         | 57 | %    |   | $        | 194,986 |         |  |      | 67 | %       |  |      | (10 | %)       |   | $       | 194,986 |  |  |    | 67 | %    |   | $       | 165,435 |  |  |    | 59 | % |  |    | 8  | %
|                                |       |   |                           |         |      |  |         |    |      |   |          |         |         |  |      |    |         |  |      |     |          |   |         |         |  |  |    |    |      |   |         |         |  |  |    |    |   |  |    |   
|                               
|                                |       |   | Trading Systems Division 
|                                |       |   |                          
|                                |       |   |                           |         |      |  | % of    |    |      |   |          |         | % of    |  |      |    |         |  |      |     |          |   | % of    |         |  |  |    |    | % of |   |         |         | 
|                                |       |   | FY 2003                   |         | Rev. |  | FY 2002 |    | Rev. |   | % Change |         | FY 2002 |  | Rev. |    | FY 2001 |  | Rev. |     | % Change
|(dollars in thousands)          |       |   |                           |         |      |  |         |    |      |   |          |         |         |  |      |    |         |  |      |    
|Product sales and installations |       | $ | 53,657                    |         |      |  | 47      | %  |      | $ | 104,452  |         |         |  | 68   | %  |         |  | (21  | %)  |          | $ | 104,452 |         |  |  | 68 | %  |      | $ | 70,018  |         |  |  | 51 | %  |   |  | 17 | % 
|Service                         |       |   | 40,268                    |         |      |  | 46      | %  |      |   | 43,193   |         |         |  | 50   | %  |         |  | (4   | %)  |          |   | 43,193  |         |  |  | 50 | %  |      |   | 44,607  |         |  |  | 54 | %  |   |  | (4 | %)
|Depreciation and amortization   |       |   | 1,189                     |         |      |  | 1       | %  |      |   | 1,031    |         |         |  | 0    | %  |         |  | 1    | %   |          |   | 1,031   |         |  |  | 0  | %  |      |   | 834     |         |  |  | 0  | %  |   |  | 0  | % 
|                                |       |   |                           |         |      |  |         |    |      |   |          |         |         |  |      |    |         |  |      |     |          |   |         |         |  |  |    |    |      |   |         |         |  |  |    |    |   |  |    |   
|                                | Total |   | $                         | 95,114  |      |  |         | 47 | %    |   | $        | 148,676 |         |  |      | 62 | %       |  |      | (15 | %)       |   | $       | 148,676 |  |  |    | 62 | %    |   | $       | 115,459 |  |  |    | 52 | % |  |    | 10 | %
|                                |       |   |                           |         |      |  |         |    |      |   |          |         |         |  |      |    |         |  |      |     |          |   |         |         |  |  |    |    |      |   |         |         |  |  |    |    |   |  |    |   
|                               
|                                |       |   | I.T.S. Division          
|                                |       |   |                          
|                                |       |   |                           |         |      |  | % of    |    |      |   |          |         | % of    |  |      |    |         |  |      |     |          |   | % of    |         |  |  |    |    | % of |   |         |         | 
|                                |       |   | FY 2003                   |         | Rev. |  | FY 2002 |    | Rev. |   | % Change |         | FY 2002 |  | Rev. |    | FY 2001 |  | Rev. |     | % Change
|(dollars in thousands)          |       |   |                           |         |      |  |         |    |      |   |          |         |         |  |      |    |         |  |      |    
|Product sales and installations |       | $ | 40,744                    |         |      |  | 93      | %  |      | $ | 34,022   |         |         |  | 91   | %  |         |  | 2    | %   |          | $ | 34,022  |         |  |  | 91 | %  |      | $ | 36,234  |         |  |  | 84 | %  |   |  | 7  | % 
|Service                         |       |   | 9,154                     |         |      |  | 101     | %  |      |   | 12,288   |         |         |  | 90   | %  |         |  | 11   | %   |          |   | 12,288  |         |  |  | 90 | %  |      |   | 13,742  |         |  |  | 88 | %  |   |  | 2  | % 
|Depreciation and amortization   |       |   |                          |         |      |  | 0       | %  |      |   |         |         |         |  | 0    | %  |         |  | 0    | %   |          |   |        |         |  |  | 0  | %  |      |   |        |         |  |  | 0  | %  |   |  | 0  | % 
|                                |       |   |                           |         |      |  |         |    |      |   |          |         |         |  |      |    |         |  |      |     |          |   |         |         |  |  |    |    |      |   |         |         |  |  |    |    |   |  |    |   
|                                | Total |   | $                         | 49,898  |      |  |         | 95 | %    |   | $        | 46,310  |         |  |      | 91 | %       |  |      | 4   | %        |   | $       | 46,310  |  |  |    | 91 | %    |   | $       | 49,976  |  |  |    | 85 | % |  |    | 6  | %
|                                |       |   |                           |         |      |  |         |    |      |   |          |         |         |  |      |    |         |  |      |     |          |   |         |         |  |  |    |    |      |   |         |         |  |  |    |    |   |  |    |   
|                               
|                                |       |   | Network Services Division
|                                |       |   |                          
|                                |       |   |                           |         |      |  | % of    |    |      |   |          |         | % of    |  |      |    |         |  |      |     |          |   | % of    |         |  |  |    |    | % of |   |         |         | 
|                                |       |   | FY 2003                   |         | Rev. |  | FY 2002 |    | Rev. |   | % Change |         | FY 2002 |  | Rev. |    | FY 2001 |  | Rev. |     | % Change
|                                |       |   |                           |         |      |  |         |    |      |   |          |         |         |  |      |    |         |  |      |     |         
|(dollars in thousands)          |       |   |                           |         |      |  |         |    |      |   |          |         |         |  |      |    |         |  |      |     |          |   |         |         |  |  |    |    |      |   |         |         |  |  |    |    |   |  |    |   
|Product sales and installations |       | $ |                          |         |      |  |        | %  |      | $ |         |         |         |  |     |    |         |  |     |     |          | $ |        |         |  |  |   |    |      | $ |        |         |  |  |   |    |   |  |   |   
|Service                         |       |   | 5,700                     |         |      |  | 55      | %  |      |   |         |         |         |  |     |    |         |  |     |     |          |   |        |         |  |  |   |    |      |   |        |         |  |  |   |    |   |  |   |   
|Depreciation and amortization   |       |   | 687                       |         |      |  | 7       | %  |      |   |         |         |         |  |     |    |         |  |     |     |          |   |        |         |  |  |   |    |      |   |        |         |  |  |   |    |   |  |   |   
|                                |       |   |                           |         |      |  |         |    |      |   |          |         |         |  |      |    |         |  |      |     |          |   |         |         |  |  |    |    |      |   |         |         |  |  |    |    |   |  |    |   
|                                | Total |   | $                         | 6,387   |      |  |         | 61 | %    |   | $        |        |         |  |      |   |         |  |      |    |          |   | $       |        |  |  |    |   |      |   | $       |        |  |  |    |   |   |  |    |   |  
|                                |       |   |                           |         |      |  |         |    |      |   |          |         |         |  |      |    |         |  |      |     |          |   |         |         |  |  |    |    |      |   |         |         |  |  |    |    |   |  |    |   

Comparison of FY 2003 to FY 2002

Consolidated

Cost of revenue for FY 2002 includes a charge resulting from the
amortization of the step-up in inventory of $34.3 million (relating to the
acquisition of IPC Information Systems). This purchase accounting inventory
fair value step-up is a non-cash GAAP adjustment that is recorded when a
company is acquired as we were in December 2001. Since the adjustment has been
fully recognized in income as of September 30, 2002, the cost of inventory in
FY 2003 was not impacted by this adjustment, nor will this adjustment impact
the 2004 fiscal year or any subsequent fiscal years. We expect our fiscal year
2004 total consolidated cost of revenue to be approximately $175 million:
however, pricing changes, more competitive bidding, and further cost
rationalization by our customers could cause the actual total
consolidated cost of revenue to be higher.

Product sales and installations.The decrease in product sales and
installations cost of revenue of 12% as a percentage of product sales and
installations revenue in FY 2003 from FY 2002 was primarily due to the
inclusion of $33.5 million of inventory fair value step-up in FY 2002, while
there was no inventory fair value adjustment in FY 2003. The decrease in
product sales and installations cost of revenue was partially offset by a
higher percentage of I.T.S. installations and third party products sold
compared to Trading System manufactured products sold in FY 2003. I.T.S. and
third party products have a higher cost of revenue than Trading Systems
manufactured products.

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Service.The decrease in service cost of revenue of 5% as a percentage of
service revenue in FY 2003 from FY 2002 was primarily due to an increase in
contract maintenance services in FY 2003, which have a lower cost of revenue
than non-contract MAC services, as well as the inclusion of $0.8 million of
inventory fair value step-up in FY 2002, while there was no inventory fair
value adjustment in FY 2003.

Trading Systems

Product sales and installations.The decrease in product sales and
installations cost of revenue of 20% as a percentage of product sales and
installations revenue in FY 2003 from FY 2002 was primarily due to the
inclusion of $32.3 million of inventory fair value step-up in FY 2002, while
there was no inventory fair value adjustment in FY 2003.

Service.The decrease in service cost of revenue of 4% as a percentage of
service revenue in FY 2003 from FY 2002 was primarily due to an increase in
contract maintenance services in FY 2003, which have a lower cost of revenue
than non-contract MAC services, as well as the inclusion of $0.8 million of
inventory fair value step-up in FY 2002, while there was no inventory fair
value adjustment in FY 2003.

I.T.S.

Product sales and installations.The increase in product sales and
installations cost of revenue of 2% as a percentage of product sales and
installations revenue in FY 2003 from FY 2002 was primarily due to higher
customer discounts as a result of current economic conditions in the
construction industry, partially offset by the inclusion of $1.2 million of
inventory fair value step-up in FY 2002, while there was no inventory fair
value adjustment in FY 2003. The general decline in real estate and
construction activities within our customer base has resulted in more
competitive pricing on installation project bids.

Service.The increase in service cost of revenue of 11% in FY 2003 from FY
2002 as a percentage of service revenue was primarily due to the general
decline in the real estate and construction activities within our customer
base. As a result of such business decline, we have experienced a decrease in
direct margins to remain competitive, and our fixed costs represent a more
significant portion of our total costs for this line of business.

Network Services

Service.Service cost of revenue for our Network Services division as a
percentage of revenue was 55% in FY 2003. We incurred no cost of revenue from
our Network Services division in FY 2002 as it was created through the
acquisition of the Gains entities in April 2003.

Comparison of FY 2002 to FY 2001

Consolidated

Cost of revenue for FY 2002 includes a charge resulting from the
amortization of the step-up in inventory of $34.3 million (relating to the
acquisition of IPC Information Systems in December 2001) and cost of revenue
for FY 2001 reflects a charge of
$10.7 million (relating to the June 2000 acquisition of IPC Information
Systems, Inc. by Global Crossing). This purchase accounting inventory fair
value step-up is a non-cash GAAP adjustment that is recorded when a company is
acquired as we were in FY 2002 and FY 2001.

Product sales and installations.The increase in product sales and
installations cost of revenue of 13% as a percentage of product sales and
installations revenue in FY 2002 from FY 2001 was primarily due to the
inclusion of $33.5 million of inventory fair value step-up in FY 2002 as
compared to $10.7 million in FY 2001. Also, lower margins were realized from
sales of the IQMX, as well as lower margins that were realized on large
installations in both the Trading Systems and I.T.S. divisions. The lower
margins for the IQMX are typical with the introduction of a new voice trading
system.

Service.The decrease in service cost of revenue of 3% as a percentage of
service revenue in FY 2002 from FY 2001 was primarily due to the sale of
services by our Trading Systems division, which have higher margins and
comprised a larger percentage of total service revenue for FY 2002, which was
partially offset by the inclusion of $0.8 million of inventory fair value
step-up in FY 2002 as compared to no inventory fair value step-up in FY 2001.

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Trading Systems

Product sales and installations.The increase in product sales and
installations cost of revenue of 17% as a percentage of product sales and
installations revenue in FY 2002 from FY 2001 was primarily due to the
inclusion of $32.3 million of inventory fair value step-up in FY 2002 as
compared to $9.7 million in FY 2001, as well as lower margins attained from
sales of the IQMX. The lower margins for the IQMX are typical with the
introduction of a new voice trading system. In addition, our largest
installation in FY 2002 included the installation of the IQMX, which was sold
to a global customer at a higher than normal discount.

Service.The decrease in service cost of revenue of 4% as a percentage of
service revenue in FY 2002 from FY 2001 was primarily due to an increase in
maintenance revenue, which has higher margins than MAC revenue, which was
partially offset by the inclusion of $0.8 million of inventory fair value
step-up in FY 2002 as compared to no inventory fair value step-up in FY 2001.

I.T.S.

Product sales and installations.The increase in product sales and
installations cost of revenue of 7% as a percentage of product sales and
installations cost of revenue in FY 2002 from FY 2001 was primarily due to the
inclusion of $1.2 million of inventory fair value step-up in FY 2002 as
compared to $1.0 million in FY 2001, as well as lower margins associated with
certain large installations in FY 2002. These lower margins in FY 2002 were
mainly due to pricing pressures resulting from the decline in market
conditions.

Service.The increase in service cost of revenue of 2% as a percentage of
revenue in FY 2002 from FY 2001 was primarily due to the loss of high margin
revenue from one customer that was principally offset by higher margins
realized from disaster recovery work in FY 2002.

Research and Development Expense.

|                         |  |              |        |         |  |          |        |          |  |         |        |         |  |          |     |          |  |   |        |  |  |   |        |  |  |   |      |   |  |  |    |   
|------------------------ |  | ------------ | ------ | ------- |  | -------- | ------ | -------- |  | ------- | ------ | ------- |  | -------- | --- | -------- |  | - | ------ |  |  | - | ------ |  |  | - | ---- | - |  |  | -- | --
|                         |  | Consolidated
|                         |  |             
|                         |  | FY 2003      |        | FY 2002 |  | $ Change |        | % Change |  | FY 2002 |        | FY 2001 |  | $ Change |     | % Change
|(dollars in thousands)   |  |              |        |         |  |          |        |          |  |         |        |         |  |          |     |         
|Research and development |  | $            | 11,713 |         |  | $        | 15,136 |          |  | $       | (3,423 | )       |  |          | (23 | %)       |  | $ | 15,136 |  |  | $ | 15,502 |  |  | $ | (366 | ) |  |  | (2 | %)

Research and development efforts are focused on the next generation of
Trading Systems products, applications, and enhancements of our current product
lines. We expect our research and development expenses in fiscal year 2004 to
be approximately $12 million; however, the actual research and development
expenses could be higher.

Comparison of FY 2003 to FY 2002

Research and development expenses decreased by $3.4 million in FY 2003
from FY 2002 primarily due to planned reductions in headcount in FY 2002 and a
reduction in discretionary spending in FY 2003.

Comparison of FY 2002 to FY 2001

Research and development expenses decreased by $0.4 million in FY 2002
from FY 2001 due primarily to our effort to reduce fixed costs.

Selling, General and Administrative Expense.

|                                            |  |              |        |         |  |          |        |          |  |         |        |         |  |          |    |          |  |   |        |  |  |   |        |  |  |   |        |  |  |  |    |  
|------------------------------------------- |  | ------------ | ------ | ------- |  | -------- | ------ | -------- |  | ------- | ------ | ------- |  | -------- | -- | -------- |  | - | ------ |  |  | - | ------ |  |  | - | ------ |  |  |  | -- | -
|                                            |  | Consolidated
|                                            |  |             
|                                            |  | FY 2003      |        | FY 2002 |  | $ Change |        | % Change |  | FY 2002 |        | FY 2001 |  | $ Change |    | % Change
|(dollars in thousands)                      |  |              |        |         |  |          |        |          |  |         |        |         |  |          |    |         
|Selling, general and administrative expense |  | $            | 47,313 |         |  | $        | 51,686 |          |  | $       | (4,373 | )       |  |          | (8 | %)       |  | $ | 51,686 |  |  | $ | 33,541 |  |  | $ | 18,145 |  |  |  | 54 | %

Comparison of FY 2003 to FY 2002

Selling, general and administrative expenses decreased by $4.4 million in
FY 2003 from FY 2002 primarily due to a reduction in discretionary spending in
FY 2003, as well as the inclusion of a $6.9 million charge in FY 2002 for
corporate related services from Global Crossing. These corporate related
service charges represented a calculation of the allocation to IPC Information
Systems of services such as treasury, payroll, tax compliance, legal and other
professional fees. This decrease in selling, general and administrative
expenses was partially offset by the addition of expenses from our new Network
Services division. We expect our selling, general and administrative expenses
in fiscal year 2004 to be approximately $53 million;

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however the actual
selling, general and administrative expenses could be higher. We believe the
anticipated increase of selling, general and administrative expenses for the
2004 fiscal year will principally result from the inclusion of our Network
Services division for the full fiscal year.

Comparison of FY 2002 to FY 2001

Selling, general and administrative expenses increased by $18.1 million in
FY 2002 from FY 2001 primarily due to the inclusion of additional expenses in
FY 2002 that were necessary for us to operate as a stand alone entity. Also,
the increase in FY 2002 reflects the inclusion of $2.5 million of employee
bonuses related to the acquisition of IPC Information Systems and a $6.9
million charge for corporate related services from Global Crossing in FY 2002,
compared to only a $1.9 million charge for corporate related services from
Global Crossing in FY 2001. These corporate related service charges represent
an allocation to IPC Information Systems, Inc. for the cost of services such as
treasury, payroll, tax compliance, legal and other professional fees.

Depreciation and Amortization.

|                              |  |              |        |         |  |          |        |          |  |         |        |         |  |          |     |          |  |   |        |  |  |   |        |  |  |   |         |   |  |  |     |   
|----------------------------- |  | ------------ | ------ | ------- |  | -------- | ------ | -------- |  | ------- | ------ | ------- |  | -------- | --- | -------- |  | - | ------ |  |  | - | ------ |  |  | - | ------- | - |  |  | --- | --
|                              |  | Consolidated
|                              |  |             
|                              |  | FY 2003      |        | FY 2002 |  | $ Change |        | % Change |  | FY 2002 |        | FY 2001 |  | $ Change |     | % Change
|(dollars in thousands)        |  |              |        |         |  |          |        |          |  |         |        |         |  |          |     |         
|Depreciation and amortization |  | $            | 19,376 |         |  | $        | 24,771 |          |  | $       | (5,395 | )       |  |          | (22 | %)       |  | $ | 24,771 |  |  | $ | 47,801 |  |  | $ | (23,030 | ) |  |  | (48 | %)

Comparison of FY 2003 to FY 2002

The decrease in depreciation and amortization of $5.4 million in FY 2003
from FY 2002 was primarily due the adoption in FY 2002 of SFAS No. 142
Goodwill and Other Intangible Assets, in which goodwill and indefinite lived
intangible assets are no longer subject to periodic amortization. This decrease
was partially offset by the addition of our Network Services division in April
2003 and increased capital expenditures in FY 2003 when compared to FY 2002.

Comparison of FY 2002 to FY 2001

The decrease of $23.0 million in depreciation and amortization in FY 2002
from FY 2001 was primarily due to the adoption in FY 2002 of SFAS No. 142, in
which goodwill and indefinite lived intangible assets are no longer subject to
periodic amortization, as well as a change in the carrying amount of
amortizable intangible assets resulting from the acquisition of IPC Information
Systems in December 2001.

Interest Expense, net.

|                       |  |              |        |         |  |          |        |          |  |         |        |         |  |          |    |          |  |   |        |  |  |   |        |  |  |   |      |   |  |  |    |   
|---------------------- |  | ------------ | ------ | ------- |  | -------- | ------ | -------- |  | ------- | ------ | ------- |  | -------- | -- | -------- |  | - | ------ |  |  | - | ------ |  |  | - | ---- | - |  |  | -- | --
|                       |  | Consolidated
|                       |  |             
|                       |  | FY 2003      |        | FY 2002 |  | $ Change |        | % Change |  | FY 2002 |        | FY 2001 |  | $ Change |    | % Change
|(dollars in thousands) |  |              |        |         |  |          |        |          |  |         |        |         |  |          |    |         
|Interest expense, net  |  | $            | 25,146 |         |  | $        | 27,520 |          |  | $       | (2,374 | )       |  |          | (9 | %)       |  | $ | 27,520 |  |  | $ | 27,871 |  |  | $ | (351 | ) |  |  | (1 | %)

Comparison of FY 2003 to FY 2002

Interest expense, net decreased by $2.4 million in FY 2003 as compared to
FY 2002 primarily due to the reduction of principal on our outstanding senior
secured credit facilities, including a $14.0 million voluntary
prepayment of principal made in March 2003.

Comparison of FY 2002 to FY 2001

Interest expense, net in FY 2002 remained relatively flat, decreasing by
$0.4 million as compared to FY 2001. Interest expense, net in FY 2002 was
primarily related to interest on our outstanding senior subordinated notes and
indebtedness under our senior secured credit facilities. Interest expense, net
in FY 2001 was primarily related to interest charged by Global Crossing for
cash funding of our operations.

Provision for Income Taxes.

Our effective tax rate for FY 2003, FY 2002 and FY 2001 was 66.0%, 11.4%,
and (52.3)%, respectively. The comparability of these periods is significantly
impacted by the acquisition of IPC Information Systems in FY 2002 and reflects
the tax impact of purchase accounting as well as the jurisdictions in which our
income is generated.

We have
U.S. federal net operating loss carryforwards of approximately
$24.9 million at September 30, 2003, which expire through September 30, 2023. As of September 30, 2003 and 2002, we recognized deferred tax assets
related to our US federal and state net operating loss carryforwards of
approximately $9.6 million and $8.9 million, respectively. In determining
whether it is more likely than not that we will realize the benefits of the net
deferred tax assets from US operations, we considered all available evidence,
both positive

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and negative. The principal factors that led us to recognize these
benefits were: (1) US results of operations for the period ended September 30,
2002, reported a loss before income taxes of $22.1 million, after reflecting
charges of $34.3 million resulting from the fair-value inventory adjustments
under the purchase price allocation (which, as a result of the Internal Revenue
Code Section 338(h)(10) tax election, jointly made by us and Global Crossing,
also generates deductions for income tax purposes); (2) US results of
operations for fiscal 2004, 2005 and subsequent years are expected to generate
sufficient taxable income to fully utilize these tax loss carryforwards; and
(3) our conclusion that the net US deferred tax assets were generated by an
event (our purchase of IPC Information Systems in December 2001), rather than a
continuing condition. As of September 30, 2003, no circumstances have arisen
that would require us to change such conclusion.

Net Income (Loss)

|                       |  |              |       |         |  |          |         |          |  |         |        |         |  |          |     |          |  |   |         |   |  |   |         |   |  |   |        |   |  |  |     |   
|---------------------- |  | ------------ | ----- | ------- |  | -------- | ------- | -------- |  | ------- | ------ | ------- |  | -------- | --- | -------- |  | - | ------- | - |  | - | ------- | - |  | - | ------ | - |  |  | --- | --
|                       |  | Consolidated
|                       |  |             
|(dollars in thousands) |  | FY 2003      |       | FY 2002 |  | $ Change |         | % Change |  | FY 2002 |        | FY 2001 |  | $ Change |     | % Change
|                       |  |              |       |         |  |          |         |          |  |         |        |         |  |          |     |         
|Net income (loss)      |  | $            | 4,039 |         |  | $        | (20,228 | )        |  | $       | 24,267 |         |  |          | 120 | %        |  | $ | (20,228 | ) |  | $ | (12,831 | ) |  | $ | (7,397 | ) |  |  | (58 | %)

Comparison of FY 2003 to FY 2002

We had
net income of $4.0 million in FY 2003 when compared to $20.2
million of net loss in FY 2002. The $24.3 million increase was primarily due to
the inclusion of the inventory fair value step-up of $34.3 million in cost of
revenue in FY 2002, offset by $0.5 million in net loss from our Network
Services division in FY 2003, as well as $0.2 million in net loss in FY 2003
from the inclusion of Purple Voice in our consolidated financial statements. We
also incurred income taxes of $7.9 million in FY 2003 compared to a tax benefit
of $2.6 million in FY 2002. We expect our net income in fiscal year 2004 to be
consistent with FY 2003; however, the actual amount may be lower.

Comparison of FY 2002 to FY 2001

Net loss increased in FY 2002 from FY 2001 by $7.4 million. The net losses
in FY 2002 and FY 2001 were primarily due to non-cash GAAP adjustments made to
the fair value of the inventory of our company related to the acquisition of
IPC Information Systems, Inc. by Global Crossing in June 2000 and our
acquisition of IPC Information Systems in December 2001. These adjustments
increase the carry value of the inventory to its fair value at the acquisition
date, which effectively reduces the gross profit on the sale of such inventory
to a nominal amount. The amount of inventory fair value adjustments included as
cost of revenue for FY 2002 and FY 2001 was $34.3 million and $10.7 million,
respectively, and will not impact net income in upcoming years. In addition,
the net loss in FY 2002 and FY 2001 was unfavorably impacted by corporate
related service charges from Global Crossing, which represents an allocation to
IPC Information Systems, Inc. for the cost of services, such as treasury,
payroll, tax compliance, legal and other professional fees, totaling $6.9
million and $1.9 million in FY 2002 and FY 2001, respectively, which will not
be incurred in upcoming years, and a $22.8 million decrease in depreciation and
amortization in FY 2002. This decrease was primarily due to the adoption in FY
2002 of SFAS No. 142, under which goodwill and indefinite lived intangible assets
are no longer subject to periodic amortization, as well as a change in the
carrying amount of amortizable intangible assets resulting from the acquisition
of IPC Information Systems.

Liquidity and Capital Resources

For fiscal years 2003, 2002 and 2001, we satisfied our operating cash
requirements through cash provided by operations, capital loans, financing,
intercompany financing from Global Crossing in FY 2001 and bank lines of
credit. Our principal uses of cash were to fund working capital requirements,
operating losses, capital expenditures and repayment of borrowings.
Non-operating cash requirements relating to the transfer of ownership of us in
FY 2002 are detailed below.

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The Senior Secured Credit Facilities

On
December 20, 2001, we entered into the senior secured credit
facilities comprised of a $150.0 million term loan and a $15.0
million revolving credit facility. On
September 2, 2003, we amended and restated our senior secured credit facilities. The
amended and restated senior secured credit facilities consist of a $25.0
million revolving credit facility and a $55.0 million term loan; provided,
however, that we can increase the committed amount under these facilities by up
to $25.0 million so long as one or more lenders agrees to provide this
incremental commitment and other customary conditions are satisfied. The term
loan was borrowed in full at closing, but as of September 30, 2003, we have not
borrowed against the revolving credit facility. The amount available under the
revolving credit facility is reduced by outstanding letters of credit of $4.3
million as of September 30, 2003.

Mandatory prepayments of the amended and restated senior secured credit
facilities are required upon the occurrence of certain events, including
certain asset sales, equity issuances and debt issuances, as well as from 75%
of our excess cash flow in FY 2003 and 50% of excess cash flow thereafter.
Excess cash flow is defined in our amended and restated credit agreement, as:
(1) the sum of net income, interest expense, provisions for taxes, depreciation
expense, amortization expense, other non-cash items affecting net income and to
the extent included in calculating net income, expenses incurred by us in
connection with an amendment of the then existing credit agreement, certain
restructuring expenses and prepayment premiums in connection with prepayment of
loans under the then existing credit agreement, plus (2) a working capital
adjustment less (3) scheduled repayments of debt, capital expenditures, cash
interest expense and provisions for taxes based on income.

As required under the terms of our senior secured credit facilities, we
made mandatory excess cash flow repayments of $30.0 million and $0.8 million on
September 30, 2002 and December 29, 2002, respectively, based upon 75% of our
excess cash flow for the period ended September 30, 2002. On March 3, 2003, we
also voluntarily prepaid $14.0 million in debt on our then existing senior
secured credit facilities. At September 30, 2003, we were not required to
make a mandatory excess cash flow repayment under the terms of the
amended and restated senior secured credit facilities.

Obligations under the amended and restated senior secured credit
facilities are secured by a first priority security interest in substantially
all of our assets and the assets of our domestic subsidiaries and by a pledge
of 100% of the shares of domestic subsidiaries and 65% of the shares of direct
foreign subsidiaries. Our domestic subsidiaries have unconditionally guaranteed
our obligations under the amended and restated senior secured credit
facilities.

The amended and restated senior secured credit facilities contain
customary affirmative covenants as well as negative covenants that, among other
things, restrict our and our subsidiaries ability to: incur additional
indebtedness (including guarantees of certain obligations); create
liens; engage in mergers,
consolidations, liquidations and dissolutions; sell assets; enter into capital
leases; pay dividends or make other payments in respect of capital stock; make
acquisitions; make investments, loans and advances; enter into
transactions with affiliates; make payments with respect
to or modify subordinated debt instruments; enter into sale and
leaseback transactions; change the fiscal year or lines of business; and enter into agreements with
negative pledge clauses or clauses restricting subsidiary distributions.

The amended and restated senior secured credit facilities also contain
minimum interest coverage and fixed charge coverage ratios and maximum senior
secured and total leverage ratios as well as a restriction on the amount of capital
expenditures we can incur in a fiscal year.

The Senior Subordinated Notes

On December 20, 2001 we issued $150.0 million in aggregate principal
amount of 11.50% senior subordinated notes to fund a portion of the
consideration for the acquisition of IPC Information Systems. Under the terms
of the indenture governing the notes, we may, subject to certain restrictions,
issue additional notes up to a maximum aggregate principal amount of $250.0
million. The notes mature on December 15, 2009. The notes are general unsecured
obligations, are subordinated in right of payment to all existing and future
senior debt, including the amended and restated senior secured credit
facilities, are pari passu in right of payment with any future senior
subordinated indebtedness, and are unconditionally guaranteed by certain of our
domestic restricted subsidiaries. Interest on the notes accrue at the rate of
11.50% per annum and is payable semi-annually in arrears on June 15 and
December 15, commencing on June 15, 2002.

The indenture governing the notes contains covenants that impose
significant restrictions on us. These restrictions include limitations on our
ability to: incur indebtedness or issue preferred shares; pay dividends or make
distributions in respect of capital stock or to make other restricted payments;
create liens; agree to payment restrictions affecting restricted subsidiaries;
consolidate, merge, sell or otherwise dispose of all or substantially all of
our assets; enter into transactions with affiliates; and designate subsidiaries
as unrestricted subsidiaries.

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Settlement and Rejection Agreement

On March 13, 2003, we entered into a settlement and rejection agreement
with Global Crossing. Pursuant to the settlement and rejection agreement, all
of the remaining obligations under the purchase agreement relating to the
acquisition of IPC Information Systems were terminated. In addition, we and
Global Crossing mutually released each other for all prior claims.

The bankruptcy court entered an order on March 14, 2003 approving the
settlement and rejection agreement. Under the terms of the settlement and
rejection agreement, we have deposited $5.2 million in an escrow account.
Global Crossing received $3.2 million from the escrow account upon the filing
of certain tax returns for periods prior to and including the date of the
acquisition of IPC Information Systems. Global Crossing will receive the
remaining $2.0 million from the escrow account after a $2.0 million irrevocable
letter of credit is issued on behalf of us. We will have the right to draw on
that letter of credit in the event Global Crossings affiliate fails to make
any payments due to us pursuant to a sublease for office space at 67-73 Worship
Street in London, England.

We believe that all tax returns required to be filed in respect of IPC
Information Systems, Inc. and its subsidiaries for periods prior to and
including the date of the acquisition of IPC Information Systems have now been
filed. These returns consist of consolidated tax returns with Global Crossing,
and, where required by law, separate tax returns for IPC Information Systems,
Inc. and/or its subsidiaries.

As a result of the termination of the purchase agreement, Global Crossing
has been relieved of all of its obligations under the purchase agreement,
including, among other things, indemnifying us for tax liabilities that may be
imposed upon IPC Information Systems, Inc. and its subsidiaries for periods
prior to and including the date of the acquisition of IPC Information Systems.
Therefore, in the event that any tax liabilities are imposed, as a result of an
audit or otherwise, on IPC Information Systems, Inc. and/or its subsidiaries
for these periods prior to and including the date of the acquisition of IPC
Information Systems, we may be required to pay those taxes and are no longer
able to recover indemnification from Global Crossing. As of September 30, 2003,
the aggregate amount of taxes for which we have received notices of taxes due
from various jurisdictions and recognized as tax liabilities under purchase
accounting is approximately $6.5 million and, as of
September 30, 2003, we have made settlement
payments in the aggregate of $0.6 million. We estimate that the range of our exposure
for additional tax liabilities is from $0.0 to $36.0 million. In computing the
estimated range of potential tax liabilities, we took into account tax returns
in certain jurisdictions where the statutes of limitations have not yet
expired. Under those tax returns as filed, the remaining liability is zero.
Although we believe that all those tax returns have been filed correctly, such
returns may be audited and additional taxes may be assessed (or refunds may be
granted). Payment by us of a significant amount of these potential tax
liabilities could have a material adverse effect on our financial condition and
results of operations, requiring us to seek additional financing. In that
event, we cannot assure you we will be able to obtain additional financing on
commercially reasonable terms, or at all.

Pursuant to the settlement and rejection agreement, Global Crossing has
also paid to us approximately $2.2 million for payroll and federal tax refunds
received by it for periods prior to and including the date of the acquisition
of IPC Information Systems. Global Crossing is also required to pay us any
future tax refunds or credits it receives applicable to IPC Information
Systems, Inc. and its subsidiaries for these periods.

Comparison of FY 2003 to FY 2002

Cash provided by operating activities was $19.4 million for FY 2003 as
compared to $47.8 million for FY 2002. The decrease of $28.4 million was
primarily due to decreases from changes in accounts receivable and inventory in
FY 2003 compared to FY 2002, offset in part by increases in cash from increased
customer advances and net income in FY 2003 compared to a net loss in FY 2002.
In FY 2002, we benefited from cash inflows from the improvement of working
capital through the decrease of accounts receivable and inventory balances. The
improvement of accounts receivable for FY 2002 was a direct result of improved
collections both in the US and internationally. The progress in this area
during FY 2002 plateaued during FY 2003 and accounts receivable balances are
being maintained at a more sustainable level. The change in inventory was
primarily due to the timing of projects; the inventory balance at September 30,
2003 reflects several projects currently in progress compared to fewer
installation projects at September 30, 2002.

Cash
used in investing activities was $0.5 million for FY 2003 as
compared to cash used of $354.2 million for FY 2002. Cash used
in investing
activities for FY 2003 related to the net cash received of $4.2 million
resulting from the settlement and rejection agreement with Global Crossing,
combined with the cash provided by our acquisition of Gains International (US)
Inc. and Gains International (UK) Ltd. in April 2003 totaling $3.1 million
relating to the prior existing cash on hand of the Gains entities at the date
of acquisition. The acquisition of the Gains entities provided cash to us as
the consideration for the transaction was non-cash and paid in our common
stock. Upon acquisition of the Gains entities, the existing cash on their
balance sheet results in a cash inflow. This activity was partially offset by
capital expenditures of $7.5 million and our investment in Purple

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Voice of $1.3 million in FY 2003. Cash used in investing activities for FY
2002 related exclusively to cash used to fund the acquisition of IPC
Information Systems of $345.7 million and capital expenditures of $8.4 million.

Cash used in financing activities was $17.6 million for FY 2003 as
compared to cash provided by financing activities of $328.4 million for FY
2002. Cash used in financing activities in FY 2003 represented costs related to
the amendment and restatement of our senior secured credit facilities of $0.3
million, the voluntary prepayment of $14.0 million of principal on our senior
secured credit facilities and the scheduled principal repayments as required
under the terms of our senior secured credit facilities. Cash provided by
financing activities in FY 2002 included $140.0 million of common equity
contribution from a group led by GSCP 2000 and other private equity funds
affiliated with Goldman, Sachs & Co., the proceeds from the sale of $150.0
million of senior subordinated notes, and the borrowing of $105.0 million under
our senior secured credit facilities. These inflows were partially offset by
outflows of $15.1 million of intercompany activity that occurred prior to the
acquisition of IPC Information Systems, issuance costs for the financing of
the acquisition of IPC Information Systems, and principal repayments under our
senior secured credit facilities of $33.9 million, mainly due to the mandatory
excess cash flow repayments of $30.0 million.

The effect of exchange rate changes on cash represents increases and
decreases in various currencies when translated into US dollars. As an
international company, we are subjected to currency fluctuation risk, which
resulted in a net decrease of cash of approximately $0.7 million in FY 2003 as
compared to a decrease of $0.5 million in FY 2002. Currently our largest
currency exposure is to the British Pound and the Canadian Dollar, although we
have additional exposure, to a lesser extent, to the Euro, Australian Dollar,
Japanese Yen, Hong Kong Dollar and Singapore Dollar.

Comparison of FY 2002 to FY 2001

Cash provided by operating activities was $47.8 million for FY 2002 as
compared to $33.3 million for FY 2001. This increase of $14.5 million reflects
improvements to our working capital position, including a reduction of accounts
receivable through improved collections and reduced inventory levels due to the
completion of certain large jobs.

Cash used in investing activities in FY 2002 of $354.2 million reflects
$345.7 million used for the acquisition of IPC Information Systems and $8.4
million of capital expenditures. Cash used in investing activities in FY 2001
of $9.4 million related exclusively to capital expenditures.

Cash provided by financing activities was $328.4 million for FY 2002 as
compared to $23.4 million for FY 2001. This increase of $305.0 million was
primarily due to the financing activity resulting from the acquisition of IPC
Information Systems. Cash inflows in FY 2002 included $140.0 million of common
equity contribution from a group led by GSCP 2000 and other private equity
funds affiliated with Goldman, Sachs & Co., the proceeds from the sale of
$150.0 million of senior subordinated notes, and the borrowing of $105.0
million under our previously existing senior secured credit facilities. These
inflows were partially offset by outflows of $15.1 million of intercompany
activity that occurred prior to the acquisition of IPC Information Systems,
$3.9 million of principal repayment under the amortization schedule in our
senior secured credit facilities and an excess cash flow repayment of $30.0
million required under our credit agreement. Cash inflows in FY 2001 related
primarily to proceeds from intercompany borrowings from our former parent.

The effect of exchange rate changes on cash represents increases and
decreases in various currencies when translated into US dollars. As an
international company, we are subjected to currency fluctuations which resulted
in a net decrease of cash of approximately $0.5 million for FY 2002 as compared
to an increase of $0.9 million for FY 2001.

Capital Resources and Expenditures

We expect that our capital expenditures for fiscal year 2004 will be
approximately $10 million; however, actual capital expenditures for the 2004
fiscal year may be greater. We are limited in our capital expenditures in any
fiscal year by the capital expenditure covenant in our amended and restated
credit agreement. The limits imposed by the amended and restated credit
agreement are $12.0 million
annually. We have no
off balance sheet arrangements or other relationships with unconsolidated
affiliates.

Our primary future uses of cash will be to fund interest expense and
principal repayments on our debt, capital expenditures, research and
development efforts, and working
capital as needed for potential strategic acquisitions and/or
alliances, as well as to pay dividends to our shareholders, including
the special cash dividend of approximately $18.0 million that we expect to pay by December 31, 2003 to
all shareholders of record of our outstanding common stock. Our
primary future sources of cash will be cash flows from operations, and, if
necessary, borrowings under the revolving credit facility.

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During the course of the year, our short-term liquidity is impacted by our
mandatory payment obligations of principal and interest under both our amended
and restated senior secured credit facilities and our senior subordinated
notes. The mandatory interest and principal payments under the amended and
restated senior secured credit facilities are due at the end of each quarter.
The interest payments required by the senior subordinated notes of $8.6 million
payable due in June and December of each year negatively impact our liquidity
during those particular months. Additionally, in any such year that we generate
excess cash flow, the mandatory prepayment required under our amended and
restated senior secured credit facilities must be made within 90 days of our
fiscal year end. At September 30, 2003, under the terms of the amended and
restated senior secured credit facilities, we were not required to make a
mandatory excess cash flow repayment.

At September 30, 2003, we had $25.8 million of unrestricted cash and had
additional liquidity available to us of $20.7 million through the $25.0 million
revolving credit facility, under which there were no amounts outstanding at
September 30, 2003 ($25.0 million revolving credit facility reduced by
outstanding letters of credit of $4.3 million at September 30, 2003). On
November 30, 2003, we had approximately $34.5 million of unrestricted cash and
had no outstanding borrowings under our revolving credit facility. In
the near term, we anticipate making several substantial cash
payments, including, among other things, the interest payment on our senior subordinated notes and the special
cash dividend, totaling approximately $39.0 million. As a result of
these payments, it is likely that we will draw approximately
$6.0 million to $7.0 million on our revolving credit facility
in the near term. We expect to
repay such amounts on our revolving credit facility by the end of our second
quarter of the 2004 fiscal year.

Our ability to make payments on our indebtedness, including the senior
subordinated notes, and to fund planned capital expenditures, research and
development efforts and payment of dividends to our shareholders will depend on
our ability to generate cash in the future, which is subject, in part, to
general economic, financial, competitive, legislative, regulatory and other
factors that are beyond our control.

Since the acquisition of IPC Information Systems, our cash generated from
the operations of the business has been sufficient to meet our cash needs.
Based on our forecasts, we believe that this trend will continue and our cash
flow from operations, available cash and available borrowings under our
revolving credit facility will be adequate to meet our current and long-term
liquidity needs for at least the next few years. We cannot assure you, however,
that our business will generate sufficient cash flow from operations or that
future borrowings will be available to us under the revolving credit facility
in an amount sufficient to enable us to pay our indebtedness, including the
notes, or to fund our other liquidity needs. We may need to refinance all or a
portion of our indebtedness, including the notes, on or before maturity. We
cannot assure you that we will be able to refinance any of our indebtedness,
including the notes, on commercially reasonable terms, or at all.

Contractual Obligations and Other Commercial Commitments

The following summarizes our contractual obligations at September 30,
2003, and the effect such obligations are expected to have on our liquidity and
cash flow in future periods.

|                                 |                                    |                        |         |         |  |           |       |        |  |       |        |         |  |   |       |        |  |   |         |         | 
|-------------------------------- | ---------------------------------- | ---------------------- | ------- | ------- |  | --------- | ----- | ------ |  | ----- | ------ | ------- |  | - | ----- | ------ |  | - | ------- | ------- | 
|(dollars in thousands)           |                                    | Payments Due by Period
|                                 |                                    |                       
|                                 |                                    |                        |         |         |  | Less than |       | 1-3    |  | 4-5   |        | After 5
|Contractual Obligations:         |                                    | Total                  |         | 1 year  |  | years     |       | years  |  | years
|                                 |                                    |                        |         |         |  |           |       |        |  |      
|Deferred Compensation Agreements |                                    | $                      | 5,223   |         |  | $         | 692   |        |  | $     | 1,024  |         |  | $ | 955   |        |  | $ | 2,552   |        
|Network Carrier Commitments      |                                    |                        | 2,455   |         |  |           | 2,455 |        |  |       |       |         |  |   |      |        |  |   |        |        
|Deferred Purchase Consideration  |                                    |                        | 6,722   |         |  |           | 6,722 |        |  |       |       |         |  |   |      |        |  |   |        |        
|Long-Term Debt                   |                                    |                        | 205,000 |         |  |           | 550   |        |  |       | 1,100  |         |  |   | 550   |        |  |   | 202,800 |        
|Operating Leases                 |                                    |                        | 38,023  |         |  |           | 6,703 |        |  |       | 11,182 |         |  |   | 9,785 |        |  |   | 10,353  |        
|                                 |                                    |                        |         |         |  |           |       |        |  |       |        |         |  |   |       |        |  |   |         |        
|                                 | Total Contractual Cash Obligations |                        | $       | 257,423 |  |           | $     | 17,122 |  |       | $      | 13,306  |  |   | $     | 11,290 |  |   | $       | 215,705 | 
|                                 |                                    |                        |         |         |  |           |       |        |  |       |        |         |  |   |       |        |  |   |         |        

|                                          |                              |           |                                            |        |           |       |       |       |     |       |        |       |  |   |   |   |  |   |   |   | 
|----------------------------------------- | ---------------------------- | --------- | ------------------------------------------ | ------ | --------- | ----- | ----- | ----- | --- | ----- | ------ | ----- |  | - | - | - |  | - | - | - | 
|                                          |                              |           | Amount of Commitment Expiration Per Period
|                                          |                              |           |                                           
|                                          |                              |           | Total                                      |        |           |       |       |       |     |       |        |       |  |   |   |   |  |   |  
|                                          |                              |           | Amounts                                    |        | Less than |       | 1-3   |       | 4-5 |       | Over 5
|Other Commercial Commitments:             |                              | Committed |                                            | 1 year |           | years |       | years |     | years
|                                          |                              |           |                                            |        |           |       |       |       |     |      
|Line of Credit                            |                              | $         |                                           |        |           | $     |      |       |     | $     |       |       |  | $ |  |   |  | $ |  |  
|Standby Letters of Credit                 |                              |           | 4,250                                      |        |           |       | 4,250 |       |     |       |       |       |  |   |  |   |  |   |  |  
|Guaranties for Global Crossing Affiliates |                              |           | 4,665                                      |        |           |       | 2,256 |       |     |       | 2,409  |       |  |   |  |   |  |   |  |  
|                                          |                              |           |                                            |        |           |       |       |       |     |       |        |       |  |   |   |   |  |   |   |  
|                                          | Total Commercial Commitments |           | $                                          | 8,915  |           |       | $     | 6,506 |     |       | $      | 2,409 |  |   | $ |  |  |   | $ |  | 
|                                          |                              |           |                                            |        |           |       |       |       |     |       |        |       |  |   |   |   |  |   |   |  

Recent Accounting Pronouncements

In August 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations, which requires entities to record the fair value of
the estimated liability for an asset retirement obligation in the period in
which it is incurred. When the liability is initially recorded, the entity
capitalizes an amount equal to the present value of the estimated liability by
increasing the

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carrying amount of the related long-lived asset. Over time, the liability
is accreted to its present value each period, and the capitalized cost is
depreciated over the useful life of the related asset. Upon settlement of the
liability, an entity either settles the obligation for its recorded amount or
incurs a gain or loss upon settlement. SFAS 143 is effective for fiscal years
beginning after June 15, 2002, with earlier application encouraged. We adopted
SFAS 143 on October 1, 2002. The adoption of this standard did not have a
material impact on our consolidated financial statements.

In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. SFAS 144 addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
This statement supersedes SFAS 121, Accounting for Impairment of Long-Lived
Assets and the accounting and reporting provisions of APB Opinion No. 30,
Reporting the Results of Operations  Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary and Unusual and Infrequently Occurring
Events and Transactions, for the disposal of a segment of a business (as
previously defined in that Opinion). SFAS 144 was adopted by us on October 1,
2002. The adoption of this standard did not have a material impact on our
consolidated financial statements.

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB
Statements No. 4, 44, and 62, Amendment of FASB Statement No. 13, and Technical
Corrections. SFAS 145 eliminates the requirement under SFAS No. 4, Reporting
Gains and Losses from Extinguishment of Debt, to report gains and losses from
extinguishments of debt as extraordinary items in the income statement.
Accordingly, gains or losses from extinguishments of debt for fiscal years
beginning after May 15, 2002 shall not be reported as extraordinary items
unless the extinguishment qualifies as an extraordinary item under the
provisions of Accounting Principles Board, or APB, Opinion No. 30 Reporting
the Results of Operations  Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary and Unusual and Infrequently Occurring Events and
Transactions, or APB Opinion 30. Upon adoption of this pronouncement, any gain
or loss on extinguishment of debt previously classified as an extraordinary
item in prior periods that does not meet the criteria of APB Opinion No. 30 for
such classification should be reclassified to conform with the provisions of
SFAS 145. We adopted SFAS 145 on October 1, 2002. In accordance with SFAS 145,
the $10.6 million loss from extinguishment of debt has been reclassified to Other
income (expense), net and Provision (benefit) for income taxes in the
selected financial data table for the period June 15, 2000 to September 30,
2000.

In July 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities which nullified Emerging Issues
Task Force, or EITF, Issue No. 94-3, Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity (including
Certain Costs Incurred in a Restructuring). SFAS 146 requires that a liability
for a cost associated with an exit or disposal activity be recognized when the
liability is incurred, whereas EITF No. 94-3 had recognized the liability at
the commitment date to an exit plan. We are required to adopt the provisions
of SFAS 146 effective for exit or disposal activities initiated after December
31, 2002. We adopted SFAS 146 on January 1, 2003. The adoption of this standard
did not have a material impact on our consolidated financial statements.

In November 2002, the EITF reached a consensus on Issue 00-21,
Multiple-Deliverable Revenue Arrangements. EITF 00-21 addresses how to
account for arrangements that may involve the delivery or performance of
multiple products, services, and/or rights to use assets. The consensus
mandates how to identify whether goods or services or both which are to be
delivered separately in a bundled sales arrangement should be accounted for
separately because they are separate divisions of accounting. The guidance
can affect the timing of revenue recognition for such arrangements, even though
it does not change rules governing the timing or pattern of revenue recognition
of individual items accounted for separately. The final consensus will be
applicable to agreements entered into in fiscal periods beginning after June
15, 2003 with early adoption permitted. Additionally, companies will be
permitted to apply the consensus guidance to all existing arrangements as the
cumulative effect of a change in accounting principle in accordance with APB
Opinion No. 20, Accounting Changes. The adoption of this standard did not
have a material impact on our consolidated financial statements.

In November 2002, the FASB issued Interpretation No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others, or FIN 45. This interpretation
elaborates on disclosures to be made by a guarantor in its interim and annual
financial statements with regard to its obligations under certain guarantees
that it has issued. It also clarifies that a guarantor is required to
recognize, at the inception of a guarantee, a liability for the fair value of
the obligation undertaken in issuing the guarantee. The disclosure requirements
of FIN 45 are effective for interim and annual periods ending after December
15, 2002, and we have adopted those requirements in our consolidated financial
statements. The initial recognition and initial measurement requirements of FIN
45 are effective prospectively for guarantees issued or modified after December
31, 2002. We applied FIN 45 in connection with the March 13, 2003 settlement
and rejection agreement with Global Crossing. We have reflected the fair value
of guarantees on behalf of Global Crossing in our consolidated financial
statements.

In December 2002, the FASB issued SFAS No. 148, Accounting for
Stock-Based Compensation-Transition and Disclosure. SFAS 148 amends FASB
Statement No. 123, Accounting for Stock-Based Compensation, or SFAS 123, and
provides alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based

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employee compensation. SFAS 148 also amends the disclosure requirements of
SFAS 123 to require more prominent and frequent disclosures in financial
statements about the effects of stock-based compensation. The transition
guidance and annual disclosure provisions of SFAS 148 are effective for
financial statements issued for fiscal years ending after December 15, 2002.
The disclosure provisions are effective for financial reports
containing financial statements for interim periods beginning after December
15, 2002, and are included in our consolidated financial statements.

In January 2003, the FASB issued FASB Interpretation No. 46,
Consolidation of Variable Interest Entities, or FIN 46, which requires
variable interest entities (commonly referred to as SPEs) to be consolidated
by the primary beneficiary of the entity if certain criteria are met. FIN 46 is
effective immediately for all new variable interest entities created
after January 31, 2003. For non-special purpose variable interest entities created before February 1, 2003, the provisions of FIN 46 became effective
during the first calendar quarter of 2003. We have determined that our investment in Purple Voice meets
the criteria of a variable interest entity, however, pursuant to
the recent deferrals of the adoption date of FIN 46, we have not applied FIN 46 in our fiscal year 2003
consolidated financial statements. Notwithstanding the deferral of
FIN 46, we have consolidated Purple Voice in
accordance with the requirements of Accounting Research Bulletin No. 51
Consolidated Financial Statements because we have voting
control over Purple Voice.

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133
on Derivative Instruments and Hedging Activities. SFAS 149 amends and
clarifies financial reporting for derivative instruments, including certain
derivative instruments embedded in other contracts and for hedging activities
under SFAS No. 133. SFAS 149 clarifies under what circumstances a contract with
an initial net investment meets the characteristic of a derivative, clarifies
when a derivative contains a financing component, amends the definition of an
underlying to conform it to language used in FIN 45, and amends certain other
existing pronouncements. SFAS 149 is effective for contracts entered into or
modified after June 30, 2003, and should be applied prospectively, with the
exception of certain SFAS No. 133 implementation issues that were effective for
all fiscal quarters prior to June 15, 2003. Any such implementation issues
should continue to be applied in accordance with their respective effective
dates. The adoption of SFAS 149 did not have a material impact on our
consolidated financial statements.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity.
SFAS 150 establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. SFAS 150 applies specifically to a number of financial instruments that
companies have historically presented within their financial statements either
as equity or between the liabilities section and the equity section, rather
than as liabilities. SFAS 150 is effective for financial instruments entered
into or modified after May 31, 2003, and otherwise is effective at the
beginning of the first interim period beginning after June 15, 2003. The
adoption of SFAS 150 did not have any impact on our consolidated
financial statements.

Summary of Critical Accounting Policies

The discussion and analysis of our financial condition and results of
operations are based upon our consolidated financial statements, which have
been prepared in accordance with accounting principles generally accepted in
the United States. The preparation of these financial statements requires us to
make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities. On an ongoing basis, we continually evaluate our estimates. We
base our estimates on historical experience and on various other assumptions
that are believed to be reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates.

We believe the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of our consolidated
financial statements.

Revenue Recognition

Revenue from product sales and installations is recognized upon completion
of the installation or, for contracts that are completed in stages and include
contract specified milestones, upon achieving such contract milestones, and
the occurrence of the delivery and customer acceptance of a fully functional system. Revenue from
sales to distributors is recognized upon shipment. Customers are generally
progress-billed prior to the completion of the installations. The revenue
related to these advance payments is deferred until the system installations
are completed or specified milestones are attained. Costs incurred on
uncompleted contracts and stages are accumulated and recorded as inventory
awaiting installation. In addition, contracts for annual recurring turret and
I.T.S. services are generally billed in advance, and are recorded as revenue
ratably (on a monthly basis) over the contractual periods. Revenue from MACs to
turret systems is recognized upon completion, which generally occurs in the
same month or the month

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following the order for services. Revenue from our Network Services
division is billed in advance and recorded ratably (on a monthly basis) over
the contractual period, which range from three months to one year.

Allowance for Doubtful Accounts

We evaluate the collectibility of our accounts receivable based on a
combination of factors. Where we are aware of circumstances that may impair a
specific customers ability to meet its financial obligations to us, we record
a specific allowance against amounts due to us and thereby reduce the net
receivable to the amount we reasonably believe is likely to be collected. For
all other customers, we recognize allowances for doubtful accounts based on the
length of time the receivables are outstanding, industry and geographic
concentrations, the current business environment and our historical experience.
If the financial condition of our customers deteriorates or if economic
conditions worsen, additional allowances may be required.

Inventories

Inventories are stated at the lower of FIFO (first in, first out) cost or
market but not in excess of net realizable value. Inventory costs include all
direct manufacturing costs and applied overhead. Allowances are established
based on managements estimate of inventory on hand that is potentially
obsolete or for which its market value is below cost.

Impairment of Long-Lived Assets

We review long-lived assets, including property, plant and equipment and
definite lived intangible assets, for impairment whenever events or changes in
business circumstances indicate that the carrying amount of the assets may not
be fully recoverable. An impairment loss would be recognized when estimated
undiscounted future cash flows expected to result from the use of the assets
and its eventual disposition is less than its carrying amount. Impairment, if
any, is assessed using discounted cash flows. No impairments have occurred to
date.

Goodwill and Other Intangible Assets

Goodwill represents the excess of the cost over the net of the fair value
of the identifiable tangible and intangible assets acquired and the fair value
of liabilities assumed in acquisitions. For fiscal year ended September 30,
2001, and the period from October 1, 2001 to December 20, 2001, the costs
allocated to goodwill were amortized on a straight-line basis over the periods
benefited, principally 10 years, and resulted in amortization of $21.1 million
and $4.7 million, respectively.

We adopted SFAS No. 142 effective upon the acquisition of IPC Information
Systems and, in accordance with SFAS No. 142, there is no amortization of
goodwill and intangible assets that have indefinite useful lives for the period
from November 15, 2001 (date of initial capitalization) to September 30, 2002
and the fiscal year ended September 30, 2003. However, such assets are tested for impairment
annually using the two-step process specifically provided in SFAS No. 142.
Other intangible assets are carried at cost. Technology is amortized over its
estimated useful life between 3 to 7 years, customer relationships are
amortized over its estimated useful life of 8 to 20 years, and proprietary
software is amortized over its estimated useful life of 7 years. Trade name has
been deemed to have an indefinite life and will not be subject to amortization
expense, but instead will be subject to annual impairment tests in accordance
with the provisions of SFAS No. 142. In determining that the trade name has an
indefinite life, we considered the following factors: the ongoing active use of
our trade name, which is directly associated with our market leading position
in the turret business, the lack of any legal, regulatory or contractual
provisions that may limit the useful life of the trade name, the lack of any
substantial costs to maintain the asset, the positive impact on our trade name
generated by our other ongoing business activities (including marketing and
development of new technology and new products) and our commitment to products
branded with our trade name over our 30 year history.

We completed the required annual impairment test as of July 1, 2003 (the
first day of the fourth quarter of fiscal year 2003), and concluded that there
was no impairment to our recorded goodwill or trade name. We believe the
recorded values of goodwill and trade name in the amounts of $83.1 million and
$18.9 million, respectively, at September 30, 2003 are fully recoverable.

StockBased Compensation

As permitted by SFAS 123, we have elected to follow APB Opinion No. 25,
Accounting for Stock Issued to Employees and related interpretations in
accounting for our employee option plans. Under APB 25, no compensation expense
is recognized at the time of an option grant if the exercise price of the
employee stock option is fixed and equals or exceeds the fair market value of
the underlying common stock on the date of the grant and the number of shares
to be issued pursuant to the exercise of such options are fixed on the date of
the grant.

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Income Taxes

In accordance with SFAS No. 109, Accounting for Income Taxes, or SFAS
109, we recognize deferred income taxes for the tax consequences in future
years of differences between the tax basis of assets and liabilities and their
financial reporting amounts at each year end, based on enacted tax laws and
statutory tax rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount that is more likely than
not to be realized. The provision for income taxes is the tax payable for the
period and the change during the period in deferred tax assets and liabilities.
Although realization is not assured, management believes it is more likely than
not that the recorded deferred tax assets will be realized. Additionally,
deferred tax liabilities are regularly reviewed to confirm that the amounts
recorded are appropriately stated. All such evaluations require significant
management judgments.

For periods prior to the acquisition of IPC Information Systems, we had
filed a consolidated federal tax return and separate and combined state tax
returns with our parent. For purposes of the accompanying combined financial
statements for the period October 1, 2001 to December 20, 2001, income taxes
have been prepared in accordance with SFAS 109 and SEC Staff Accounting
Bulletin Topic 1B, Allocation of Expenses and Related Disclosure in Financial
Statements of Subsidiaries, utilizing the separate return method. Resulting
payables for taxes have been recorded as adjustments to the intercompany
accounts. We are now required to file separate tax returns.

Business Combinations

During the 2003 fiscal year, the acquisition of Gains International (US),
Inc. and Gains International (UK) Ltd. required certain estimates and judgments
related to the fair value of assets acquired and liabilities assumed. Certain
of the liabilities are subjective in nature. These liabilities have been
reflected in the purchase accounting based upon the most recent information
available, and principally include Federal and state payroll taxes, state sales
taxes, state income taxes, value added tax, or VAT, and income taxes in several
foreign countries. The ultimate settlement of such liabilities may be for
amounts which are different from the amounts presently recorded.

Other Matters

We do not have any off balance sheet financial arrangements.




Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market risks relating to our operations result primarily from changes in
interest rates and changes in foreign exchange rates. We monitor our interest
rate and foreign exchange rate exposures on an ongoing basis. We have not
entered into any interest rate hedging contracts.

As an international company, we are exposed to foreign currency risk. In
the past, we entered into foreign currency hedging contracts, commonly known as
collars. For the 2003 fiscal year, we did not enter into any foreign currency
hedging instruments or other derivatives.

The following table provides information about our financial instruments
that are sensitive to changes in interest rates. For debt obligations, the
table presents principal cash flows and related weighted average interest rates
by expected maturity dates. The fair market value of our long-term debt at
September 30, 2003 is shown in the table below.

|                      |               |                                                                                                |  |               |       |      |  |                           |     |      |  |      |     |            |  |       |     |  |  |   |     |  |  |   |      |  |  |   |       |  |  |   |       | 
|--------------------- | ------------- | ---------------------------------------------------------------------------------------------- |  | ------------- | ----- | ---- |  | ------------------------- | --- | ---- |  | ---- | --- | ---------- |  | ----- | --- |  |  | - | --- |  |  | - | ---- |  |  | - | ----- |  |  | - | ----- | 
|                      |               |                                                                                                |  |               |       |      |  | Future Principal Payments
|                      |               |                                                                                                |  | Fair Value on |       |     
|(Dollars in millions) |               | September 30, 2003                                                                             |  | 2004          |       | 2005 |  | 2006                      |     | 2007 |  | 2008 |     | Thereafter |  | Total
|                      |               |                                                                                                |  |               |       |      |  |                           |     |      |  |      |     |            |  |      
|Long-Term Debt:       |               |                                                                                                |  |               |       |      |  |                           |     |      |  |      |     |            |  |       |     |  |  |   |     |  |  |   |      |  |  |   |       |  |  |  
|                      | Fixed Rate    |                                                                                                |  |               |       |      |  |                           |     |      |  |      |     |            |  |       |     |  |  |   |     |  |  |   |      |  |  |   |       |  |  |   |      
|                      |               | Senior Subordinated
Notes, interest
payable at 11.50%,
maturing 2009                           |  | $             | 153.4 |      |  | $                         |    |      |  | $    |    |            |  | $     |    |  |  | $ |    |  |  | $ |     |  |  | $ | 150.0 |  |  | $ | 150.0 | 
|                      |               |                                                                                                |  |               |       |      |  |                           |     |      |  |      |     |            |  |       |     |  |  |   |     |  |  |   |      |  |  |   |       |  |  |   |       | 
|                      | Variable Rate |                                                                                                |  |               |       |      |  |                           |     |      |  |      |     |            |  |       |     |  |  |   |     |  |  |   |      |  |  |   |       |  |  |   |      
|                      |               | Senior Secured Credit
Facilities  Term
Loan (interest
payable at 5.12% at September 30, 2003) |  | $             | 55.3  |      |  | $                         | 0.5 |      |  | $    | 0.6 |            |  | $     | 0.5 |  |  | $ | 0.6 |  |  | $ | 52.8 |  |  | $ |      |  |  | $ | 55.0  | 
|                      |               |                                                                                                |  |               |       |      |  |                           |     |      |  |      |     |            |  |       |     |  |  |   |     |  |  |   |      |  |  |   |       |  |  |   |       | 

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Item 8. Financial Statements and Supplementary Data

The following consolidated financial statements and the related notes
thereto of IPC Acquisition Corp., the Report of Independent Auditors and
Reprinted Copy of the Report of Independent Public Accountants are filed as a
part of this Form 10K.

|                                                                                                                                                                                                                                                                                               |  |      |    | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                                                                                                                                                                                                               |  | Page
|                                                                                                                                                                                                                                                                                               |  |     
|Report of Independent Auditors                                                                                                                                                                                                                                                                 |  |      | 33 | 
|Reprinted Copy of Report of Independent Public Accountants                                                                                                                                                                                                                                     |  |      | 34 | 
|Consolidated Balance Sheets as of September 30, 2002 and September 30, 2003                                                                                                                                                                                                                    |  |      | 35 | 
|Consolidated Statements of Operations for the fiscal year ended September
30, 2001, the period from October 1, 2001 to December 20, 2001, the period
from November 15, 2001 (date of initial capitalization) to September 30,
2002 and the fiscal year      ended September 30, 2003           |  |      | 36 | 
|Consolidated Statements of Cash Flows for the fiscal year ended September
30, 2001, the period from October 1, 2001 to December 20, 2001, the period
from November 15, 2001 (date of initial capitalization) to September 30,
2002 and the fiscal year      ended September 30, 2003           |  |      | 37 | 
|Consolidated Statements of Stockholders Equity for the fiscal year ended
September 30, 2001, the period from October 1, 2001 to December 20, 2001,
the period from November 15, 2001 (date of initial capitalization) to
September 30, 2002 and the fiscal year      ended September 30, 2003 |  |      | 38 | 
|Notes to Consolidated Financial Statements                                                                                                                                                                                                                                                     |  |      | 39 | 

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IPC ACQUISITION CORP.

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
IPC Acquisition Corp.

We have audited the accompanying consolidated balance sheet of IPC
Acquisition Corp. as of September 30, 2002 and September 30, 2003, and the
related consolidated statements of operations, stockholders equity and cash
flows for the period from November 15, 2001 (date of initial capitalization) to
September 30, 2002 and the fiscal year ended September 30, 2003 and the
combined statements of operations, cash flows and stockholders equity of IPC
Information Systems, including the Trading Systems division and the Information
Transport Systems division, operating divisions of a wholly owned subsidiary of
Global Crossing Ltd., and Asia Global Crossing IPC Trading Systems Australia
Pty. Ltd. (the Predecessor), for the period from October 1, 2001 to December
20, 2001 (the Predecessor Period). Our audits also included the financial
statement schedule listed in the Index at Item 15(a) for the periods October 1,
2001 through September 30, 2003. These financial statements and schedule are
the responsibility of the Companys management. Our responsibility is to
express an opinion on these financial statements and schedule based on our
audits. The combined statements of operations, stockholders
equity, and cash flows of IPC Information Systems for the year ended September
30, 2001 were audited by other auditors who have ceased operations. Those
auditors expressed an unqualified opinion on those financial statements in
their report dated December 4, 2001.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of IPC
Acquisition Corp. at September 30, 2002 and September 30, 2003 and the
consolidated results of its operations and its cash flows for the period from
November 15, 2001 to September 30, 2002 and the fiscal year ended September 30,
2003 and the combined results of operations and cash flows of IPC Information
Systems for the period from October 1, 2001 to December 20, 2001, in conformity
with accounting principles generally accepted in the United States. Also, in
our opinion, the related financial statement schedule for the periods October
1, 2001 through September 30, 2003, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.

| |  |  |  |  |  |                      
| |  |  |  |  |  | ---------------------
| |  |  |  |  |  | /s/ ERNST
& YOUNG LLP

MetroPark, New Jersey
November 24, 2003

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REPRINTED COPY OF REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To IPC Information Systems:

We have audited the accompanying combined balance sheets of the entities
identified in Note 1, collectively referred to as IPC Information Systems,
including the Trading Systems division and Information Transport Systems
division, operating divisions of a wholly owned subsidiary of Global Crossing
Ltd., and Asia Global Crossing IPC Trading Systems Australia Pty. Ltd., an
operating division of a wholly owned subsidiary of Asia Global Crossing Ltd.,
as of September 30, 2000 and 2001, and the related combined statements of
operations, capital, and cash flows for the year ended September 30, 1999, the
period from October 1, 1999 to June 14, 2000 (the Predecessor Periods), the
period from June 15, 2000 to September 30, 2000 and the year ended September
30, 2001 (the Successor Periods). These combined financial statements are the
responsibility of the Companys management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of IPC Information Systems as
of September 30, 2000 and 2001, and the results of their operations and their
cash flows for the year ended September 30, 1999, the period from October 1,
1999 to June 14, 2000, the period from June 15, 2000 to September 30, 2000 and
the year ended September 30, 2001, in conformity with accounting principles
generally accepted in the United States.

ARTHUR ANDERSEN LLP

Roseland, New Jersey

December 4, 2001 (except with respect to the matters discussed in Note 15 as to
which the date is January 16, 2002)




|Note: |  | Reprinted above is a copy of the report previously expressed by such
firm which has ceased operations. The reprinting of this report is not
equivalent to a current reissuance of such report as would be required if
such firm was still operating. The consolidated balance sheet as of
September 30, 2000 and 2001 and the combined statement of operations,
capital and cash flows for the year ended September 30, 1999, the period
from October 1, 1999 to June 14, 2000, and the period from June 15, 2000
to September 30, 2000 referred to in this report have not been included in
the accompanying financial statements or schedule. Certain items in the
September 30, 2001 financial statements have been reclassified from
amounts previously reported to conform to the presentation of the
September 30, 2003 financial statements. Because such firm has not
consented to the inclusion of this report in this annual report, it may be
more difficult for you to seek remedies against such firm and your ability
to seek relief against such firm may be impaired.
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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IPC ACQUISITION CORP.
CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Amounts)

|                                     |                                                                                                                                                                                              |                                            |   |         |         |               |   |         |         |  |  | 
|------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | - | ------- | ------- | ------------- | - | ------- | ------- |  |  | 
|                                     |                                                                                                                                                                                              |                                            |   |         |         | September 30,
|                                     |                                                                                                                                                                                              |                                            |   |         |         |              
|                                     |                                                                                                                                                                                              |                                            |   |         |         | 2002          |   | 2003   
|                                     |                                                                                                                                                                                              |                                            |   |         |         |               |   |        
|Assets                               |                                                                                                                                                                                              |                                            |   |         |         |               |   |        
|Assets:                              |                                                                                                                                                                                              |                                            |   |         |         |               |   |        
|                                     | Cash                                                                                                                                                                                         |                                            | $ | 25,294  |         |               | $ | 25,800  |        
|                                     | Restricted cash                                                                                                                                                                              |                                            |   | 7,272   |         |               |   |        |        
|                                     | Accounts receivable, net of allowance of $1,245 and $1,103, respectively                                                                                                                     |                                            |   | 52,468  |         |               |   | 60,201  |        
|                                     | Inventories, net                                                                                                                                                                             |                                            |   | 22,218  |         |               |   | 30,396  |        
|                                     | Prepaid and other current assets                                                                                                                                                             |                                            |   | 4,614   |         |               |   | 5,523   |        
|                                     |                                                                                                                                                                                              |                                            |   |         |         |               |   |        
|                                     |                                                                                                                                                                                              | Total current assets                       |   |         | 111,866 |               |   |         | 121,920 | 
|                                     | Property, plant and equipment, net                                                                                                                                                           |                                            |   | 21,004  |         |               |   | 24,419  |        
|                                     | Goodwill                                                                                                                                                                                     |                                            |   | 72,279  |         |               |   | 83,079  |        
|                                     | Trade name                                                                                                                                                                                   |                                            |   | 18,462  |         |               |   | 18,892  |        
|                                     | Technology, net                                                                                                                                                                              |                                            |   | 39,987  |         |               |   | 34,829  |        
|                                     | Customer relationships, net                                                                                                                                                                  |                                            |   | 150,683 |         |               |   | 146,364 |        
|                                     | Deferred financing costs, net                                                                                                                                                                |                                            |   | 15,116  |         |               |   | 14,146  |        
|                                     | Other assets                                                                                                                                                                                 |                                            |   | 835     |         |               |   | 1,261   |        
|                                     |                                                                                                                                                                                              |                                            |   |         |         |               |   |        
|                                     |                                                                                                                                                                                              | Total assets                               |   | $       | 430,232 |               |   | $       | 444,910 | 
|                                     |                                                                                                                                                                                              |                                            |   |         |         |               |   |        
|Liabilities and Stockholders Equity |                                                                                                                                                                                              |                                            |   |         |         |               |   |        
|Liabilities:                         |                                                                                                                                                                                              |                                            |   |         |         |               |   |        
|                                     | Current portion of long term debt                                                                                                                                                            |                                            | $ | 6,460   |         |               | $ | 550     |        
|                                     | Accounts payable                                                                                                                                                                             |                                            |   | 4,530   |         |               |   | 2,787   |        
|                                     | Accrued expenses and other current liabilities                                                                                                                                               |                                            |   | 24,195  |         |               |   | 28,541  |        
|                                     | Income taxes payable                                                                                                                                                                         |                                            |   | 2,373   |         |               |   | 4,208   |        
|                                     | Customer advances on installation contracts                                                                                                                                                  |                                            |   | 11,232  |         |               |   | 18,989  |        
|                                     | Deferred revenue on maintenance contracts                                                                                                                                                    |                                            |   | 12,261  |         |               |   | 13,128  |        
|                                     | Deferred purchase consideration and obligations                                                                                                                                              |                                            |   | 7,272   |         |               |   | 6,722   |        
|                                     | Current portion of guaranties on former parent obligations                                                                                                                                   |                                            |   |        |         |               |   | 1,353   |        
|                                     |                                                                                                                                                                                              |                                            |   |         |         |               |   |        
|                                     |                                                                                                                                                                                              | Total current liabilities                  |   |         | 68,323  |               |   |         | 76,278  | 
|                                     | Term loan                                                                                                                                                                                    |                                            |   | 64,602  |         |               |   | 54,450  |        
|                                     | Senior subordinated notes                                                                                                                                                                    |                                            |   | 150,000 |         |               |   | 150,000 |        
|                                     | Deferred taxes, net                                                                                                                                                                          |                                            |   | 7,190   |         |               |   | 12,182  |        
|                                     | Deferred compensation                                                                                                                                                                        |                                            |   | 3,119   |         |               |   | 2,936   |        
|                                     | Guaranties on former parent obligations and other long term liabilities                                                                                                                      |                                            |   |        |         |               |   | 1,885   |        
|                                     |                                                                                                                                                                                              |                                            |   |         |         |               |   |        
|                                     |                                                                                                                                                                                              | Total liabilities                          |   |         | 293,234 |               |   |         | 297,731 | 
|                                     |                                                                                                                                                                                              |                                            |   |         |         |               |   |        
|Commitments and Contingencies        |                                                                                                                                                                                              |                                            |   |         |         |               |   |        
|Stockholders Equity:                |                                                                                                                                                                                              |                                            |   |         |         |               |   |        
|                                     | Common stock, $0.01 par value (authorized 25,000,000 shares; 14,060,000
shares issued and outstanding at September 30, 2002; 14,724,380 shares
issued and outstanding at September 30, 2003) |                                            |   | 141     |         |               |   | 147     |        
|                                     | Paid in capital                                                                                                                                                                              |                                            |   | 140,159 |         |               |   | 145,846 |        
|                                     | Notes receivable for purchases of common stock                                                                                                                                               |                                            |   | (383    | )       |               |   | (393    | )      
|                                     | Accumulated deficit                                                                                                                                                                          |                                            |   | (9,200  | )       |               |   | (5,161  | )      
|                                     | Accumulated other comprehensive income                                                                                                                                                       |                                            |   | 6,281   |         |               |   | 6,740   |        
|                                     |                                                                                                                                                                                              |                                            |   |         |         |               |   |        
|                                     |                                                                                                                                                                                              | Total stockholders equity                 |   |         | 136,998 |               |   |         | 147,179 | 
|                                     |                                                                                                                                                                                              |                                            |   |         |         |               |   |        
|                                     |                                                                                                                                                                                              | Total liabilities and stockholders equity |   | $       | 430,232 |               |   | $       | 444,910 | 
|                                     |                                                                                                                                                                                              |                                            |   |         |         |               |   |        

The accompanying notes are an integral part of the consolidated financial statements.

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IPC ACQUISITION CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands)

|                                                    |                                 |                                   |         |               |         |                   |         |                    |         |               |         |         |         |   |         |         |         | 
|--------------------------------------------------- | ------------------------------- | --------------------------------- | ------- | ------------- | ------- | ----------------- | ------- | ------------------ | ------- | ------------- | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                                                    |                                 |                                   |         | Predecessors  |         |                   |         |                    |         |               |         |        
|                                                    |                                 |                                   |         |               |         |                   |         |                    |         |               |         |        
|                                                    |                                 |                                   |         | Fiscal Year   |         | Period from       |         | Period from        |         | Fiscal Year  
|                                                    |                                 |                                   |         | Ended         |         | October 1, 2001   |         | November 15, 2001  |         | Ended        
|                                                    |                                 |                                   |         | September 30, |         | to                |         | to                 |         | September 30,
|                                                    |                                 |                                   |         | 2001          |         | December 20, 2001 |         | September 30, 2002 |         | 2003         
|                                                    |                                 |                                   |         |               |         |                   |         |                    |         |              
|Revenue:                                            |                                 |                                   |         |               |         |                   |         |                    |         |               |         |         |         |   |         |        
|                                                    | Product sales and installations |                                   | $       | 181,267       |         |                   | $       | 35,691             |         |               | $       | 156,503 |         |   | $       | 156,793 |        
|                                                    | Service                         |                                   |         | 98,430        |         |                   |         | 23,089             |         |               |         | 76,281  |         |   |         | 107,963 |        
|                                                    |                                 |                                   |         |               |         |                   |         |                    |         |               |         |         |         |   |         |        
|                                                    |                                 |                                   | 279,697 |               |         |                   | 58,780  |                    |         |               | 232,784 |         |         |   | 264,756 |        
|                                                    |                                 |                                   |         |               |         |                   |         |                    |         |               |         |         |         |   |         |        
|Cost of goods sold (depreciation shown
separately): |                                 |                                   |         |               |         |                   |         |                    |         |               |         |         |         |   |         |        
|                                                    | Product sales and installations |                                   |         | 106,252       |         |                   |         | 18,869             |         |               |         | 119,605 |         |   |         | 94,401  |        
|                                                    | Service                         |                                   |         | 58,349        |         |                   |         | 13,953             |         |               |         | 41,528  |         |   |         | 55,122  |        
|                                                    | Depreciation and amortization   |                                   |         | 834           |         |                   |         | 216                |         |               |         | 815     |         |   |         | 1,876   |        
|                                                    |                                 |                                   |         |               |         |                   |         |                    |         |               |         |         |         |   |         |        
|                                                    |                                 |                                   | 165,435 |               |         |                   | 33,038  |                    |         |               | 161,948 |         |         |   | 151,399 |        
|                                                    |                                 |                                   |         |               |         |                   |         |                    |         |               |         |         |         |   |         |        
|                                                    |                                 | Gross profit                      |         |               | 114,262 |                   |         |                    | 25,742  |               |         |         | 70,836  |   |         |         | 113,357 | 
|Research and development                            |                                 |                                   | 15,502  |               |         |                   | 3,519   |                    |         |               | 11,617  |         |         |   | 11,713  |        
|Selling, general and administrative expense         |                                 |                                   | 33,541  |               |         |                   | 17,110  |                    |         |               | 34,576  |         |         |   | 47,313  |        
|Depreciation and amortization                       |                                 |                                   | 47,801  |               |         |                   | 10,521  |                    |         |               | 14,250  |         |         |   | 19,376  |        
|                                                    |                                 |                                   |         |               |         |                   |         |                    |         |               |         |         |         |   |         |        
|                                                    | Income (loss) from operations   |                                   |         | 17,418        |         |                   |         | (5,408             | )       |               |         | 10,393  |         |   |         | 34,955  |        
|Other income (expense):                             |                                 |                                   |         |               |         |                   |         |                    |         |               |         |         |         |   |         |        
|                                                    | Interest expense, net           |                                   |         | (27,871       | )       |                   |         | (5,987             | )       |               |         | (21,533 | )       |   |         | (25,146 | )      
|                                                    | Other income (expense), net     |                                   |         | 2,028         |         |                   |         | 49                 |         |               |         | (346    | )       |   |         | 2,078   |        
|                                                    |                                 |                                   |         |               |         |                   |         |                    |         |               |         |         |         |   |         |        
|                                                    |                                 | Income (loss) before income taxes |         |               | (8,425  | )                 |         |                    | (11,346 | )             |         |         | (11,486 | ) |         |         | 11,887  | 
|Income tax provision (benefit)                      |                                 |                                   | 4,406   |               |         |                   | (318    | )                  |         |               | (2,286  | )       |         |   | 7,848   |        
|                                                    |                                 |                                   |         |               |         |                   |         |                    |         |               |         |         |         |   |         |        
|Net income (loss)                                   |                                 | $                                 | (12,831 | )             |         | $                 | (11,028 | )                  |         | $             | (9,200  | )       |         | $ | 4,039   |        
|                                                    |                                 |                                   |         |               |         |                   |         |                    |         |               |         |         |         |   |         |        

The accompanying notes are an integral part of the consolidated financial statements.

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IPC ACQUISITION CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)

|                                                                                                      |                                                           |                                           |         |               |        |                   |         |                    |        |               |          |          |        |   |         |         |        | 
|----------------------------------------------------------------------------------------------------- | --------------------------------------------------------- | ----------------------------------------- | ------- | ------------- | ------ | ----------------- | ------- | ------------------ | ------ | ------------- | -------- | -------- | ------ | - | ------- | ------- | ------ | 
|                                                                                                      |                                                           |                                           |         | Predecessors  |        |                   |         |                    |        |               |          |         
|                                                                                                      |                                                           |                                           |         |               |        |                   |         |                    |        |               |          |         
|                                                                                                      |                                                           |                                           |         | Fiscal Year   |        | Period from       |         | Period from        |        | Fiscal Year  
|                                                                                                      |                                                           |                                           |         | Ended         |        | October 1, 2001   |         | November 15, 2001  |        | Ended        
|                                                                                                      |                                                           |                                           |         | September 30, |        | to                |         | to                 |        | September 30,
|                                                                                                      |                                                           |                                           |         | 2001          |        | December 20, 2001 |         | September 30, 2002 |        | 2003         
|                                                                                                      |                                                           |                                           |         |               |        |                   |         |                    |        |              
|Cash flows from operating activities:                                                                 |                                                           |                                           |         |               |        |                   |         |                    |        |               |          |          |        |   |         |        
|Net income (loss)                                                                                     |                                                           | $                                         | (12,831 | )             |        | $                 | (11,028 | )                  |        | $             | (9,200   | )        |        | $ | 4,039   |        
|Adjustments to reconcile net income (loss) to net
cash provided by operating activities:              |                                                           |                                           |         |               |        |                   |         |                    |        |               |          |          |        |   |         |        
|                                                                                                      | Depreciation and amortization                             |                                           |         | 6,992         |        |                   |         | 1,393              |        |               |          | 3,951    |        |   |         | 6,771   |       
|                                                                                                      | Amortization of goodwill and intangibles                  |                                           |         | 41,643        |        |                   |         | 9,344              |        |               |          | 11,114   |        |   |         | 14,481  |       
|                                                                                                      | Amortization of deferred financing costs                  |                                           |         |              |        |                   |         |                   |        |               |          | 2,304    |        |   |         | 2,555   |       
|                                                                                                      | Provision for doubtful accounts                           |                                           |         | 793           |        |                   |         | 1,018              |        |               |          | 1,288    |        |   |         | 374     |       
|                                                                                                      | Deferred income taxes                                     |                                           |         | (13,148       | )      |                   |         | (4,761             | )      |               |          | (7,170   | )      |   |         | 1,453   |       
|                                                                                                      | Other income from guarantees on former parent
obligations |                                           |         |              |        |                   |         |                   |        |               |          |         |        |   |         | (678    | )     
|                                                                                                      | Employee deferred compensation charge                     |                                           |         | (29           | )      |                   |         | (19                | )      |               |          | (77      | )      |   |         | (124    | )     
|Changes in operating assets and liabilities:                                                          |                                                           |                                           |         |               |        |                   |         |                    |        |               |          |          |        |   |         |        
|                                                                                                      | Accounts receivables                                      |                                           |         | (1,151        | )      |                   |         | 4,702              |        |               |          | 17,957   |        |   |         | (5,765  | )     
|                                                                                                      | Inventories                                               |                                           |         | (1,056        | )      |                   |         | 1,823              |        |               |          | 59,557   |        |   |         | (8,164  | )     
|                                                                                                      | Prepaids and other current assets                         |                                           |         | 4,429         |        |                   |         | (281               | )      |               |          | (1,414   | )      |   |         | (1,506  | )     
|                                                                                                      | Other assets                                              |                                           |         | (28           | )      |                   |         | 322                |        |               |          | (154     | )      |   |         | 21      |       
|                                                                                                      | Accounts payable and accrued expenses                     |                                           |         | (18,894       | )      |                   |         | 7,019              |        |               |          | (10,972  | )      |   |         | (4,466  | )     
|                                                                                                      | Income taxes payable                                      |                                           |         | 3,147         |        |                   |         | (988               | )      |               |          | 2,948    |        |   |         | 1,767   |       
|                                                                                                      | Customer advances and deferred revenue                    |                                           |         | 20,816        |        |                   |         | 9,326              |        |               |          | (37,627  | )      |   |         | 8,600   |       
|                                                                                                      | Other liabilities                                         |                                           |         | 2,623         |        |                   |         | (2,623             | )      |               |          |         |        |   |         |        |       
|                                                                                                      |                                                           |                                           |         |               |        |                   |         |                    |        |               |          |          |        |   |         |        
|                                                                                                      |                                                           | Net cash provided by operating activities |         |               | 33,306 |                   |         |                    | 15,247 |               |          |          | 32,505 |   |         |         | 19,358 | 
|                                                                                                      |                                                           |                                           |         |               |        |                   |         |                    |        |               |          |          |        |   |         |        
|Cash flows from investing activities:                                                                 |                                                           |                                           |         |               |        |                   |         |                    |        |               |          |          |        |   |         |        
|Capital expenditures                                                                                  |                                                           |                                           | (9,370  | )             |        |                   | (1,902  | )                  |        |               | (6,506   | )        |        |   | (7,527  | )      
|Cash payments in connection with Global Crossing
settlement                                           |                                                           |                                           |        |               |        |                   |        |                    |        |               |         |          |        |   | (5,200  | )      
|Proceeds from restricted cash account and other
amounts in connection with Global Crossing Settlement |                                                           |                                           |        |               |        |                   |        |                    |        |               |         |          |        |   | 9,419   |        
|Payments for acquisitions, net of cash acquired                                                       |                                                           |                                           |        |               |        |                   |        |                    |        |               | (345,746 | )        |        |   | 2,799   |        
|                                                                                                      |                                                           |                                           |         |               |        |                   |         |                    |        |               |          |          |        |   |         |        
|                                                                                                      | Net cash used in investing activities                     |                                           |         | (9,370        | )      |                   |         | (1,902             | )      |               |          | (352,252 | )      |   |         | (509    | )     
|                                                                                                      |                                                           |                                           |         |               |        |                   |         |                    |        |               |          |          |        |   |         |        
|Cash flows from financing activities:                                                                 |                                                           |                                           |         |               |        |                   |         |                    |        |               |          |          |        |   |         |        
|Repayments of intercompany borrowings                                                                 |                                                           |                                           | (23,186 | )             |        |                   | (15,134 | )                  |        |               |         |          |        |   |        |        
|Principal payments on capital leases                                                                  |                                                           |                                           | (234    | )             |        |                   |        |                    |        |               |         |          |        |   |        |        
|Debt issue costs for term loan amendment                                                              |                                                           |                                           |        |               |        |                   |        |                    |        |               |         |          |        |   | (310    | )      
|Principal repayments on term loan                                                                     |                                                           |                                           |        |               |        |                   |        |                    |        |               | (33,938  | )        |        |   | (18,616 | )      
|Proceeds from term loan, net of issuance costs                                                        |                                                           |                                           |        |               |        |                   |        |                    |        |               | 98,600   |          |        |   | 1,279   |        
|Proceeds from senior subordinated notes, net of
issuance costs                                        |                                                           |                                           |        |               |        |                   |        |                    |        |               | 138,980  |          |        |   |        |        
|Proceeds from equity issuances, net                                                                   |                                                           |                                           |        |               |        |                   |        |                    |        |               | 139,917  |          |        |   |        |        
|                                                                                                      |                                                           |                                           |         |               |        |                   |         |                    |        |               |          |          |        |   |         |        
|                                                                                                      | Net cash provided by (used in) financing activities       |                                           |         | (23,420       | )      |                   |         | (15,134            | )      |               |          | 343,559  |        |   |         | (17,647 | )     
|                                                                                                      |                                                           |                                           |         |               |        |                   |         |                    |        |               |          |          |        |   |         |        
|Effect of exchange rate changes on cash                                                               |                                                           |                                           | 868     |               |        |                   | (1,996  | )                  |        |               | 1,482    |          |        |   | (696    | )      
|                                                                                                      |                                                           |                                           |         |               |        |                   |         |                    |        |               |          |          |        |   |         |        
|                                                                                                      | Net increase (decrease) in cash                           |                                           |         | 1,384         |        |                   |         | (3,785             | )      |               |          | 25,294   |        |   |         | 506     |       
|Cash, beginning of period                                                                             |                                                           |                                           | 3,152   |               |        |                   | 4,536   |                    |        |               |         |          |        |   | 25,294  |        
|                                                                                                      |                                                           |                                           |         |               |        |                   |         |                    |        |               |          |          |        |   |         |        
|Cash, end of period                                                                                   |                                                           | $                                         | 4,536   |               |        | $                 | 751     |                    |        | $             | 25,294   |          |        | $ | 25,800  |        
|                                                                                                      |                                                           |                                           |         |               |        |                   |         |                    |        |               |          |          |        |   |         |        
|Supplemental disclosures of cash flow information:                                                    |                                                           |                                           |         |               |        |                   |         |                    |        |               |          |          |        |   |         |        
|                                                                                                      | Cash paid during the periods for:                         |                                           |         |               |        |                   |         |                    |        |               |          |          |        |   |         |         |       
|                                                                                                      |                                                           | Income taxes                              |         | $             | 2,755  |                   |         | $                  | 1,338  |               |          | $        | 2,574  |   |         | $       | 5,226  | 
|                                                                                                      |                                                           |                                           |         |               |        |                   |         |                    |        |               |          |          |        |   |         |        
|                                                                                                      |                                                           | Interest                                  |         | $             | 478    |                   |         | $                  | 66     |               |          | $        | 15,005 |   |         | $       | 22,808 | 
|                                                                                                      |                                                           |                                           |         |               |        |                   |         |                    |        |               |          |          |        |   |         |        
|Supplemental disclosures of non-cash investing
activities:                                            |                                                           |                                           |         |               |        |                   |         |                    |        |               |          |          |        |   |         |        
|Common stock issued for the Gains acquisition                                                         |                                                           |                                           |         |               |        |                   |         |                    |        |               |          |          |        | $ | 5,693   |        
|                                                                                                      |                                                           |                                           |         |               |        |                   |         |                    |        |               |          |          |        |   |         |        

The accompanying notes are an integral part of the consolidated financial statements.

37



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##### Table of Contents



IPC ACQUISITION CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(In Thousands)

|                                                 |                                                            |   |     |        |  |         |         |              |   |              |     |               |  |           |         |          |   |               |        |            |   |   |      |       |   |   |         |         |   | 
|------------------------------------------------ | ---------------------------------------------------------- | - | --- | ------ |  | ------- | ------- | ------------ | - | ------------ | --- | ------------- |  | --------- | ------- | -------- | - | ------------- | ------ | ---------- | - | - | ---- | ----- | - | - | ------- | ------- | - | 
|                                                 |                                                            |   |     |        |  |         |         |              |   |              |     |               |  |           |         |          |   |               |        |            |   |   |      | Notes |   |   |         |        
|                                                 |                                                            |   |     |        |  |         |         |              |   |              |     |               |  |           |         | Retained |   | Accumulated   |        | Receivable |   |   |      |      
|                                                 |                                                            |   |     |        |  |         |         | Paid         |   |              |     |               |  | Earnings  |         | Other    |   | for Purchases |        |            |   |  
|                                                 |                                                            |   |     | Common |  | In      |         | Subscription |   | (Accumulated |     | Comprehensive |  | of Common |         |          |   |              
|                                                 |                                                            |   |     | Stock  |  | Capital |         | Receivable   |   | Deficit)     |     | Income (Loss) |  | Stock     |         | Total   
|                                                 |                                                            |   |     |        |  |         |         |              |   |              |     |               |  |           |         |         
|Predecessor                                      |                                                            |   |     |        |  |         |         |              |   |              |     |               |  |           |         |          |   |               |        |            |   |   |      |       |   |   |         |        
|Balance at September 30, 2000                    |                                                            | $ |    |        |  | $       | 340,618 |              |   | $            |    |               |  | $         | (19,879 | )        |   | $             | (2,160 | )          |   | $ |     |       |   | $ | 318,579 |        
|                                                 | Deemed dividend to parent                                  |   |     |        |  |         |         | (11,474      | ) |              |     |               |  |           |         |          |   |               |        |            |   |   |      |       |   |   |         | (11,474 | )
|                                                 | Deemed dividend on stock
option repatriation               |   |     |        |  |         |         | (51,096      | ) |              |     |               |  |           |         |          |   |               |        |            |   |   |      |       |   |   |         | (51,096 | )
|                                                 | Net loss                                                   |   |     |        |  |         |         |              |   |              |     |               |  |           |         | (12,831  | ) |               |        |            |   |   |      |       |   |   |         | (12,831 | )
|                                                 | Foreign currency translation
adjustments                   |   |     |        |  |         |         |              |   |              |     |               |  |           |         |          |   |               |        | 868        |   |   |      |       |   |   |         | 868     |  
|                                                 |                                                            |   |     |        |  |         |         |              |   |              |     |               |  |           |         |          |   |               |        |            |   |   |      |       |   |   |         |        
|                                                 | Total comprehensive loss                                   |   |     |        |  |         |         |              |   |              |     |               |  |           |         |          |   |               |        |            |   |   |      |       |   |   |         | (11,963 | )
|                                                 |                                                            |   |     |        |  |         |         |              |   |              |     |               |  |           |         |          |   |               |        |            |   |   |      |       |   |   |         |        
|Balance at September 30, 2001                    |                                                            |   |    |        |  |         | 278,048 |              |   |              |    |               |  |           | (32,710 | )        |   |               | (1,292 | )          |   |   |     |       |   |   | 244,046 |        
|                                                 | Net loss                                                   |   |     |        |  |         |         |              |   |              |     |               |  |           |         | (11,028  | ) |               |        |            |   |   |      |       |   |   |         | (11,028 | )
|                                                 | Foreign currency translation
adjustments                   |   |     |        |  |         |         |              |   |              |     |               |  |           |         |          |   |               |        | (1,965     | ) |   |      |       |   |   |         | (1,965  | )
|                                                 |                                                            |   |     |        |  |         |         |              |   |              |     |               |  |           |         |          |   |               |        |            |   |   |      |       |   |   |         |        
|                                                 | Total comprehensive loss                                   |   |     |        |  |         |         |              |   |              |     |               |  |           |         |          |   |               |        |            |   |   |      |       |   |   |         | (12,993 | )
|                                                 |                                                            |   |     |        |  |         |         |              |   |              |     |               |  |           |         |          |   |               |        |            |   |   |      |       |   |   |         |        
|Balance at December 20, 2001                     |                                                            | $ |    |        |  | $       | 278,048 |              |   | $            |    |               |  | $         | (43,738 | )        |   | $             | (3,257 | )          |   | $ |     |       |   | $ | 231,053 |        
|                                                 |                                                            |   |     |        |  |         |         |              |   |              |     |               |  |           |         |          |   |               |        |            |   |   |      |       |   |   |         |        
|IPC Acquisition Corp.                            |                                                            |   |     |        |  |         |         |              |   |              |     |               |  |           |         |          |   |               |        |            |   |   |      |       |   |   |         |        
|Initial equity subscription at November 15, 2001 |                                                            | $ |    |        |  | $       | 10      |              |   | $            | (10 | )             |  | $         |        |          |   | $             |       |            |   | $ |     |       |   | $ |        |        
|                                                 | Issuance of common stock                                   |   |     | 141    |  |         |         | 140,149      |   |              |     | 10            |  |           |         |          |   |               |        |            |   |   |      |       |   |   |         | 140,300 |  
|                                                 | Issuance of notes receivable for
purchases of common stock |   |     |        |  |         |         |              |   |              |     |               |  |           |         |          |   |               |        |            |   |   |      | (383  | ) |   |         | (383    | )
|                                                 | Net loss                                                   |   |     |        |  |         |         |              |   |              |     |               |  |           |         | (9,200   | ) |               |        |            |   |   |      |       |   |   |         | (9,200  | )
|                                                 | Foreign currency translation
adjustments                   |   |     |        |  |         |         |              |   |              |     |               |  |           |         |          |   |               |        | 6,281      |   |   |      |       |   |   |         | 6,281   |  
|                                                 |                                                            |   |     |        |  |         |         |              |   |              |     |               |  |           |         |          |   |               |        |            |   |   |      |       |   |   |         |        
|                                                 | Total comprehensive loss                                   |   |     |        |  |         |         |              |   |              |     |               |  |           |         |          |   |               |        |            |   |   |      |       |   |   |         | (2,919  | )
|                                                 |                                                            |   |     |        |  |         |         |              |   |              |     |               |  |           |         |          |   |               |        |            |   |   |      |       |   |   |         |        
|Balance at September 30, 2002                    |                                                            |   | 141 |        |  |         | 140,159 |              |   |              |    |               |  |           | (9,200  | )        |   |               | 6,281  |            |   |   | (383 | )     |   |   | 136,998 |        
|                                                 | Issuance of common stock                                   |   |     | 6      |  |         |         | 5,687        |   |              |     |               |  |           |         |          |   |               |        |            |   |   |      |       |   |   |         | 5,693   |  
|                                                 | Interest
accrued on notes receivable                       |   |     |        |  |         |         |              |   |              |     |               |  |           |         |          |   |               |        |            |   |   |      | (10   | ) |   |         | (10     | )
|                                                 | Net income                                                 |   |     |        |  |         |         |              |   |              |     |               |  |           |         | 4,039    |   |               |        |            |   |   |      |       |   |   |         | 4,039   |  
|                                                 | Foreign currency translation
adjustments                   |   |     |        |  |         |         |              |   |              |     |               |  |           |         |          |   |               |        | 459        |   |   |      |       |   |   |         | 459     |  
|                                                 |                                                            |   |     |        |  |         |         |              |   |              |     |               |  |           |         |          |   |               |        |            |   |   |      |       |   |   |         |        
|                                                 | Total
comprehensive income                                 |   |     |        |  |         |         |              |   |              |     |               |  |           |         |          |   |               |        |            |   |   |      |       |   |   |         | 4,498   |  
|                                                 |                                                            |   |     |        |  |         |         |              |   |              |     |               |  |           |         |          |   |               |        |            |   |   |      |       |   |   |         |        
|Balance at September 30, 2003                    |                                                            | $ | 147 |        |  | $       | 145,846 |              |   | $            |    |               |  | $         | (5,161  | )        |   | $             | 6,740  |            |   | $ | (393 | )     |   | $ | 147,179 |        
|                                                 |                                                            |   |     |        |  |         |         |              |   |              |     |               |  |           |         |          |   |               |        |            |   |   |      |       |   |   |         |        

The accompanying notes are an integral part of the consolidated financial statements.

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IPC ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003

1.     Basis of Presentation

IPC Acquisition Corp. (the Company) was incorporated in Delaware and
initially capitalized on November 15, 2001 for the purpose of entering into a
purchase agreement to acquire: (1) 100% of the shares of common stock of IPC
Information Systems, Inc. and 100% of the ordinary shares of Asia Global
Crossing IPC Trading Systems Australia Pty Ltd. from Global Crossing Ltd.
(Global Crossing) and its affiliates and (2) various assets owned by
affiliates of Global Crossing related to the operation of these businesses
(collectively IPC Information Systems). The Company did not have any assets
or operations prior to its acquisition of IPC Information Systems. As used
herein, the Company refers to IPC Acquisition Corp. and its subsidiaries.

Effective December 20, 2001, pursuant to a purchase agreement, as amended,
between IPC Acquisition Corp. and Global Crossing, IPC Acquisition Corp.
completed the acquisition of IPC Information Systems (the IPC Information
Systems Acquisition). The Companys financial statements for the period from
November 15, 2001 (date of initial capitalization) to September 30, 2003 are
substantially comprised of the funding and closing of the IPC Information
Systems Acquisition on December 20, 2001 and the results of operations of IPC
Information Systems from the closing through September 30, 2003. Under the
purchase agreement, the total purchase price for the shares and assets was
$360.0 million, subject to various adjustments for working capital and customer
advances. Global Crossing and certain of its subsidiaries filed for bankruptcy
protection on January 28, 2002.

The Company, headquartered in New York, designs, manufactures, installs
and services turret systems for the trading operations of investment and
commercial banks, foreign exchange and commodity brokers and dealers, market
exchanges, mutual and hedge fund companies, asset managers and insurance
companies. The Company also installs and services the cabling infrastructure
and networks within the same building that connect voice and data
communications for traders and others in the global financial, trading and
exchange trading industries, as well as provides voice and data services to
customers primarily in the financial community.

The Company markets its products and services worldwide in major financial
centers, with the majority of its revenues and employees located in the United
States.

2.     Summary of Significant Accounting Policies

Principles of Consolidation and Combination

The combined financial statements for the fiscal year ended September 30,
2001 and the period from October 1, 2001 to December 20, 2001 include the
accounts of IPC Information Systems (the Predecessor). Intercompany balances
and transactions have been eliminated.

The consolidated financial statements for the period from November 15,
2001 (date of initial capitalization) to September 30, 2002 and the fiscal year
ended September 30, 2003 include the accounts of the Company and its wholly
owned subsidiaries. The principal activity of the Company consists of the
acquisition of IPC Information Systems, Inc. and the results of operations of
the acquired business from December 20, 2001 through September 30, 2003.
Intercompany balances and transactions have been eliminated.

Revenue Recognition

Revenue from product sales and installation is recognized upon completion
of the installation or, for contracts that are completed in stages and include
contract specified milestones, upon achieving such contract milestones, and the
occurence of the delivery and customer acceptance of a fully functional system. Revenue from
sales to distributors is recognized upon shipment. Customers are generally
progress-billed prior to the completion of the installations. The revenue
related to these advance payments is deferred until the system installations
are completed or specified milestones are attained. Costs incurred on
uncompleted contracts and stages are accumulated and recorded as inventory
awaiting installation. In addition, contracts for annual recurring turret and
I.T.S. services are generally billed in advance, and are recorded as revenue
ratably (on a monthly basis) over the contractual periods.
Revenue from moves, additions and changes, commonly known as MACs, to
turret systems is recognized upon completion, which generally occurs in the
same month or the month following the order for services. Revenue from the
Companys Network Services division, which provides voice and data services to
the financial community, is billed in advance and recorded ratably (on a
monthly basis) over the contractual period, which range from three months to
one year.

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IPC ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
September 30, 2003

Cash and Cash Equivalents

The Company maintains cash with several high credit quality financial
institutions. Temporary cash investments with original maturities of three
months or less are considered cash equivalents. Temporary cash investments are
stated at cost, which approximates fair value. These investments are not
subject to significant market risk.

Trade Receivables

Trade accounts receivable potentially expose the Company to concentrations
of credit risk, as a large volume of business is conducted with several major
financial institutions, primarily companies in the brokerage, banking and
financial services industries. To help reduce this risk, customers are
progress-billed prior to the completion of the contract. At September 30, 2002,
and September 30, 2003, uncollected accounts receivable recorded in customer
advances amounted to $6.3 million and $4.8 million, respectively.

Allowance for Doubtful Accounts

The Company evaluates the collectibility of its accounts receivable based
on a combination of factors. Where the Company is aware of circumstances that
may impair a specific customers ability to meet its financial obligations to
the Company, the Company records a specific allowance against amounts due to it
and thereby reduces the net receivable to the amount the Company reasonably
believes is likely to be collected. For all other customers, the Company
recognizes allowances for doubtful accounts based on the length of time the
receivables are outstanding, industry and geographic concentrations, the
current business environment and its historical experience. If the financial
condition of the Companys customers deteriorates or if economic conditions
worsen, additional allowances may be required.

Inventories

Inventories are stated at the lower of FIFO (first in, first out) cost or
market but not in excess of net realizable value. Inventory costs include all
direct manufacturing costs and applied overhead. Allowances are established
based on managements estimate of inventory on hand that is potentially
obsolete or for which its market value is below cost. Cost of goods sold for
the period ended September 30, 2002 reflects fair value inventory adjustments
of $34.3 million associated with the purchase accounting treatment of the IPC
Information Systems Acquisition on December 20, 2001. Similarly, cost of goods sold for the fiscal
year ended September 30, 2001 include fair value inventory adjustments of $10.7
million associated with the purchase of the Predecessor by Global Crossing in
June 2000. There were no fair value inventory adjustments to cost of goods sold
in the fiscal year ended September 30, 2003.

Property, Plant and Equipment

Property, plant and equipment are stated at cost and depreciated on a
straight-line basis over the shorter of their estimated useful lives or related
contract terms beginning in the year the asset was placed into service. Normal
repair and maintenance costs are expensed as incurred. The useful lives by
asset category are as follows:

|                                  |  |          |  | 
|--------------------------------- |  | -------- |  | 
|Buildings                         |  | 20 years
|Furniture, fixtures and equipment |  | 5 years 
|Network equipment                 |  | 3 years 
|Computer software                 |  | 3 years 

Leasehold improvements are amortized over the lesser of the lease term or
the estimated useful life of the improvements.

Impairment of Long-Lived Assets

The Company reviews long-lived assets, including property, plant and
equipment and definite lived intangible assets, for impairment whenever events
or changes in business circumstances indicate that the carrying amount of the
assets may not be fully recoverable. An impairment loss would be recognized
when estimated undiscounted future cash flows expected to result from the use
of the assets and its eventual disposition is less than its carrying amount.
Impairment, if any, is assessed using discounted
cash flows. No impairments have occurred to date. See Effects of Recently
Issued Accounting Standards below.

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IPC ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
September 30, 2003

Goodwill and Other Intangible Assets

Goodwill represents the excess of the cost over the net of the fair value
of the identifiable tangible and intangible assets acquired and the fair value
of liabilities assumed in acquisitions. For fiscal year ended September 30,
2001, and the period from
October 1, 2001 to December 20, 2001, the costs allocated to goodwill were
amortized on a straight-line basis over the periods benefited, principally 10
years, and resulted in amortization of $21.1 million and $4.7 million,
respectively.

The Company adopted Statement of Financial Accounting Standards (SFAS)
No. 142 Goodwill and Other Intangible Assets (SFAS No. 142), effective upon
the acquisition of IPC Information Systems and, in accordance with SFAS No.
142, there is no amortization of goodwill and intangible assets that have
indefinite useful lives for the period from November 15, 2001 (date of initial
capitalization) to September 30, 2002 and the fiscal year ended 2003. However,
such assets are tested for impairment annually using the two-step process
specifically provided in SFAS No. 142. Other intangible assets are carried at
cost. Technology is amortized over its estimated useful life between 3 to 7
years, customer relationships are amortized over its estimated useful life of 8
to 20 years, and proprietary software is amortized over its estimated useful
life of 7 years. Trade name has been deemed to have an indefinite life and will
not be subject to amortization expense, but instead will be subject to annual
impairment tests in accordance with the provisions of SFAS No. 142. In
determining that the trade name has an indefinite life, the Company considered
the following factors: the ongoing active use of its trade name, which is
directly associated with its market leading position in the turret business,
the lack of any legal, regulatory or contractual provisions that may limit the
useful life of the trade name, the lack of any substantial costs to maintain
the asset, the positive impact on its trade name generated by its other ongoing
business activities (including marketing and development of new technology and
new products) and its commitment to products branded with its trade name over
its 30 year history. The Companys acquired trade name has significant market
recognition and the Company expects to derive benefits from the use of such
asset beyond the foreseeable future.

The Company completed the required annual impairment test as of July 1,
2003 (the first day of the fourth quarter of fiscal year 2003), and concluded
that there was no impairment to its recorded goodwill or trade name. The
Company believes the recorded values of goodwill and trade name in the amounts
of $83.1 million and $18.9 million, respectively, at September 30, 2003 are
fully recoverable.

Deferred Financing Costs

As part of the acquisition of IPC Information Systems in December 2001,
the Company capitalized certain debt issuance costs in the amount of $17.4
million relating to the establishment of the senior secured credit facilities
and the issuance of the senior subordinated notes. These costs are being
amortized over the respective lives of the debt using the effective interest
method. On September 2, 2003, the Company amended and restated its senior
secured credit facilities to more favorable terms. Additional debt issuance
costs of $1.6 million were incurred and are also being amortized using the
effective interest method. Amortization expense
related to deferred financing costs is included in interest expense in the
accompanying consolidated statement of operations and aggregated approximately
$2.3 million for the period from November 15, 2001 (date of initial
capitalization) to September 30, 2002 and $2.6 million for the fiscal year
ended September 30, 2003.

Research and Development

Research and development expenditures are charged to expense as incurred.

Income Taxes

In accordance with SFAS No. 109, Accounting for Income Taxes (SFAS No.
109), the Company recognizes deferred income taxes for the tax consequences in
future years of differences between the tax basis of assets and liabilities and
their financial reporting amounts at each year end, based on enacted tax laws
and statutory tax rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount that is more likely than
not to be realized. The provision for income taxes is the tax payable for the
period and the change during the period in deferred tax assets and liabilities.

For the fiscal year ended September 30, 2001 and the period October 1,
2001 to December 20, 2001, the Predecessor had filed a consolidated Federal
income tax return with its parent. Prior to the fiscal year ended September 30,
2001, the Predecessor filed separate Federal income tax returns. The income
tax provisions for these periods have been prepared in accordance with SFAS No. 109 and SEC

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IPC ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
September 30, 2003

Staff
Accounting Bulletin Topic 1B, utilizing the separate return method. Resulting
payables for taxes have been recorded as adjustments to the intercompany
accounts. The Company is now required to file separate tax returns.

Effective as of the date of the acquisition of IPC Information Systems,
the Company provides deferred income taxes on the unremitted earnings of its
foreign subsidiaries.

Use of Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Foreign Currency Translation Adjustment

The balance sheets and statements of operations of the Companys foreign
operations are measured using the local currency as the functional currency.
Assets and liabilities of these foreign operations are translated at the
year-end exchange rate and revenue and expense amounts are translated at the
average rates of exchange prevailing during the year. The resulting foreign
currency translation adjustments are accumulated as a component of other
comprehensive income. Gains and losses resulting from foreign currency
transactions are recognized in other income (expense), including gains of
approximately $2.6 million in the 2003 fiscal year.

Fair Value of Financial Instruments

The Companys financial instruments at September 30, 2003 consist of
accounts receivable, accounts payable and debt. As of September 30, 2003, the
Company did not have any derivative financial instruments. The Company believes
the reported carrying amounts of its accounts receivable and accounts payable
approximates fair value, based upon the short term nature of these accounts.
The fair value of borrowings under the senior secured credit facilities was
$55.3 million at September 30, 2003 as it bears interest at a floating rate.
The fair value of the senior subordinated notes was $153.4 million at September
30, 2003, based upon quoted trading prices at such date.

StockBased Compensation

As permitted by Financial Accounting Standards Board (FASB) Statement
No. 123, Accounting for Stock-Based Compensation (SFAS 123), the Company
has elected to follow Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees (APB 25) and related interpretations in
accounting for its employee option plans. Under APB 25, no compensation expense
is recognized at the time of an option grant if the exercise price of the
employee stock option is fixed and equals or exceeds the fair market value of
the underlying common stock on the date of the grant and the number of shares
to be issued pursuant to the exercise of such options are fixed on the date of
the grant.

Pro forma information regarding net income (loss) and earnings (loss) per
share is required by SFAS 123, and has been determined as if the Company had
been accounting for its employee stock options under the fair value method of
that Statement. The fair value of these options was estimated at the date of
the grant using a Black-Scholes option pricing model with the following
assumptions for the period from November 15, 2001 (date of initial
capitalization) to September 30, 2002 and the fiscal year ended September 30,
2003: weighted-average risk-free interest rate of 3.5% and 2.1%, respectively;
no dividends; weighted-average volatility factor of the expected market price
of the Companys common stock of 74.2% and 90.0%, respectively, and a
weighted-average expected life of the options of 5 and 4 years, respectively.

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Companys employee stock options have characteristics
significantly different from those of traded options and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
managements opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.

For purposes of pro forma disclosures, the estimated fair value of options
granted is amortized to expense over their vesting periods. The
weighted-average grant date fair value of options granted during the period
from November 15, 2001 (date of initial

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IPC ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
September 30, 2003

capitalization) to September 30, 2002
and the fiscal year ended September 30, 2003 was $6.28 and $5.30, respectively.
The Companys pro forma net income (loss) for all periods is shown below. These
amounts may not necessarily be indicative of the pro forma effect of SFAS 123
for future periods in which options may be granted.

The Company recorded no compensation expense under APB 25 for the periods
presented. If the Company elected to recognize compensation expense based on
the fair value of the options granted at grant date, as prescribed by SFAS 123,
net income (loss) would have been adjusted to the pro forma amounts indicated
in the table below:

|                                                                                                                                  |  |               |         |                   |  |                    |         |               |  |   |        |   |  |   |       |  
|--------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | ----------------- |  | ------------------ | ------- | ------------- |  | - | ------ | - |  | - | ----- | -
|                                                                                                                                  |  | Predecessors  |         |                   |  |                    |         |               |  |  
|                                                                                                                                  |  |               |         |                   |  |                    |         |               |  |  
|                                                                                                                                  |  | Fiscal Year   |         | Period from       |  | Period from        |         | Fiscal Year  
|                                                                                                                                  |  | Ended         |         | October 1, 2001   |  | November 15, 2001  |         | Ended        
|                                                                                                                                  |  | September 30, |         | to                |  | to                 |         | September 30,
|(dollars in thousands)                                                                                                            |  | 2001          |         | December 20, 2001 |  | September 30, 2002 |         | 2003         
|                                                                                                                                  |  |               |         |                   |  |                    |         |              
|Reported net income (loss)                                                                                                        |  | $             | (12,831 | )                 |  | $                  | (11,028 | )             |  | $ | (9,200 | ) |  | $ | 4,039 |  
|Add back total stock-based
employee compensation
determined under APB 25
intrinsic value method, net
of tax                       |  |               |        |                   |  |                    |        |               |  |   |       |   |  |   |      |  
|Deduct total stock-based
employee compensation
expense determined under
fair value based method for
all awards, net of tax
effect |  |               |        |                   |  |                    |        |               |  |   | (326   | ) |  |   | (825  | )
|                                                                                                                                  |  |               |         |                   |  |                    |         |               |  |   |        |   |  |   |       |  
|Net income (loss), pro forma                                                                                                      |  | $             | (12,831 | )                 |  | $                  | (11,028 | )             |  | $ | (9,526 | ) |  | $ | 3,214 |  
|                                                                                                                                  |  |               |         |                   |  |                    |         |               |  |   |        |   |  |   |       |  

Reclassifications

Certain items in the September 30, 2001 Predecessor Period financial
statements have been reclassified from amounts previously reported to conform
to the presentation of the September 30, 2003 consolidated financial
statements.

Effects of Recently Issued Accounting Standards

In August 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations (SFAS 143), which requires entities to record the
fair value of the estimated liability for an asset retirement obligation in the
period in which it is incurred. When the liability is initially recorded, the
entity capitalizes an amount equal to the present value of the estimated
liability by increasing the carrying amount of the related long-lived asset.
Over time, the liability is accreted to its present value each period, and the
capitalized cost is depreciated over the useful life of the related asset. Upon
settlement of the liability, an entity either settles the obligation for its
recorded amount or incurs a gain or loss upon settlement. SFAS 143 is effective
for fiscal years beginning after June 15, 2002, with earlier application
encouraged. The Company adopted SFAS 143 on October 1, 2002. The adoption of
this standard did not have a material impact on the Companys consolidated
financial statements.

In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets (SFAS 144). SFAS 144 addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets. This statement supersedes SFAS 121, Accounting for Impairment of
Long-Lived Assets and the accounting and reporting provisions of APB Opinion
No. 30, Reporting the Results of Operations  Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary and Unusual and
Infrequently Occurring Events and Transactions, for the disposal of a segment
of a business (as previously defined in that Opinion). SFAS 144 was adopted by
the Company on October 1, 2002. The adoption of this standard did not have a
material impact on the Companys consolidated financial statements.

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB
Statements No. 4, 44, and 62, Amendment of FASB Statement No. 13, and Technical
Corrections (SFAS 145). SFAS 145 eliminates the requirement under SFAS No.
4, Reporting Gains and Losses from Extinguishment of Debt, to report gains
and losses from extinguishments of debt as extraordinary items in the income
statement. Accordingly, gains or losses from extinguishments of debt for fiscal
years beginning after May 15, 2002 shall not be reported as extraordinary items
unless the extinguishment qualifies as an extraordinary item under the
provisions of APB Opinion No. 30. Upon adoption of this pronouncement, any gain or loss
on extinguishment of debt previously classified as an extraordinary item in
prior periods that does not meet the criteria of Opinion 30 for such
classification should be reclassified to conform with the provisions of SFAS
145. The Company adopted SFAS 145 on October 1, 2002.

In July 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities (SFAS 146) which nullified EITF
Issue No. 94-3, Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred
in a Restructuring) (EITF No. 94-3). SFAS 146 requires that a liability for
a

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IPC ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
September 30, 2003

cost associated with an exit or disposal activity be recognized when the
liability is incurred, whereas EITF No. 94-3 had recognized the liability at
the commitment date to an exit plan. The Company is required to adopt the
provisions of SFAS 146 effective for exit or disposal activities initiated
after December 31, 2002. The Company adopted SFAS 146 on January 1, 2003. The
adoption of this standard did not have a material impact on the Companys
consolidated financial statements.

In November 2002, the EITF reached a consensus on Issue 00-21,
Multiple-Deliverable Revenue Arrangements (EITF 00-21). EITF 00-21
addresses how to account for arrangements that may involve the delivery or
performance of multiple products, services, and/or rights to use assets. The
consensus mandates how to identify whether goods or services or both which are
to be delivered separately in a bundled sales arrangement should be accounted
for separately because they are separate units of accounting. The guidance
can affect the timing of revenue recognition for such arrangements, even though
it does not change rules governing the timing or pattern of revenue recognition
of individual items accounted for separately. The final consensus will be
applicable to agreements entered into in fiscal periods beginning after June
15, 2003 with early adoption permitted. Additionally, companies will be
permitted to apply the consensus guidance to all existing arrangements as the
cumulative effect of a change in accounting principle in accordance with APB
Opinion No. 20, Accounting Changes. The adoption of this standard did not
have a material impact on the Companys consolidated financial statements.

In November 2002, the FASB issued Interpretation No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others (FIN 45). This interpretation
elaborates on disclosures to be made by a guarantor in its interim and annual
financial statements with regard to its obligations under certain guarantees
that it has issued. It also clarifies that a guarantor is required to
recognize, at the inception of a guarantee, a liability for the fair value of
the obligation undertaken in issuing the guarantee. The disclosure requirements
of FIN 45 are effective for interim and annual periods ending after December
15, 2002, and the Company has adopted those requirements in its consolidated
financial statements. The initial recognition and initial measurement
requirements of FIN 45 are effective prospectively for guarantees issued or
modified after December 31, 2002. The Company applied FIN 45 in connection with
the March 13, 2003 settlement and rejection agreement with Global Crossing and
has reflected the fair value of guarantees on behalf of Global Crossing in the
consolidated financial statements.

In December 2002, the FASB issued SFAS No. 148, Accounting for
Stock-Based Compensation-Transition and Disclosure (SFAS 148) . SFAS 148
amends FASB Statement No. 123, Accounting for Stock-Based Compensation (SFAS
123), and provides alternative methods of transition for a voluntary change to
the fair value based method of accounting for stock-based employee
compensation. SFAS 148 also amends the disclosure requirements of SFAS 123 to
require more prominent and frequent disclosures in financial statements about
the effects of stock-based compensation. The transition guidance and annual
disclosure provisions of SFAS 148 are effective for financial statements issued
for fiscal years ending after December 15, 2002. The disclosure
provisions are effective for financial reports containing financial statements
for interim periods beginning after December 15, 2002, and are included in the
consolidated financial statements.

In January 2003, the FASB issued FASB Interpretation No. 46, Consolidation of
Variable Interest Entities (FIN 46), which requires variable interest
entities (commonly referred to as SPEs) to be consolidated by the primary
beneficiary of the entity if certain criteria are met. FIN 46 is effective
immediately for all new variable interest entities created after
January 31, 2003. For non-special purpose variable interest entities created before
February 1, 2003, the provisions of FIN 46 became effective for the Company
during the first calendar quarter of 2003. The Company has determined that its investment in Purple
Voice meets the criteria of a variable interest entity, however,
pursuant to the recent deferrals of the required adoption date of
FIN 46, the Company
has not applied FIN 46 in its fiscal year 2003 consolidated financial
statements. Notwithstanding the deferral of FIN 46, the Company has consolidated Purple Voice in accordance with the
requirements of Accounting Research Bulletin No. 51 Consolidated Financial
Statements because the Company has voting control over Purple
Voice.

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133
on Derivative Instruments and Hedging Activities (SFAS 149). SFAS 149 amends
and clarifies financial reporting for derivative instruments, including certain
derivative instruments embedded in other contracts and for hedging activities
under SFAS No. 133. SFAS 149 clarifies under what circumstances a contract with
an initial net investment meets the characteristic of a derivative, clarifies
when a derivative contains a financing component, amends the definition of an
underlying to conform it to language used in FIN 45, and amends certain other
existing pronouncements. SFAS 149 is effective for contracts entered into or
modified after June 30, 2003, and should be applied prospectively, with the
exception of certain SFAS No. 133 implementation issues that were effective for
all

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IPC ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
September 30, 2003

fiscal quarters prior to June 15, 2003. Any such implementation issues
should continue to be applied in accordance with their respective effective
dates. The adoption of SFAS 149 did not have a material impact on the Companys
consolidated financial statements.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity
(SFAS 150). SFAS 150 establishes standards for how an issuer classifies and
measures certain financial instruments with characteristics of both liabilities
and equity. SFAS 150 applies specifically to a number of financial instruments
that companies have historically presented within their financial statements
either as equity or between the liabilities section and the equity section,
rather than as liabilities. SFAS 150 is effective for financial instruments
entered into or modified after May 31, 2003, and otherwise is effective at the
beginning of the first interim period beginning after June 15, 2003. The
adoption of SFAS 150 did not have any impact on the Companys
consolidated financial statements.

3.     Acquisitions

Acquisition of IPC Information Systems

The Company was formed in November 2001 by a group led by GS Capital
Partners 2000, L.P. (GSCP 2000), and other private equity funds affiliated
with Goldman, Sachs & Co., to acquire IPC Information Systems. The Company did
not have any assets or operations prior to its acquisition of IPC Information
Systems. On December 20, 2001, the Company purchased IPC Information Systems
from Global Crossing and Asia Global Crossing, Ltd. and various of their
affiliates. The Company and
various of its subsidiaries also entered into a network services, channel
sales and transition services agreement with Global Crossing and various other
parties that obligated the Company to market or resell Global Crossings
channel network services to its customers and restricted its ability to supply
telecommunications services to any third party or to own a network capable of
providing these services to any third party. Under the purchase agreement, the
total purchase price for the shares and assets was $360.0 million, subject to
various adjustments for working capital and customer advances. As a result of
the IPC Information Systems Acquisition, the Company owns the leader in the
turret industry, based on its base of approximately 110,000 turrets and related
equipment installed in trading positions worldwide.

The following table summarizes the fair value of the assets acquired and
the liabilities assumed at the date of the acquisition of IPC Information
Systems. The purchase price on the date of the acquisition of IPC Information
Systems exceeded the fair market value of the net assets acquired by
approximately $77.3 million and was recorded as goodwill on the consolidated
balance sheet. The factors that contributed to a purchase price that resulted
in the recognition of goodwill include the market leading position of IPC
Information Systems, Inc. in the turret industry and its ability to generate
significant income from operations and cash flows from operating activities.

|                                               |                           |   |         |         | 
|---------------------------------------------- | ------------------------- | - | ------- | ------- | 
|Condensed Balance Sheet (dollars in thousands) |                           |   |         |        
|Current assets                                 |                           | $ | 153,732 |        
|Property, plant and equipment, net             |                           |   | 21,163  |        
|Intangible assets, net                         |                           |   | 216,000 |        
|Goodwill                                       |                           |   | 77,310  |        
|Other long-term assets                         |                           |   | 549     |        
|                                               |                           |   |         |        
|                                               | Total assets acquired     |   |         | 468,754 | 
|                                               |                           |   |         |        
|Current liabilities                            |                           |   | 102,666 |        
|Deferred taxes                                 |                           |   | 12,430  |        
|Other long-term liabilities                    |                           |   | 3,358   |        
|                                               |                           |   |         |        
|                                               | Total liabilities assumed |   |         | 118,454 | 
|                                               |                           |   |         |        
|                                               | Net assets acquired       |   | $       | 350,300 | 
|                                               |                           |   |         |        

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\

IPC ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued
September 30, 2003

The acquisition of IPC Information Systems was accounted for using the
purchase method of accounting in accordance with FASB Statement No. 141,
Business Combinations (SFAS 141). The following represents the original
allocation of the excess of the purchase price over the historical cost of the
net tangible assets acquired at the date of the purchase:

|                                                           |                                 |                                       |  |   |         |   |         |         |   | 
|---------------------------------------------------------- | ------------------------------- | ------------------------------------- |  | - | ------- | - | ------- | ------- | - | 
|(dollars in thousands)                                     |                                 |                                       |  |   |         |   |         |        
|Purchase price                                             |                                 |                                       |  |   |         | $ | 350,300 |        
|Transaction costs                                          |                                 |                                       |  |   |         |   | 7,900   |        
|                                                           |                                 |                                       |  |   |         |   |         |        
|Total consideration                                        |                                 |                                       |  |   |         |   | 358,200 |        
|Historical cost of net tangible assets acquired            |                                 |                                       |  |   |         |   | (43,020 | )      
|                                                           |                                 |                                       |  |   |         |   |         |        
|Excess of purchase price over net tangible assets acquired |                                 |                                       |  |   |         | $ | 315,180 |        
|                                                           |                                 |                                       |  |   |         |   |         |        
|Allocation of excess purchase price:                       |                                 |                                       |  |   |         |   |         |        
|                                                           | Step-up inventory to fair value |                                       |  |   |         |   | $       | 34,300  |  
|                                                           | Deferred taxes                  |                                       |  |   |         |   |         | (12,430 | )
|                                                           | Residual goodwill               |                                       |  |   |         |   |         | 77,310  |  
|                                                           | Identifiable intangibles:       |                                       |  |   |         |   |         |         |  
|                                                           |                                 | Technology (7 year life)              |  | $ | 45,000  |   |         |         |   | 
|                                                           |                                 | Trade name (indefinite life)          |  |   | 18,000  |   |         |         |   | 
|                                                           |                                 | Customer relationships (20 year life) |  |   | 153,000 |   |         |         |   | 
|                                                           |                                 |                                       |  |   |         |   |         |        
|                                                           | Total identifiable intangibles  |                                       |  |   |         |   |         | 216,000 |  
|                                                           |                                 |                                       |  |   |         |   |         |        
|Total allocation of excess purchase price                  |                                 |                                       |  |   |         | $ | 315,180 |        
|                                                           |                                 |                                       |  |   |         |   |         |        

On
January 28, 2002, Global Crossing and 54 of its subsidiaries
filed petitions for relief under Chapter 11 of Title 11 of
the United States Code. On March 13, 2003, the Company entered into a settlement and rejection
agreement with Global Crossing. Pursuant to the settlement and rejection
agreement, all of the remaining obligations under the purchase agreement
relating to the acquisition of
IPC Information Systems were terminated, including Global Crossings
obligation to pay any portion of the deferred purchase price and Global
Crossings obligation to indemnify the Company for specific tax liabilities. In
addition, the Company and Global Crossing mutually released each other for all
prior claims. The bankruptcy court entered an order on March 14, 2003 approving
the settlement and rejection agreement.

In connection with the settlement and rejection agreement with Global
Crossing, goodwill has been reduced by $2.1 million from the amount
recorded at September 30, 2002. This reduction to the goodwill account reflects
the transfer of $7.3 million of restricted cash to cash, tax refunds in the
amount of $2.2 million received from Global Crossing pursuant to the settlement
and rejection agreement aggregating $9.5 million and $0.9 million of other net
items, which are partially offset by the payment of $5.2 million
cash to an
escrow account pursuant to the settlement and rejection agreement and the
assumption of $3.2 million of liabilities associated with pre-existing
guarantees of real estate obligations that the Company may be required to pay
if Global Crossing fails to do so. As a result of the settlement and rejection
agreement, the Company may no longer offset any payments relating to those
guarantees from the payment by the Company to Global Crossing of any portion of
the deferred purchase price. The September 30, 2002 goodwill balance of $72.3
million decreased $5.0 million from the amount initially recorded at December
20, 2001 of $77.3 million, primarily due to working capital adjustments to the
purchase price and a reduction of certain estimated assumed and contingent
liabilities, which were offset by the acquisition of the Hitachi Ltd. customer
base and related assets on March 29, 2002 and foreign exchange adjustments
related to the allocation of goodwill to the Companys foreign operating units.

The acquisition of IPC Information Systems was accounted for by the
purchase method and acquired intangible assets were recognized apart from
goodwill in accordance with SFAS 141. The purchase price, as adjusted for the
working capital adjustments and the March 13, 2003 settlement and rejection
agreement, exceeded the fair value of the net assets acquired by approximately
$70.2 million. This excess has been recorded in the accompanying consolidated
balance sheet as goodwill and has not been amortized in accordance with SFAS
No.142. SFAS No.142 eliminates the requirement to amortize goodwill and
intangible assets that have indefinite useful lives. However, it requires that
such assets be tested for impairment at least annually using the guidance
specifically provided in the statement. Accordingly, the Companys consolidated
financial statements for periods subsequent to the acquisition of IPC
Information Systems are not comparable to any Predecessor period.

The IPC Information Systems Acquisition was financed with the net proceeds
from the issuance of the outstanding senior subordinated notes, borrowings
under the senior secured credit facilities and a common equity contribution of
$140.0 million by a group led by GSCP 2000 and other private equity funds
affiliated with Goldman, Sachs & Co. Under the terms of the purchase agreement,
approximately $20.8 million of the purchase price was not paid to Global
Crossing at the closing. A portion of these

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IPC ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinuedSeptember 30, 2003

deferred amounts was used to offset the Companys payment of contingent
equipment lease liabilities of former affiliates that the Company guaranteed.
Through March 13, 2003, the Company had paid approximately $13.5 million of
these contingent liabilities. On March 13, 2003, in connection with the
settlement and rejection agreement that the Company entered into with Global
Crossing, the Company was relieved of any obligation to make deferred purchase
price payments to Global Crossing.

Prior to the completion of the acquisition of IPC Information Systems, the
Company leased six floors at 67-73 Worship Street, London, England at an annual
rate of approximately £565,000, or $942,000, assuming an exchange rate of £1 to
$1.667. Of these six floors, the Company uses one floor for office space and an
affiliate of Global Crossing uses five floors for telecommunications and
networking equipment. Under the lease, which expires in 2010, the Company
remains liable to the landlord for all six floors. Pursuant to the purchase
agreement with Global Crossing, the Company entered into a sublease for a
portion of these premises with an affiliate of Global Crossing and the landlord
has consented to that sublease. Through September 30, 2003, Global Crossings
affiliate has made all of its required sublease payments.

Under the terms of the settlement and rejection agreement, the Company
deposited $5.2 million in an escrow account. Global Crossing received $3.2
million from the escrow account upon the filing of certain tax returns. Global
Crossing will receive the remaining $2.0 million from the escrow account after
a $2.0 million irrevocable letter of credit is issued on behalf of the Company.
The Company will have the right to draw on that letter of credit in the event
Global Crossings affiliate fails to make any payments due to the Company
pursuant to the sublease for office space at 67-73 Worship Street in London,
England.

The Company believes that all tax returns required to be filed in respect
of IPC Information Systems, Inc. and its subsidiaries for periods prior to and
including the date of the IPC Information Systems Acquisition have now been
filed. These returns consist of consolidated tax returns with Global Crossing,
and, where required by law, separate tax returns for IPC Information Systems,
Inc. and/or its subsidiaries.

As a result of the termination of the purchase agreement, Global Crossing
has been relieved of all of its obligations under the purchase agreement,
including, among other things, indemnifying the Company for tax liabilities
that may be imposed upon IPC Information Systems, Inc. and its subsidiaries for
periods prior to and including the date of the acquisition of IPC Information
Systems. Therefore, in the event that any tax liabilities are imposed, as a
result of an audit or otherwise, on IPC Information Systems, Inc. and/or its
subsidiaries for periods prior to and including the date of the acquisition of
IPC Information Systems, the Company may be required to pay those taxes and is
no longer able to seek indemnification from Global Crossing. As of the date of
this filing, the aggregate amount of taxes for which the Company has received
notices of taxes due from various jurisdictions and recognized as tax
liabilities under purchase accounting is approximately
$6.5 million and, as of September 30, 2003, the Company has made settlement payments aggregating $0.6 million. The
Company estimates that the range of its exposure for additional tax liabilities
is from $0.0 to $36.0 million. In computing its estimated range of potential
tax liabilities, the Company took into account tax returns in certain
jurisdictions where the statutes of limitations have not yet expired. Under
those tax returns as filed, the remaining liability is zero. Although the
Company believes that all those tax returns have been filed correctly, such
returns may be audited and additional taxes may be assessed (or refunds may be
granted). Payment by the Company of a significant amount of these potential tax
liabilities could have a material adverse effect on the Companys financial
condition and results of operations, requiring the Company to seek additional
financing. In that event, the Company cannot assure you that it will be able to
obtain additional financing on commercially reasonable terms, or at all.

Pursuant to the settlement and rejection agreement, Global Crossing has
also paid over to the Company approximately $2.2 million for payroll and
federal tax refunds received by it for periods prior to and including the date
of the acquisition of IPC Information Systems. Global Crossing is also required
to pay the Company any future tax refunds or credits it receives that are
applicable to IPC Information Systems, Inc. and its subsidiaries for these
periods.

As part of the settlement and rejection agreement, the Company also
entered into an amendment to the network services, channel sales and transition
services agreement. Under the amendment, the Company no longer has any
obligation to market or resell Global Crossings channel network services to
its customers. In addition, the restrictions on the Companys ability to
compete with Global Crossing will terminate on June 20, 2004 (instead of
December 20, 2004), or, on June 20, 2003 (instead of December 20, 2003) in
connection with a business combination transaction with an unrelated third
party that is or becomes a competitor of Global Crossing. Finally, pursuant to
the settlement and rejection agreement, the Company will be permitted to use
any other provider of network services for its own internal purposes provided
its aggregate annual payments to Global Crossing and their subsidiaries is at
least $48,000. Neither this amendment nor a prior amendment to the network
services, channel sales and transition services agreement was signed by Asia
Global Crossing Asia Pacific Commercial, Ltd., a former Global Crossing
affiliate that was an original signatory to this agreement. Accordingly, with
respect to Asia Global Crossing Asia Pacific
Commercial, Ltd., the non-compete restrictions contained in the original
network services, channel sales and transition services

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IPC ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued
September 30, 2003

agreement have not been
suspended and the Companys ability to engage in certain new lines of business
activities in Asia may be restricted.

Set forth below are the unaudited pro forma results of operations of the
Company for the fiscal year ended September 30, 2001 and the period October 1,
2001 to December 20, 2001, as if the acquisition of IPC Information Systems and
the related financings had occurred as of the beginning of each period.

The unaudited pro forma financial information is presented for
informational purposes only and does not purport to represent the results of
operations of the Company for the periods described above had the acquisition
of IPC Information Systems and the related financings occurred as of the
beginning of each period, or to project the results for any future period.

The unaudited pro forma financial information gives effect to (a) the
acquisition of IPC Information Systems (b) the offering of the outstanding
senior subordinated notes, (c) term loan borrowings under the Companys
previously existing senior secured credit facilities, (d) the purchase
accounting adjustments associated with the acquisition of IPC Information
Systems, (e) the common equity contribution and (f) the related fees and
expenses. The unaudited pro forma financial information assumes that no
post-closing working capital adjustments have been made in connection with the
acquisition of IPC Information Systems. The unaudited pro forma financial
information of the Company does not include various one-time costs for
operating expenses and capital expenditures associated with establishing the
Company as a stand-alone entity but does include the restructuring charge of
$0.8 million and tax benefit of $2.1 million related to a 1999 dividend payment
from the Companys European operations for the fiscal year ended September 30,
2001.

|                       |  |              |         |            |  |             |        |  
|---------------------- |  | ------------ | ------- | ---------- |  | ----------- | ------ | -
|                       |  | Predecessors
|                       |  |             
|                       |  |              |         |            |  | Period from
|                       |  | Fiscal Year  |         | October 1,
|                       |  | Ended        |         | 2001 to   
|                       |  | September    |         | December  
|(dollars in thousands) |  | 30, 2001     |         | 20, 2001  
|                       |  |              |         |           
|Revenue                |  | $            | 279,697 |            |  | $           | 58,780 |  
|Net income (loss)      |  | $            | 12,100  |            |  | $           | (3,870 | )

Acquisition of Hitachi Turret Business

On March 11, 2002, the Company entered into an agreement to purchase the
international customer base and related assets of the turret business of
Hitachi, Ltd for approximately $2.5 million. This transaction was completed on
March 29, 2002, and was accounted for under purchase accounting in accordance
with SFAS No. 141. On a proforma basis, this acquisition did not have a
material impact on the Companys results of operations for the period October
1, 2001 to December 20, 2001, and the period November 15, 2001 (date of initial
capitalization) to September 30, 2002.

Acquisition of Gains

On April 30, 2003, the Company exercised its option to purchase Gains
International (US) Inc. and Gains International (Europe) Limited (collectively
Gains) from GSCP 2000 and other private equity funds affiliated with
Goldman, Sachs & Co., who own substantially all of the Companys common stock,
for 664,380 shares of common stock valued at approximately $5.7 million plus
the assumption of deferred consideration of $3.1 million and an
October 2003 payment of earn-out
consideration of approximately $3.6 million dollars. With the acquisition of
Gains, the Company now offers voice and data services primarily to the
financial services community under the name Network Services. This transaction
follows the completion of a transaction involving the sale of
Gains International (US) Inc., Gains International (Europe) Limited and Gains
International Asia Holdings Limited to entities formed by GSCP 2000
and other private equity funds affiliated with Goldman, Sachs & Co.

The following table summarizes the fair value of the assets acquired and
the liabilities assumed at the date of the acquisition. The purchase price on
the date of the acquisition exceeded the fair market value of the net assets
acquired by approximately $11.3 million and was recorded as goodwill on the
consolidated balance sheet. The primary factor that contributed to a purchase
price that resulted in the recognition of goodwill is the potential ability of
the Network Services division to generate income from operations and cash flows
from operating activities in the future. The goodwill and intangible assets are
not amortizable for income tax purposes.

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IPC ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued
September 30, 2003

|                                               |                           |   |        |       
|---------------------------------------------- | ------------------------- | - | ------ | ------
|Condensed Balance Sheet (dollars in thousands) |                           |   |       
|Current assets                                 |                           | $ | 6,115 
|Property, plant and equipment, net             |                           |   | 2,645 
|Goodwill                                       |                           |   | 11,324
|Intangible assets                              |                           |   | 1,664 
|Other long-term assets                         |                           |   | 12    
|                                               |                           |   |       
|                                               | Total assets acquired     |   |        | 21,760
|                                               |                           |   |       
|Current liabilities                            |                           |   | 9,345 
|Deferred purchase consideration                |                           |   | 3,128 
|Earn-out consideration                         |                           |   | 3,594 
|                                               |                           |   |       
|                                               | Total liabilities assumed |   |        | 16,067
|                                               |                           |   |       
|                                               | Net assets acquired       |   | $      | 5,693 
|                                               |                           |   |       

The acquisition of Gains was accounted for using the purchase method of
accounting in accordance with SFAS 141 and accordingly, the Companys
consolidated results of operations for the fiscal year ended September 30, 2003
include the operating results of Gains from the date of purchase. The following
table represents the allocation of the excess of the purchase price over the
historical cost of the net tangible assets acquired at the date of the
purchase:

|                                                           |                                           |                                      |  |  |  |  |  |   |       |   |        |        |  | 
|---------------------------------------------------------- | ----------------------------------------- | ------------------------------------ |  |  |  |  |  | - | ----- | - | ------ | ------ |  | 
|(dollars in thousands)                                     |                                           |                                      |  |  |  |  |  |   |       |   |        |       
|Common stock issued at closing                             |                                           |                                      |  |  |  |  |  |   |       | $ | 5,693  |       
|Deferred purchase price payment                            |                                           |                                      |  |  |  |  |  |   |       |   | 3,128  |       
|Earn-out consideration                                     |                                           |                                      |  |  |  |  |  |   |       |   | 3,594  |       
|Transaction costs                                          |                                           |                                      |  |  |  |  |  |   |       |   | 1,703  |       
|                                                           |                                           |                                      |  |  |  |  |  |   |       |   |        |       
|Total consideration                                        |                                           |                                      |  |  |  |  |  |   |       |   | 14,118 |       
|Historical cost of net tangible assets acquired            |                                           |                                      |  |  |  |  |  |   |       |   | (1,130 | )     
|                                                           |                                           |                                      |  |  |  |  |  |   |       |   |        |       
|Excess of purchase price over net tangible assets acquired |                                           |                                      |  |  |  |  |  |   |       | $ | 12,988 |       
|                                                           |                                           |                                      |  |  |  |  |  |   |       |   |        |       
|Allocation of excess purchase price:                       |                                           |                                      |  |  |  |  |  |   |       |   |        |       
|                                                           | Residual goodwill (indefinite life)       |                                      |  |  |  |  |  |   |       |   | $      | 11,324 | 
|                                                           | Identified intangibles:                   |                                      |  |  |  |  |  |   |       |   |        |        | 
|                                                           |                                           | Customer relationships (8 year life) |  |  |  |  |  | $ | 1,200 |   |        |        |  | 
|                                                           |                                           | Proprietary software (7 year life)   |  |  |  |  |  |   | 464   |   |        |        |  | 
|                                                           |                                           |                                      |  |  |  |  |  |   |       |   |        |       
|                                                           | Total identified intangibles              |                                      |  |  |  |  |  |   |       |   |        | 1,664  | 
|                                                           |                                           |                                      |  |  |  |  |  |   |       |   |        |       
|                                                           | Total allocation of excess purchase price |                                      |  |  |  |  |  |   |       |   | $      | 12,988 | 
|                                                           |                                           |                                      |  |  |  |  |  |   |       |   |        |       

Set forth below are the unaudited pro forma combined results of operations
of the Company for the period from October 1, 2001 to December 20, 2001, the
period from November 15, 2001 (date of initial capitalization) to September 30,
2002 and the fiscal year ended September 30, 2003, respectively, assuming the
acquisition of Gains occurred as of the beginning of each period.

The unaudited pro forma combined financial information is presented for
informational purposes only and does not purport to represent the results of
operations of the Company for the periods described above had the acquisition
of Gains occurred as of the beginning of the period, or to project the results
for any future period.

|                       |  |                   |         |                    |  |               |         |   |  |   |         | 
|---------------------- |  | ----------------- | ------- | ------------------ |  | ------------- | ------- | - |  | - | ------- | 
|                       |  | Predecessors      |         |                    |  |               |         |   |  |  
|                       |  |                   |         |                    |  |               |         |   |  |  
|                       |  | Period from       |         | Period from        |  | Fiscal Year  
|                       |  | October 1, 2001   |         | November 15, 2001  |  | Ended        
|                       |  | to                |         | to                 |  | September 30,
|(dollars in thousands) |  | December 20, 2001 |         | September 30, 2002 |  | 2003         
|                       |  |                   |         |                    |  |              
|Revenue                |  | $                 | 61,648  |                    |  | $             | 244,367 |   |  | $ | 277,297 | 
|Net income (loss)      |  | $                 | (11,513 | )                  |  | $             | (10,861 | ) |  | $ | 2,840   | 

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IPC ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued
September 30, 2003

Investment in Purple Voice

IPC UK Holdings Limited (IPC UK), a subsidiary of the Company, entered
into a series of transactions with Purple Voice Holdings Limited (Purple
Voice), a business-to-business IP software company that provides Voice over
Internet Protocol solutions to the financial community. As a result of these
transactions, which closed on August 1, 2003:



| |  |  | IPC UK acquired approximately 40% of the currently outstanding common
shares (calculated on a non-diluted basis) of Purple Voice together with
a warrant for additional shares from certain minority shareholders of
Purple Voice for approximately $120,000;                                      
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | IPC UK invested $1.0 million in a 7% secured convertible note, due
September 2007, issued by Purple Voice, which is convertible into 49% of
Purple Voices share capital on a fully diluted basis;                                                                                                 
|
| |  |  | The remaining shareholders of Purple Voice granted a call option to
IPC UK, which permits IPC UK to acquire the remaining issued share
capital of Purple Voice for an aggregate amount of $0.8 million, plus an
earn-out of up to $9.0 million, dependent on certain revenue targets
being met; and
|
| |  |  | IPC Information Systems, Inc. and Purple Voice entered into an
agreement under which IPC Information Systems, Inc. has been appointed
Purple Voices exclusive reseller worldwide.                                                                                                                 

On a proforma basis, this acquisition did not have a material impact on
the Companys results of operations for the period November 15, 2001 (date of
initial capitalization) to September 30, 2002 or the fiscal year ended
September 30, 2003.

4. Inventories (in thousands)

|                                                  |  |               |        |      |  |   |        | 
|------------------------------------------------- |  | ------------- | ------ | ---- |  | - | ------ | 
|                                                  |  | September 30,
|                                                  |  |              
|                                                  |  | 2002          |        | 2003
|                                                  |  |               |        |     
|Components and manufacturing work in process      |  | $             | 6,091  |      |  | $ | 5,980  | 
|Inventory on customer sites awaiting installation |  |               | 8,025  |      |  |   | 17,874 | 
|Parts and maintenance supplies                    |  |               | 8,102  |      |  |   | 6,542  | 
|                                                  |  |               |        |      |  |   |        | 
|                                                  |  | $             | 22,218 |      |  | $ | 30,396 | 
|                                                  |  |               |        |      |  |   |        | 

5. Property, Plant and Equipment (in thousands)

|                                                |  |               |        |      |  |   |         |  
|----------------------------------------------- |  | ------------- | ------ | ---- |  | - | ------- | -
|                                                |  | September 30,
|                                                |  |              
|                                                |  | 2002          |        | 2003
|                                                |  |               |        |     
|Building                                        |  | $             | 1,893  |      |  | $ | 1,893   |  
|Furniture and fixtures, machinery and equipment |  |               | 19,224 |      |  |   | 25,716  |  
|Network equipment                               |  |               |       |      |  |   | 3,464   |  
|Leasehold improvements                          |  |               | 2,738  |      |  |   | 3,009   |  
|Land                                            |  |               | 1,349  |      |  |   | 1,349   |  
|                                                |  |               |        |      |  |   |         |  
|                                                |  |               | 25,204 |      |  |   | 35,431  |  
|Less: accumulated depreciation                  |  |               | (4,200 | )    |  |   | (11,012 | )
|                                                |  |               |        |      |  |   |         |  
|                                                |  | $             | 21,004 |      |  | $ | 24,419  |  
|                                                |  |               |        |      |  |   |         |  

Depreciation and amortization expense for fiscal year ended September 30,
2001, October 1, 2001 to December 20, 2001, and November 15, 2001 (date of
initial capitalization) to September 30, 2002 and the fiscal year ended
September 30, 2003 was $7.0 million, $1.4 million, $4.0 million and $6.8
million, respectively.

6. Goodwill and Intangible Assets

The Company adopted SFAS No. 142, effective December 20, 2001 (the date of
the acquisition of IPC Information Systems). Under SFAS No. 142, goodwill and
intangible assets that have indefinite useful lives are no longer amortized.
Rather, they are reviewed for impairment annually or more frequently if certain
indicators arise. Had the Predecessor been accounting for its goodwill and
indefinite lived intangible assets (trade name) under SFAS No. 142 for all
periods presented, the Predecessors net income (loss) would have been as
follows:

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IPC ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued
September 30, 2003

|                                                                        |  |               |         |                   |  |                    |         |               |  |   |        |   |  |   |       | 
|----------------------------------------------------------------------- |  | ------------- | ------- | ----------------- |  | ------------------ | ------- | ------------- |  | - | ------ | - |  | - | ----- | 
|                                                                        |  | Predecessors  |         |                   |  |                    |         |               |  |  
|                                                                        |  |               |         |                   |  |                    |         |               |  |  
|                                                                        |  | Fiscal Year   |         | Period from       |  | Period from        |         | Fiscal Year  
|                                                                        |  | Ended         |         | October 1, 2001   |  | November 15, 2001  |         | Ended        
|                                                                        |  | September 30, |         | to                |  | to                 |         | September 30,
|(dollars in thousands)                                                  |  | 2001          |         | December 20, 2001 |  | September 30, 2002 |         | 2003         
|                                                                        |  |               |         |                   |  |                    |         |              
|Reported net income (loss)                                              |  | $             | (12,831 | )                 |  | $                  | (11,028 | )             |  | $ | (9,200 | ) |  | $ | 4,039 | 
|Add back goodwill amortization, net of tax                              |  |               | 13,367  |                   |  |                    | 2,978   |               |  |   |       |   |  |   |      | 
|Add back amortization of indefinite lived
intangible assets, net of tax |  |               | 4,263   |                   |  |                    | 950     |               |  |   |       |   |  |   |      | 
|                                                                        |  |               |         |                   |  |                    |         |               |  |   |        |   |  |   |       | 
|Adjusted net income (loss)                                              |  | $             | 4,799   |                   |  | $                  | (7,100  | )             |  | $ | (9,200 | ) |  | $ | 4,039 | 
|                                                                        |  |               |         |                   |  |                    |         |               |  |   |        |   |  |   |       | 

The
following table reflects the changes in goodwill for the period
November 15, 2001 (date of initial capitalization) to
September 30, 2002, and for the fiscal year
ended September 30, 2003:

|                               |                                                                                                                                                                                                                      |      |               |        |               |   |        |        |  
|------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- | ------------- | ------ | ------------- | - | ------ | ------ | -
|                               |                                                                                                                                                                                                                      |      | September 30, |        | September 30,
|(dollars in thousands)         |                                                                                                                                                                                                                      | 2002 |               | 2003  
|                               |                                                                                                                                                                                                                      |      |               |       
|Balance at beginning of period |                                                                                                                                                                                                                      | $    |              |        |               | $ | 72,279 |       
|                               | Additions (primarily related to the
acquisition of IPC Information Systems in
fiscal year 2002 and the acquisition of
Gains in fiscal year 2003)                                                                     |      |               | 78,519 |               |   |        | 11,324 |  
|                               | Write-offs                                                                                                                                                                                                           |      |               |       |               |   |        |       |  
|                               | Effect of currency translation adjustments                                                                                                                                                                           |      |               | 1,643  |               |   |        | 1,919  |  
|                               | Reductions (primarily related to working
capital adjustments for the acquisition
of IPC Information Systems in fiscal year
2002 and the settlement and rejection
agreement with Global Crossing in fiscal
year 2003) |      |               | (7,883 | )             |   |        | (2,443 | )
|                               |                                                                                                                                                                                                                      |      |               |        |               |   |        |       
|Balance at end of period       |                                                                                                                                                                                                                      | $    | 72,279        |        |               | $ | 83,079 |       
|                               |                                                                                                                                                                                                                      |      |               |        |               |   |        |       

The following table reflects the gross carrying amount and accumulated
amortization of the Companys goodwill and intangible assets included in the
consolidated balance sheets as of the dates indicated:

|                       |                                  |                                                 |                     |      |               |         |               |   |         |         | 
|---------------------- | -------------------------------- | ----------------------------------------------- | ------------------- | ---- | ------------- | ------- | ------------- | - | ------- | ------- | 
|                       |                                  |                                                 |                     |      | September 30, |         | September 30,
|(dollars in thousands) |                                  | 2002                                            |                     | 2003
|                       |                                  |                                                 |                     |     
|Intangible assets:     |                                  |                                                 |                     |      |               |         |               |  
|                       | Amortized intangible assets:     |                                                 |                     |      |               |         |               |   |        
|                       |                                  | Technology                                      |                     | $    | 45,000        |         |               | $ | 46,346  |        
|                       |                                  | Customer relationships                          |                     |      | 154,030       |         |               |   | 155,230 |        
|                       |                                  | Effect of currency translation adjustments      |                     |      | 2,754         |         |               |   | 5,189   |        
|                       |                                  | Accumulated amortization-technology             |                     |      | (5,014        | )       |               |   | (11,517 | )      
|                       |                                  | Accumulated amortization-customer relationships |                     |      | (6,100        | )       |               |   | (14,055 | )      
|                       |                                  |                                                 |                     |      |               |         |               |  
|                       |                                  |                                                 | Net carrying amount |      | $             | 190,670 |               |   | $       | 181,193 | 
|                       |                                  |                                                 |                     |      |               |         |               |  
|                       | Non-amortized intangible assets: |                                                 |                     |      |               |         |               |   |        
|                       |                                  | Goodwill                                        |                     | $    | 70,636        |         |               | $ | 79,517  |        
|                       |                                  | Trade name                                      |                     |      | 18,000        |         |               |   | 18,000  |        
|                       |                                  | Effect of currency translation adjustments      |                     |      | 2,105         |         |               |   | 4,455   |        
|                       |                                  |                                                 |                     |      |               |         |               |  
|                       |                                  |                                                 | Net carrying amount |      | $             | 90,741  |               |   | $       | 101,972 | 
|                       |                                  |                                                 |                     |      |               |         |               |  

Amortization expense for those intangible assets still required to be
amortized under SFAS No. 142 was $11.1 million and $14.5 million for the period
from November 15, 2001 (date of initial capitalization) to September 30, 2002
and for the fiscal year ended September 30, 2003, respectively. Amortization
expense for goodwill and intangible assets prior to the adoption of SFAS No.
142 was $41.6 million and $9.3 million for the fiscal year ended September 30,
2001 and the period from October 1, 2001 to December 20, 2001, respectively.

Estimated annual amortization expense for fiscal year 2004 and each of the
four succeeding fiscal years for intangible assets required to be amortized
under SFAS 142 is as follows:

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IPC ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued
September 30, 2003

|                        |  |   |       
|----------------------- |  | - | ------
|(dollars in thousands): |  |   |       
|                        |  |   |       
|2004                    |  | $ | 14,981
|2005                    |  |   | 14,981
|2006                    |  |   | 14,981
|2007                    |  |   | 14,533
|2008                    |  |   | 14,533

7. Accrued Expenses and Other Current Liabilities (in thousands)

|                                         |  |               |        |      |  |   |        | 
|---------------------------------------- |  | ------------- | ------ | ---- |  | - | ------ | 
|                                         |  | September 30,
|                                         |  |              
|                                         |  | 2002          |        | 2003
|                                         |  |               |        |     
|Accrued compensation and benefits        |  | $             | 7,719  |      |  | $ | 7,433  | 
|Warranty reserves                        |  |               | 2,159  |      |  |   | 1,889  | 
|Sales taxes payable                      |  |               | 1,267  |      |  |   | 891    | 
|Job accruals                             |  |               | 1,867  |      |  |   | 2,536  | 
|Accrued transaction costs                |  |               | 651    |      |  |   | 2,124  | 
|Accrued carrier costs                    |  |               |       |      |  |   | 3,650  | 
|Current portion of deferred compensation |  |               | 633    |      |  |   | 692    | 
|Accrued interest                         |  |               | 5,072  |      |  |   | 5,299  | 
|Other accruals                           |  |               | 4,827  |      |  |   | 4,027  | 
|                                         |  |               |        |      |  |   |        | 
|                                         |  | $             | 24,195 |      |  | $ | 28,541 | 
|                                         |  |               |        |      |  |   |        | 

8. Long Term Debt

Senior Secured Credit Facilities

On December 20, 2001, the Company entered into the senior secured credit
facilities comprised of a $105.0 million term loan and a $15.0 million
revolving credit facility. On September 2, 2003, the Company amended and restated its credit
facilities. The amended and restated senior secured credit facilities consist
of a $25.0 million revolving credit facility and a $55.0 million term loan;
provided, however, that the Company can increase the committed amount under
these facilities by up to $25.0 million so long as one or more lenders agrees
to provide this incremental commitment and other customary conditions are
satisfied. The term loan was borrowed in full at closing, but as of September
30, 2003, the Company has not borrowed against the revolving credit facility.
The amount available under the revolving credit facility is reduced by
outstanding letters of credit of $4.3 million as of September 30, 2003. At
September 30, 2003, the interest rate for borrowings outstanding under the
amended and restated senior secured credit facilities was 5.12%.

Mandatory prepayments of the amended and restated senior secured credit
facilities are required upon the occurrence of certain events, including
certain asset sales, equity issuances and debt issuances, as well as from 75%
of our excess cash flow in the 2003 fiscal year and 50% of excess cash flow thereafter.
Excess cash flow is defined in the Companys amended and restated credit
agreement as: (1) the sum of net income, interest expense, provisions for
taxes, depreciation expense, amortization expense, other non-cash items
affecting net income and to the extent included in calculating net income,
expenses incurred by the Company in connection with an amendment of the then
existing credit agreement, certain restructuring expenses and prepayment
premiums in connection with prepayment of loans under the then existing credit
agreement, plus (2) a working capital adjustment less (3) scheduled repayments
of debt, capital expenditures, cash interest expense and provisions for taxes
based on income.

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IPC ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued
September 30, 2003

As required under the terms of the Companys senior secured credit
facilities, the Company made mandatory excess cash flow repayments of $30.0
million and $0.8 million on September 30, 2002 and December 29, 2002,
respectively, based upon 75% of its excess cash flow for the period ended
September 30, 2002. On March 3, 2003, the Company also voluntarily prepaid
$14.0 million in debt on its then existing senior secured credit facilities. At
September 30, 2003, the Company was not required to make a mandatory excess cash
flow repayment under the terms of the amended and restated senior secured
credit facilities.

Obligations under the amended and restated senior secured credit
facilities are secured by a first priority security interest in substantially
all of the Companys assets and the assets of its domestic subsidiaries and by
a pledge of 100% of the shares of its domestic subsidiaries and 65% of the
shares of direct foreign subsidiaries. The Companys domestic subsidiaries have
unconditionally guaranteed its obligations under the amended and restated
senior secured credit facilities.

The amended and restated senior secured credit facilities contain
customary affirmative covenants as well as negative covenants that, among other
things, restrict the Companys and its subsidiaries ability to: incur
additional indebtedness (including guarantees of certain
obligations); create liens engage
in mergers, consolidations, liquidations and dissolutions; sell assets; enter
into capital leases; pay dividends or make other payments in respect of capital
stock; make acquisitions; make investments, loans and advances; enter
into transactions with affiliates; make payments
with respect to or modify subordinated debt instruments; enter into
sale and leaseback transactions; change the fiscal year or lines of
business; and enter into
agreements with negative pledge clauses or clauses restricting subsidiary
distributions.

The amended and restated senior secured credit facilities also contain
minimum interest coverage and fixed charge coverage ratios and maximum senior
secured and total leverage ratios as well as a restriction on the amount of capital
expenditures the Company can incur in a fiscal year.

As of September 30, 2003, annual principal repayments required under the
$55.0 million term loan, (excluding any future excess free cash flow amounts),
by fiscal year, are as follows (in thousands):

|     |  |   |       
|---- |  | - | ------
|2004 |  | $ | 550   
|2005 |  |   | 550   
|2006 |  |   | 550   
|2007 |  |   | 550   
|2008 |  |   | 52,800
|     |  |   |       
|     |  | $ | 55,000
|     |  |   |       

Senior Subordinated Notes

The Company issued $150.0 million in aggregate principal amount of 11.50%
senior subordinated notes on December 20, 2001 to fund a portion of the
consideration for the acquisition of IPC Information Systems. Under the terms
of the indenture governing the senior subordinated notes, the Company may,
subject to certain restrictions, issue additional notes up to a maximum
aggregate principal amount of $250 million. The senior subordinated notes
mature on December 15, 2009. The senior subordinated notes are general
unsecured obligations of the Company, are subordinated in right of payment to
all existing and future senior debt, including the senior secured credit
facilities, are pari passu in right of payment with any future senior
subordinated indebtedness of the Company, and are unconditionally guaranteed by
certain of the Companys domestic restricted subsidiaries.

Interest on the senior subordinated notes accrue at the rate of 11.50% per
annum and is payable semi-annually in arrears on June 15 and December 15,
commencing on June 15, 2002. Pursuant to a registration rights agreement
entered into at the time the senior subordinated notes were issued, on June 21,
2002 the Company completed an exchange offer registered under the Securities
Act of 1933, as amended, in which 100% of the outstanding senior subordinated
notes were exchanged for a different series of senior subordinated notes having
substantially identical terms.

The indenture governing the senior subordinated notes contains covenants
that impose significant restrictions on the Company. These restrictions include
limitations on the ability of the Company and its restricted subsidiaries to:
incur indebtness or issue preferred shares; pay dividends or make distributions
in respect of capital stock or to make other restricted payments; create liens;
agree to payment restrictions affecting restricted subsidiaries; consolidate,
merge, sell or otherwise dispose of all or substantially all of its assets;
enter into transactions with affiliates; and designate subsidiaries as
unrestricted subsidiaries.

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IPC ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued
September 30, 2003

9. Deferred Compensation and Other Benefit Plans

Deferred Compensation

The Company has deferred compensation agreements with certain past key
officers and employees. Amounts to be paid range from $3,330 to $275,000 per
individual per annum and are non-interest-bearing, with the payments commencing
on specified dates. Payments began in 1992 and continue through 2019. The gross
and discounted present value (using an interest rate of 7.5%), net of cash
payments, of the amounts to be paid under these agreements aggregated $5.2
million and $3.6 million, respectively, at September 30, 2003.

Approximate payments for subsequent fiscal periods related to the deferred
compensation agreements at September 30, 2003, are as follows (in thousands):

|                                  |                                   |   |       |        |  
|--------------------------------- | --------------------------------- | - | ----- | ------ | -
|Fiscal year ending September 30,: |                                   |   |       |       
|2004                              |                                   | $ | 692   |       
|2005                              |                                   |   | 503   |       
|2006                              |                                   |   | 521   |       
|2007                              |                                   |   | 490   |       
|2008                              |                                   |   | 465   |       
|Thereafter                        |                                   |   | 2,552 |       
|                                  |                                   |   |       |       
|                                  | Total minimum payments            |   |       | 5,223  |  
|                                  | Less amount representing interest |   |       | (1,595 | )
|                                  |                                   |   |       |       
|                                  | Present value of minimum payments |   | $     | 3,628  |  
|                                  |                                   |   |       |       

Pension Plans

The Company offers its qualified U.S. employees the opportunity to
participate in a defined contribution employee retirement plan in accordance
with section 401(k) of the Internal Revenue Code. Eligible employees are
entitled to contribute up to 50% of their annual compensation, subject to
certain limitations ($12,000 for the year ended December 31, 2003). The
Companys matching contributions are subject to the discretion of the board of
directors. IPC UK, IPC Singapore, IPC Hong Kong and IPC Australia have defined
contribution plans covering their employees. Employee contributions are limited
by statute, generally not to exceed 17.5% (UK), 16.0% (Singapore), 10.0% (Hong
Kong) and 9.0% (Australia) of base salary. The Companys contributions to these
plans, net of forfeitures, for the fiscal year ended September 30, 2001, the
period from October 1, 2001 to December 20, 2001, the period from November 15,
2001 (date of initial capitalization) to September 30, 2002 and the fiscal year
ended September 30, 2003 were $0.3 million, $0.1 million, $0.5 million and $1.6
million, respectively.

The Company paid to Kleinknecht Electric Company New York (KEC-NY) and
Kleinknecht Electric Company New Jersey (KEC-NJ), both former affiliated
companies owned by one of the Companys minority stockholders, in accordance
with labor pooling agreements, approximately $8.9 million, $1.9 million, $5.6
million and $5.0 million for the fiscal year ended September 30, 2001, the
period from October 1, 2001 to December 20, 2001, the period from November 15,
2001 (date of initial capitalization) to September 30, 2002 and the fiscal year
ended September 30, 2003, respectively. These payments represented pass-through
contributions to various union sponsored pension plans.

Stock Option Plan

In February 2002, the Company adopted the 2002 Stock Option Plan. The
option plan provides for the grant of options to purchase shares of the
Companys common stock to selected employees, officers, consultants and
directors. The purpose of the option plan is to provide an incentive to
employees, officers, consultants and directors to devote their abilities and
industry to the Companys success. The maximum number of shares that may be
made the subject of options granted under the option plan is
1,900,000 and
the Company has reserved such amount of shares of common stock for issuance
upon the exercise of its outstanding stock options. The table below reflects
the number of stock options granted by the Company since its inception:

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IPC ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued
September 30, 2003

|               |  |        |       |               |  |           |           | 
|-------------- |  | ------ | ----- | ------------- |  | --------- | --------- | 
|               |  |        |       |               |  | Number of
|               |  | Option |       | Stock Options
|Grant date     |  | Price  |       | granted      
|               |  |        |       |              
|April 2002     |  | $      | 10.00 |               |  |           | 769,550   | 
|April 2003     |  | $      | 10.00 |               |  |           | 288,650   | 
|July 2003      |  | $      | 10.00 |               |  |           | 595,000   | 
|September 2003 |  | $      | 10.00 |               |  |           | 146,000   | 
|               |  |        |       |               |  |           |           | 
|               |  |        |       |               |  |           | 1,799,200 | 
|               |  |        |       |               |  |           |           | 

The Company accounts for these options pursuant to APB Opinion No. 25
Accounting for Stock Options Issued to Employees. Accordingly, no
compensation expense was recognized for these grants.

The option plan is administered by the compensation committee of the
Companys board of directors, which determines the individuals to whom options
are awarded, the number of shares subject to each award, the exercise price of
the option and other terms and conditions of the awards. Unless otherwise
provided by the compensation committee, an option becomes exercisable for 25%
of the shares subject to the option on each of the first four anniversaries of
the date the compensation committee grants the option. Options granted under
the option plan are non-transferable and the shares acquired upon exercise of
options are subject to certain transfer restrictions. The terms and conditions
of each option are set forth in an option agreement.

The option plan provides that the effect, if any, on an option upon a
change in control or sale or the consummation of a merger, consolidation, or
reorganization which results in certain of the Companys current stockholders
no longer owning any interests in the Company or any successor corporation will
be set forth in the option agreement. Under the form option agreements that
have been approved by the Companys compensation committee for current use
under the plan, upon a change in control, 50% of the unvested portion of each
option will immediately become vested and exercisable. In the event an option
holders employment is terminated by the Company for any reason other than
cause or disability within one year following the change in control, the option
will immediately become fully vested and exercisable and remain exercisable for
180 days. The
form agreements also provide that in the event of a sale or the
consummation of a merger, consolidation or reorganization which results in
certain of the Companys stockholders no longer having any ownership interest
in the Company or any successor corporation, the option will become fully
vested and exercisable.

Stock
option transactions for the period from November 15, 2001 (date
of initial capitalization) to September
30, 2003 are as follows:

|                                                                  |           |  |           |           |                  |   |       |       | 
|----------------------------------------------------------------- | --------- |  | --------- | --------- | ---------------- | - | ----- | ----- | 
|                                                                  |           |  | Number of |           | Weighted Average
|                                                                  |           |  | Shares    |           | Exercise Price  
|                                                                  |           |  |           |           |                 
|Outstanding at November 15, 2001 (date of initial capitalization) |           |  |          |           |                  |   |      |      
|                                                                  | Granted   |  |           | 769,550   |                  |   | $     | 10.00 | 
|                                                                  | Exercised |  |           |          |                  |   |       |      | 
|                                                                  | Cancelled |  |           | (18,525   | )                |   | $     | 10.00 | 
|                                                                  |           |  |           |           |                  |   |       |      
|Outstanding at September 30, 2002                                 |           |  | 751,025   |           |                  | $ | 10.00 |      
|                                                                  | Granted   |  |           | 1,029,650 |                  |   | $     | 10.00 | 
|                                                                  | Exercised |  |           |          |                  |   |       |      | 
|                                                                  | Cancelled |  |           | (98,775   | )                |   | $     | 10.00 | 
|                                                                  |           |  |           |           |                  |   |       |      
|Outstanding at September 30, 2003                                 |           |  | 1,681,900 |           |                  | $ | 10.00 |      
|                                                                  |           |  |           |           |                  |   |       |      

Of the total stock options outstanding, 175,625 were exercisable at
September 30, 2003 and the remaining weighted average contractual life is 9.3
years. The amount of additional stock options available to be granted pursuant
to the option plan was 218,100 at September 30, 2003.

Key Employee Equity Investment Plan

In February 2002, the Company adopted the Key Employee Equity Investment
Plan. Under the plan, certain key employees, officers and directors may be
given the opportunity to purchase shares of the Companys common stock at its
current fair market value. The plan is administered by the compensation
committee of the Companys board of directors, which determines the individuals
who may participate in the plan, the number of shares offered to each
participant and the terms and conditions of each offer. Up to 100,000 shares in
the aggregate may be sold under the plan. The shares are subject to certain
transfer restrictions.

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IPC ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued
September 30, 2003

Prior to the adoption of the Sarbanes-Oxley Act in July
2002, all participants were permitted to pay for up to two-thirds of the
purchase price with a promissory note that is secured by the purchased shares.
Since the adoption of the Sarbanes-Oxley Act, certain participants may no
longer be permitted to purchase shares under the plan with such promissory
notes. Through September 30, 2003, 60,000 shares were purchased under the plan
by certain directors, officers and other key employees. During the 2003 fiscal
year, no shares were purchased by such directors, officers and other key
employees. Promissory notes received by the Company for shares purchased by
directors, officers and other key employees of the Company, prior to the
adoption of the Sarbanes-Oxley Act, totaled $0.4 million.

10. Restructuring Charge

In the fourth quarter of the 2002 fiscal year, the Company reduced its
work force by approximately 8%, or 75 employees, to reduce fixed costs in the
2003 fiscal year. The reduction in work force included 21 employees from the
Companys engineering staff, 35 employees from the Companys operations staff
and 19 employees from the Companys corporate staff. The total amount of
severance and other benefits charged to the selling, general and administrative
category of the Companys statement of operations in the fourth quarter of the
2002 fiscal year was $0.6 million and was paid in full in the 2003 fiscal year.
There were no restructuring charges incurred in the 2003 fiscal year.

11. Foreign Currency Instruments

As an international company, the Company is exposed to foreign currency
risk. For the fiscal year ended September 30, 2003, the Company did not enter
into any foreign currency hedging instruments or any other derivatives
transactions. In order to minimize the risk caused by currency fluctuations,
the Company entered into two foreign currency hedging contracts, commonly known
as collars, in the third quarter of the 2002 fiscal year and recognized a loss
of $0.3 million as a component of other income and expense in the consolidated
statement of operations in connection with the settlement of these collars. The
Company used these collars to minimize exchange rate risk when repatriating
funds from its UK subsidiary. The Company repatriated these funds in September
2002 in connection with its required bank debt repayments. The currency hedged
was the British Pound.

12. Commitments and Contingencies

Operating Leases

The Company, through its subsidiaries, has entered into various operating
leases for real estate, equipment, automobiles and telecommunications lines and
circuits.

Rental expenses under operating leases were $3.9 million, $1.0 million,
$4.3 million and $6.8 million for the fiscal year ended September 30, 2001, the
period from October 1, 2001 to December 20, 2001, the period from November 15,
2001 (date of initial capitalization) to September 30, 2002 and the fiscal year
ended September 30, 2003, respectively.

Future minimum annual rental payments required under noncancellable
operating leases at September 30, 2003 are as follows (in thousands):

|           |  |   |       
|---------- |  | - | ------
|2004       |  | $ | 6,703 
|2005       |  |   | 5,744 
|2006       |  |   | 5,438 
|2007       |  |   | 5,157 
|2008       |  |   | 4,628 
|Thereafter |  |   | 10,353
|           |  |   |       
|           |  | $ | 38,023
|           |  |   |       

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IPC ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued
September 30, 2003

Warranties

The Company records a reserve for future warranty costs based on current
division sales, historical experience and managements judgment regarding
anticipated rates of warranty claims and cost per claim. The adequacy of the
recorded warranty liability is assessed each quarter and adjustments are made
as necessary. The specific terms and conditions of the warranties vary
depending on the products sold and the countries in which the Company does
business. Changes in the warranty liability for the period November
15, 2001 (date of initial capitalization) to September 30, 2002,
and for the fiscal year ended September
30, 2003 are as follows:

|                               |                          |      |               |        |   |   |       |        |  
|------------------------------ | ------------------------ | ---- | ------------- | ------ | - | - | ----- | ------ | -
|                               |                          |      | September 30,
|(dollars in thousands)         |                          | 2002 |               | 2003  
|                               |                          |      |               |        |   |   |       |       
|Balance
at beginning of period |                          | $    | 2,352         |        |   | $ | 2,159 |       
|                               | Warranty accrual         |      |               | 1,745  |   |   |       | 2,136  |  
|                               | Material and labor usage |      |               | (1,938 | ) |   |       | (2,406 | )
|                               |                          |      |               |        |   |   |       |       
|Balance
at end of period       |                          | $    | 2,159         |        |   | $ | 1,889 |       
|                               |                          |      |               |        |   |   |       |       

Guarantees

The Company, through its subsidiaries, guaranteed certain equipment lease,
real estate and other obligations of its former affiliate, Global Crossing. The
Company remains a guarantor of certain real estate lease obligations on behalf
of Global Crossing including the sublease for office space at 67-73 Worship
Street in London, England. The terms of these guaranties will expire in
November 2004 and December 2005. These obligations were entered as a result of
Global Crossings ownership of the Company and the Company is responsible for
any payments if Global Crossing fails to make the required payments under the
lease agreements. However, under the settlement and rejection agreement (as
discussed in footnote No. 3), $2.0 million has been placed in an escrow account
pending the issuance of an irrevocable letter of credit from Global Crossing to
the Company as beneficiary in the event that Global Crossing fails to make the
required payments under the Worship Street sublease. The carrying value of
these guaranties as of September 30, 2003 is $2.6 million, and such amount has
been recorded on the Companys consolidated balance sheet in accordance with
FIN 45. Such amount has been reduced by the $2.0 million escrow account. The
maximum potential future payments the Company could be required to make under
these obligations is $4.7 million. Through September 30, 2003, Global
Crossings affiliate has made all of the required Worship Street sublease
payments.

Legal Proceedings

Except as described below, the Company is not a party to any pending legal
proceedings other than claims and lawsuits arising in the normal course of
business. Management believes these proceedings will not have a material
adverse effect on the Companys consolidated financial condition or results of
operations.

On June 27, 2000, an action was brought against several defendants,
including IPC Communications, Inc., in the United States District Court for the
Southern District of New York by two telecommunications cabling contractors
alleging that IPC Communications, Inc. violated federal antitrust and New York state law by
conspiring with the International Brotherhood of Electrical Workers Local Union
Number 3, AFL-CIO, and five electrical contractors to exclude plaintiffs from
telecommunications wiring and systems installation jobs in the New York City
metropolitan area. Subsequently, the complaint was amended to add an additional
plaintiff and an additional defendant contractor. The Company believes the suit
is without merit. However, there can be no assurance that the resolution of
this lawsuit will ultimately be favorable. Plaintiffs are seeking injunctive
relief and damages from the defendants, jointly and severally, in excess of an
aggregate of $75.0 million.

On September 8, 2003, an action was brought against several defendants,
including IPC Information Systems, Inc. and its President, in the United States
District Court for the Eastern District of New York by Advance Relocation &
Storage Co., Inc., a moving company. The complaint alleges that IPC Information
Systems, Inc. and 23 other defendants violated the Racketeer Influenced and
Corrupt Organizations Act and engaged in tortious interference with prospective
business advantage by preventing the plaintiff from obtaining work as a mover
in jobs performed in large commercial buildings in New York City. The Company
believes the suit is without merit and intends to vigorously defend against all
claims alleged against it in the complaint. Plaintiffs are seeking injunctive
relief and damages from the defendants, jointly and severally, in an aggregate
amount of approximately $7.0 million.

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IPC ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued
September 30, 2003

13. Related Party Transactions

Goldman, Sachs & Co.

GSCP 2000 and other private equity funds affiliated with Goldman, Sachs &
Co. own substantially all of the Companys common stock. Goldman, Sachs & Co.,
an affiliate of GSCP 2000 and its related investment funds, provided advisory
and other services to GSCP 2000 and the Company in connection with sourcing,
structuring and arranging the acquisition of IPC Information Systems and
received fees of $8.0 million for those services. Goldman, Sachs & Co. also
acted as an initial purchaser in the offering of the Companys notes and an
affiliate of Goldman, Sachs & Co. acted as the arranger and syndication agent
under the Companys senior secured credit facilities. In connection with these
transactions, Goldman, Sachs & Co. and its affiliates received aggregate fees
of approximately $9.3 million. The fees charged by Goldman, Sachs & Co. were
commensurate with the fees that Goldman, Sachs & Co. charges for acting in a
similar capacity on comparable transactions. Goldman, Sachs & Co. and its
affiliates may in the future provide commercial banking, investment banking or
other financial advisory services to the Company and its affiliates. Goldman,
Sachs & Co. and/or its affiliates also purchase goods and services from the
Company from time to time and may do so in the future.

The Company provides project sales and installation and maintenance
services negotiated on an arms-length basis to Goldman, Sachs & Co. Services
provided by the Company are billed to Goldman, Sachs & Co, and settled through
the collection of trade receivables and are consistent with pricing offered to
comparable globally positioned customers. Revenue related to these services
amounted to $4.5 million and $9.3 million for the period from November 15 (date
of initial capitalization) to September 30, 2002 and the fiscal year ended
September 30, 2003, respectively. For the periods ending September 30, 2002 and
2003, the Company has recorded on its balance sheet $1.1 million and $2.9
million of trade receivables, respectively, and $2.7 and $0.9 million of
customer advances, respectively, related to maintenance services provided to
Goldman, Sachs & Co.

In connection with the amendment and restatement of the Companys senior
secured credit facilities in September 2003, Goldman Sachs Credit Partners L.P.
acted as the sole lead arranger and syndication agent. Goldman Sachs Credit
Partners L.P. received $0.6 million in fees for this service, which was
commensurate with the fees that they charge for acting in a similar capacity on
comparable transactions.

Gains Acquisition

On April 30, 2003, the Company exercised its option to purchase Gains from
GSCP 2000 and other private equity funds affiliated with Goldman, Sachs & Co.,
who own substantially all of the Companys common stock, for 664,380 shares of
common stock valued at approximately $5.7 million plus the assumption of
deferred consideration of $3.1 million and earn-out commitments up to a maximum
of approximately $3.6 million based on current exchange rates. With the
acquisition of these entities, the Company now offers network voice and data
services to the financial services community under the name Network Services.
This transaction followed the completion of a transaction involving the sale of
Gains International (US) Inc., Gains International (Europe) Limited and Gains
International Asia Holdings Limited to entities formed by GSCP 2000 and other
private equity funds affiliated with Goldman, Sachs & Co.

Stockholders Agreement

The Company has entered into a stockholders agreement with GSCP 2000 and
the other private equity funds affiliated with Goldman, Sachs & Co. who own the
Companys common stock and Richard Kleinknecht, a minority holder of the
Companys common stock. This agreement provides GSCP 2000 and the other
Goldman, Sachs & Co. funds with various management rights, including the right
to designate at least one member of our board of directors. The agreement also
provides specified restrictions on Kleinknechts ability to transfer shares of
the Companys common stock. GSCP 2000 has advised the Company that it and the
other Goldman, Sachs & Co. funds may seek additional minority stockholders to
invest in up to approximately twenty percent of the Companys common stock held
by them. In connection with any investment by minority stockholders, the
Company may enter into stockholders agreements with those minority
stockholders. The Company expects any stockholders agreement to contain
customary terms, including terms regarding corporate governance and other
rights relating to the stockholders investment in its common stock.

Global Crossing

Through
December 20, 2001, Global Crossing and IPC Information Systems performed various
services and provided certain equipment for each other. Services and/or
equipment provided by Global Crossing were billed to IPC Information Systems and settled through a
periodic cash transfer to

58



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IPC ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued
September 30, 2003

Global Crossing. Revenue related to
services provided by IPC Information Systems to
Global Crossing amounted to $2.9 million and $0.4 million for the fiscal year
ended September 30, 2001 and the period from October 1, 2001 to December 20, 2001,
respectively.

Through December 20, 2001, Global Crossing allocated certain shared costs
to IPC Information Systems for items such as human resources, information technology, legal and
communication that amounted to $2.7 million and $0.5 million, for the fiscal
year ended September 30, 2001 and the period from October 1, 2001 to December
20, 2001, respectively. Additionally, Global Crossing allocated a corporate
charge to IPC Information Systems of $1.9 million and $6.9 million for the fiscal year ended
September 30, 2001 and the period from October 1, 2001 to December 20, 2001,
respectively, which represented the allocation for fiscal year 2000 and 2001. IPC
Information Systems allocated
charges to Global Crossing for shared real estate locations that amounted to
$1.0 million for the period October 1, 2001 to December 20, 2001. Management
believes that the costs allocated to IPC Information Systems are reasonable.



|14. |  | Income Taxes
|--- |  | ------------

Pretax income (loss) consisted of the following:

|                           |  |               |         |                   |  |                    |         |               |  |   |         |   |  |   |        | 
|-------------------------- |  | ------------- | ------- | ----------------- |  | ------------------ | ------- | ------------- |  | - | ------- | - |  | - | ------ | 
|                           |  | Predecessors  |         |                   |  |                    |         |               |  |  
|                           |  |               |         |                   |  |                    |         |               |  |  
|                           |  | Fiscal Year   |         | Period from       |  | Period from        |         | Fiscal Year  
|                           |  | Ended         |         | October 1, 2001   |  | November 15, 2001  |         | Ended        
|                           |  | September 30, |         | to                |  | to                 |         | September 30,
|(dollars in thousands)     |  | 2001          |         | December 20, 2001 |  | September 30, 2002 |         | 2003         
|                           |  |               |         |                   |  |                    |         |              
|United States              |  | $             | (24,725 | )                 |  | $                  | (16,230 | )             |  | $ | (22,080 | ) |  | $ | 3,333  | 
|Foreign                    |  |               | 16,300  |                   |  |                    | 4,884   |               |  |   | 10,594  |   |  |   | 8,554  | 
|                           |  |               |         |                   |  |                    |         |               |  |   |         |   |  |   |        | 
|Total pretax income (loss) |  | $             | (8,425  | )                 |  | $                  | (11,346 | )             |  | $ | (11,486 | ) |  | $ | 11,887 | 
|                           |  |               |         |                   |  |                    |         |               |  |   |         |   |  |   |        | 

The provision (benefit) for income taxes consisted of the following:

|                       |                 |                               |         |                   |       |                    |        |                   |      |               |        |        |        |   |       |       |       | 
|---------------------- | --------------- | ----------------------------- | ------- | ----------------- | ----- | ------------------ | ------ | ----------------- | ---- | ------------- | ------ | ------ | ------ | - | ----- | ----- | ----- | 
|                       |                 |                               |         | Predecessors      |       |                    |        |                   |      |               |        |       
|                       |                 |                               |         |                   |       |                    |        |                   |      |               |        |       
|                       |                 |                               |         | Fiscal Year       |       | Period from        |        | Period from       |      | Fiscal Year  
|                       |                 |                               |         | Ended             |       | October 1, 2001    |        | November 15, 2001 |      | Ended        
|                       |                 |                               |         | September 30,     |       | to                 |        | to                |      | September 30,
|(dollars in thousands) |                 | 2001                          |         | December 20, 2001 |       | September 30, 2002 |        | 2003             
|                       |                 |                               |         |                   |       |                    |        |                  
|Current:               |                 |                               |         |                   |       |                    |        |                   |      |               |        |        |        |   |       |      
|                       | State and local |                               | $       | 2,582             |       |                    | $      | 747               |      |               | $      | 490    |        |   | $     | 857   |      
|                       | Foreign         |                               |         | 5,835             |       |                    |        | 1,344             |      |               |        | 4,394  |        |   |       | 4,961 |      
|                       | Federal         |                               |         | 9,137             |       |                    |        | 2,352             |      |               |        |       |        |   |       |      |      
|                       |                 |                               |         |                   |       |                    |        |                   |      |               |        |        |        |   |       |      
|                       |                 |                               | 17,554  |                   |       |                    | 4,443  |                   |      |               | 4,884  |        |        |   | 5,818 |      
|                       |                 |                               |         |                   |       |                    |        |                   |      |               |        |        |        |   |       |      
|Deferred:              |                 |                               |         |                   |       |                    |        |                   |      |               |        |        |        |   |       |      
|                       | State           |                               |         | (2,897            | )     |                    |        | (1,050            | )    |               |        | (930   | )      |   |       | 124   |      
|                       | Foreign         |                               |         |                  |       |                    |        |                  |      |               |        | (452   | )      |   |       | (635  | )    
|                       | Federal         |                               |         | (10,251           | )     |                    |        | (3,711            | )    |               |        | (5,788 | )      |   |       | 2,541 |      
|                       |                 |                               |         |                   |       |                    |        |                   |      |               |        |        |        |   |       |      
|                       |                 |                               | (13,148 | )                 |       |                    | (4,761 | )                 |      |               | (7,170 | )      |        |   | 2,030 |      
|                       |                 |                               |         |                   |       |                    |        |                   |      |               |        |        |        |   |       |      
|                       |                 | Total tax provision (benefit) |         | $                 | 4,406 |                    |        | $                 | (318 | )             |        | $      | (2,286 | ) |       | $     | 7,848 | 
|                       |                 |                               |         |                   |       |                    |        |                   |      |               |        |        |        |   |       |      

The components of net deferred tax assets (liabilities) are as follows:

|                          |                                            |                           |   |                    |        |                    |   |    |   |         |   |        |        |  |   |        |        |  |   |        |   |  |   |        |        | 
|------------------------- | ------------------------------------------ | ------------------------- | - | ------------------ | ------ | ------------------ | - | -- | - | ------- | - | ------ | ------ |  | - | ------ | ------ |  | - | ------ | - |  | - | ------ | ------ | 
|                          |                                            |                           |   | September 30, 2002 |        | September 30, 2003
|                          |                                            |                           |   |                    |        |                   
|(dollars in thousands)    |                                            | US                        |   | Foreign            |        | Total              |   | US |   | Foreign |   | Total 
|                          |                                            |                           |   |                    |        |                    |   |    |   |         |   |       
|Deferred tax assets:      |                                            |                           |   |                    |        |                    |   |    |   |         |   |        |        |  |   |        |        |  |   |        |   |  |   |       
|                          | Excess book over tax depreciation          |                           | $ | 607                |        |                    | $ |   |   |         | $ | 607    |        |  | $ |       |        |  | $ |       |   |  | $ |       |       
|                          | Inventory and receivables                  |                           |   | 1,962              |        |                    |   |   |   |         |   | 1,962  |        |  |   | 1,996  |        |  |   |       |   |  |   | 1,996  |       
|                          | Accrued expenses and deferred
compensation |                           |   | 2,101              |        |                    |   |   |   |         |   | 2,101  |        |  |   | 2,233  |        |  |   |       |   |  |   | 2,233  |       
|                          | Net operating loss carryforwards           |                           |   | 8,895              |        |                    |   |   |   |         |   | 8,895  |        |  |   | 9,579  |        |  |   |       |   |  |   | 9,579  |       
|                          |                                            |                           |   |                    |        |                    |   |    |   |         |   |        |        |  |   |        |        |  |   |        |   |  |   |       
|                          | Total                                      |                           |   | 13,565             |        |                    |   |   |   |         |   | 13,565 |        |  |   | 13,808 |        |  |   |       |   |  |   | 13,808 |       
|                          |                                            | Less valuation allowance  |   |                    |       |                    |   |    |  |         |   |        |       |  |   |        |       |  |   |        |  |  |   |        |       | 
|                          |                                            |                           |   |                    |        |                    |   |    |   |         |   |        |        |  |   |        |        |  |   |        |   |  |   |       
|                          |                                            | Total deferred tax assets |   |                    | 13,565 |                    |   |    |  |         |   |        | 13,565 |  |   |        | 13,808 |  |   |        |  |  |   |        | 13,808 | 
|                          |                                            |                           |   |                    |        |                    |   |    |   |         |   |        |        |  |   |        |        |  |   |        |   |  |   |       
|Deferred tax liabilities: |                                            |                           |   |                    |        |                    |   |    |   |         |   |        |        |  |   |        |        |  |   |        |   |  |   |       
|                          | Intangible assets                          |                           |   | (701               | )      |                    |   |   |   |         |   | (701   | )      |  |   | (1,599 | )      |  |   |       |   |  |   | (1,599 | )     
|                          | Acquisition tax liabilities                |                           |   | (6,547             | )      |                    |   |   |   |         |   | (6,547 | )      |  |   | (5,970 | )      |  |   |       |   |  |   | (5,970 | )     
|                          | Cumulative
translation adjustment          |                           |   |                   |        |                    |   |   |   |         |   |       |        |  |   |       |        |  |   | (3,625 | ) |  |   | (3,625 | )     
|                          | Unremitted earnings of foreign entities    |                           |   | (706               | )      |                    |   |   |   |         |   | (706   | )      |  |   | (1,249 | )      |  |   |       |   |  |   | (1,249 | )     

59



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IPC ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued
September 30, 2003

|                       |                                                              |                                      |  |                    |        |                    |  |         |         |         |  |         |         |   |  |        |         |   |  |         |         |   |  |         |         |  
|---------------------- | ------------------------------------------------------------ | ------------------------------------ |  | ------------------ | ------ | ------------------ |  | ------- | ------- | ------- |  | ------- | ------- | - |  | ------ | ------- | - |  | ------- | ------- | - |  | ------- | ------- | -
|                       |                                                              |                                      |  | September 30, 2002 |        | September 30, 2003
|                       |                                                              |                                      |  |                    |        |                   
|(dollars in thousands) |                                                              | US                                   |  | Foreign            |        | Total              |  | US      |         | Foreign |  | Total  
|                       |                                                              |                                      |  |                    |        |                    |  |         |         |         |  |        
|                       | Excess tax over book depreciation                            |                                      |  |                   |        |                    |  |        |         |         |  |        |         |   |  | (1,380 | )       |   |  |        |         |   |  | (1,380  | )      
|                       | Excess
book over tax basis in assets of foreign
subsidiaries |                                      |  |                   |        |                    |  | (12,801 | )       |         |  | (12,801 | )       |   |  |       |         |   |  | (12,167 | )       |   |  | (12,167 | )      
|                       |                                                              |                                      |  |                    |        |                    |  |         |         |         |  |         |         |   |  |        |         |   |  |         |         |   |  |        
|                       |                                                              | Total deferred tax liabilities       |  |                    | (7,954 | )                  |  |         | (12,801 | )       |  |         | (20,755 | ) |  |        | (10,198 | ) |  |         | (15,792 | ) |  |         | (25,990 | )
|                       |                                                              |                                      |  |                    |        |                    |  |         |         |         |  |         |         |   |  |        |         |   |  |         |         |   |  |        
|                       |                                                              | Net deferred tax asset (liabilities) |  | $                  | 5,611  |                    |  | $       | (12,801 | )       |  | $       | (7,190  | ) |  | $      | 3,610   |   |  | $       | (15,792 | ) |  | $       | (12,182 | )
|                       |                                                              |                                      |  |                    |        |                    |  |         |         |         |  |         |         |   |  |        |         |   |  |         |         |   |  |        

The current income tax provision (benefit) and deferred tax asset
(liability) were computed using the separate return method. Foreign earnings
are assumed to be repatriated to the United States.

IPC Information Systems was included in the Global Crossing consolidated
return for federal income tax purposes for the period ended December 20, 2001.
Federal law provides that each member of an affiliated group that files a
consolidated return is liable for the groups entire tax obligation. Thus, to
the extent Global Crossing or other members of the group failed to make any
federal income tax payments required of them by law for 2001, the Company could
be liable for the shortfall. Similar principles may apply for state income tax
purposes in many states. Global Crossing has advised the Company that it does
not believe that it had federal income tax liability for 2001. The Company
cannot independently verify this information and can give no assurance that
this information is correct. If Global Crossings federal income tax
liabilities are significant and are imposed on IPC Information Systems, these
liabilities could have a material adverse effect on the Companys financial
condition and results of operations.

Based on the separate return tax computation for IPC Information Systems,
the current federal tax liability for the period ended December 20, 2001 was
treated as an intercompany liability to an affiliate included in Global
Crossings consolidated federal tax return. For tax years ending prior to
December 20, 2001, IPC Information Systems filed a separate federal tax return
with its affiliates and subsidiaries.

A reconciliation between the statutory U.S. federal income tax rate and
the effective tax rate is as follows:

|                                                     |  |               |       |                   |  |                    |       |               |  |  |       |    |  |  |      |  
|---------------------------------------------------- |  | ------------- | ----- | ----------------- |  | ------------------ | ----- | ------------- |  |  | ----- | -- |  |  | ---- | -
|                                                     |  | Predecessors  |       |                   |  |                    |       |               |  | 
|                                                     |  |               |       |                   |  |                    |       |               |  | 
|                                                     |  | Fiscal Year   |       | Period from       |  | Period from        |       | Fiscal Year  
|                                                     |  | Ended         |       | October 1, 2001   |  | November 15, 2001  |       | Ended        
|                                                     |  | September 30, |       | to                |  | to                 |       | September 30,
|(dollars in thousands)                               |  | 2001          |       | December 20, 2001 |  | September 30, 2002 |       | 2003         
|                                                     |  |               |       |                   |  |                    |       |              
|Statutory U.S. Federal tax rate                      |  |               | 35.0  | %                 |  |                    | 35.0  | %             |  |  | 35.0  | %  |  |  | 35.0 | %
|State and local income taxes,
net of Federal benefit |  |               | 2.5   | %                 |  |                    | (4.3  | )%            |  |  | 5.3   | %  |  |  | 5.7  | %
|Incremental foreign tax effect                       |  |               | (0.8  | )%                |  |                    | (5.7  | )%            |  |  | (9.3  | )% |  |  | 17.2 | %
|Goodwill amortization                                |  |               | (86.5 | )%                |  |                    | (27.7 | )%            |  |  |      |    |  |  |     |  
|Other, net                                           |  |               | (2.5  | )%                |  |                    | 5.5   | %             |  |  | (11.1 | )% |  |  | 8.1  | %
|                                                     |  |               |       |                   |  |                    |       |               |  |  |       |    |  |  |      |  
|                                                     |  |               | (52.3 | )%                |  |                    | 2.8   | %             |  |  | 19.9  | %  |  |  | 66.0 | %
|                                                     |  |               |       |                   |  |                    |       |               |  |  |       |    |  |  |      |  

The Companys effective tax rate reflects the Companys foreign, federal
and state taxes, the non-deductibility of foreign losses for federal tax
purposes, the non-deductibility of certain expenses and, for fiscal year 2003,
taxable income at several of the Companys foreign subsidiaries, which,
combined with the lower absolute amount of pre-tax income for the 2003 periods
as compared to the absolute amount of pre-tax loss for the 2002 periods,
generates a more significant impact on the Companys effective tax rate.

The Company has U.S. federal net operating loss carryforwards of
approximately $24.9 million at September 30, 2003, which
expire through September 30, 2023. As of September 30, 2003 and 2002, the Company has
recognized deferred tax assets related to its US federal and state net
operating loss carryforwards of approximately $9.6 million and $8.9 million,
respectively. In determining whether it is more likely than not that the
Company will realize the benefits of the net deferred tax assets from US
operations, the Company considered all available evidence, both positive and
negative. The principal factors that led the Company to recognize these
benefits were: (1) US results of operations for the period ended September 30,
2002 reported a loss before income taxes of $22.1 million, after reflecting
charges of $34.3 million resulting from the fair-value inventory adjustments
under the purchase price allocation (which, as a result of the Internal Revenue
Code Section 338(h)(10) tax election, jointly made by the Company and Global
Crossing, also generated deductions for income tax purposes); (2) US results of
operations for subsequent fiscal years are expected to generate sufficient
taxable income to fully utilize these tax loss carryforwards; and (3) the
Companys conclusion that the net US deferred tax assets were generated by an
event (the Companys purchase of the business), rather than a continuing
condition. As of September 30, 2003, no circumstances have arisen that would
require the Company to change such conclusion.

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IPC ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued
September 30, 2003

As a result of the rejection of the purchase agreement, Global Crossing
has been relieved of all of its obligations under the purchase agreement,
including, among other things, indemnifying the Company for tax liabilities
that may be imposed upon IPC Information Systems, Inc. and its subsidiaries for periods prior to and
including the date of the IPC Information Systems Acquisition. Therefore, in
the event that any tax liabilities are imposed, as a result of an audit or
otherwise, on IPC Information Systems, Inc. and/or its subsidiaries for these
periods prior to and including the date of the IPC Information Systems
Acquisition, the Company may be required to pay those taxes and is no longer
able to seek indemnification from Global Crossing. As of
September 30, 2003, the aggregate amount of taxes for which the Company has received
notices of taxes due from various jurisdictions and recognized as tax
liabilities under purchase accounting is approximately
$6.5 million and, as of September 30, 2003, the Company has made settlement payments aggregating $0.6 million. The
Company estimates that the range of its exposure for additional tax liabilities
is from $0.0 to $36.0 million. In computing its estimated range of potential
tax liabilities, the Company took into account tax returns in certain
jurisdictions where the statutes of limitations have not yet expired. Under
those tax returns as filed, the remaining liability is zero. Although the
Company believes that all those tax returns have been filed correctly, such
returns may be audited and additional taxes may be assessed (or refunds may be
granted). Payment by the Company of a significant amount of these potential tax
liabilities could have a material adverse effect on its financial condition and
results of operations, requiring the Company to seek additional financing. In
that event, the Company cannot assure you that it will be able to obtain
additional financing on commercially reasonable terms, or at all.

Pursuant to the settlement and rejection agreement, Global Crossing has
also paid over to the Company approximately $2.2 million for payroll and
federal tax refunds received by it for periods prior to and including the date
of the IPC Information Systems Acquisition. Global Crossing is also required to
pay the Company any future tax refunds or credits it receives that are
applicable to IPC Information Systems, Inc. and its subsidiaries for these
periods.

The Company believes that all tax returns required to be filed in respect
of IPC Information Systems, Inc. and its subsidiaries for periods prior to and
including the date of the IPC Information Systems Acquisition have now been
filed. These returns consist of consolidated tax returns with Global Crossing,
and, where required by law, separate tax returns for IPC Information Systems,
Inc. and/or its subsidiaries.



|15. |  | Business Segment Information
|--- |  | ----------------------------

The Companys operations include the Trading Systems, Information
Transport Systems, or I.T.S., and the Network Services divisions. Trading
Systems reports sales of turret systems to distributors and direct sales and
installations of turret systems as Product sales and installations. It
reports revenue from turret system maintenance, including annual and multi-year
service contracts, and from MACs to existing turret system installations as
Service. I.T.S. reports revenue from the design, integration and
implementation of cabling infrastructure projects, including local and wide
area networks, and from the sales of intelligent network products, such as
hubs, bridges and routers, as Product sales and installations. It reports
revenue from on-site maintenance of customer cable infrastructure, including
annual and multi-year contracts, and from the provision of outsourcing services
for the support, expansion and upgrading of existing customer networks, as
Service. Revenue from the Network Services division, which provides voice and
data services to the financial community, is billed in advance and recorded
ratably (on a monthly basis) over the contractual period, which is usually one
year, as Service. The Companys primary measures to evaluate performance are
direct margin (revenue less cost of goods sold, excluding indirect
costs and depreciation and amortization) and income from operations.

|                                     |                                 |               |         |                        |         |              |        |        |        |   |         |         |         | 
|------------------------------------ | ------------------------------- | ------------- | ------- | ---------------------- | ------- | ------------ | ------ | ------ | ------ | - | ------- | ------- | ------- | 
|                                     |                                 |               |         | Predecessor           
|                                     |                                 |               |         |                       
|                                     |                                 |               |         | Trading                |         |              |        |        |        |   |         |        
|Fiscal Year Ended September 30, 2001 |                                 | Systems       |         | I.T.S.                 |         | Consolidated
|                                     |                                 |               |         |                        |         |             
|                                     |                                 |               |         | (dollars in thousands)
|Revenue:                             |                                 |               |         |                        |         |              |        |        |        |   |         |        
|                                     | Product sales and installations |               | $       | 138,165                |         |              | $      | 43,102 |        |   | $       | 181,267 |        
|                                     | Service                         |               |         | 82,851                 |         |              |        | 15,579 |        |   |         | 98,430  |        
|                                     |                                 |               |         |                        |         |              |        |        |        |   |         |        
|                                     |                                 | Total revenue |         |                        | 221,016 |              |        |        | 58,681 |   |         |         | 279,697 | 
|Direct margin                        |                                 |               | 129,746 |                        |         |              | 12,508 |        |        |   | 142,254 |        
|Depreciation and amortization        |                                 |               | 48,370  |                        |         |              | 265    |        |        |   | 48,635  |        
|Income (loss) from operations        |                                 |               | 12,700  |                        |         |              | 4,718  |        |        |   | 17,418  |        
|Interest income (expense), net       |                                 |               | (27,871 | )                      |         |              |       |        |        |   | (27,871 | )      
|Other income (expense), net          |                                 |               | 2,028   |                        |         |              |       |        |        |   | 2,028   |        
|Income (loss) before income taxes    |                                 |               | (13,143 | )                      |         |              | 4,718  |        |        |   | (8,425  | )      
|Income tax provision                 |                                 |               | 4,406   |                        |         |              |       |        |        |   | 4,406   |        
|Goodwill, net                        |                                 | $             | 185,033 |                        |         | $            |       |        |        | $ | 185,033 |        
|Total assets                         |                                 | $             | 459,066 |                        |         | $            | 30,045 |        |        | $ | 489,111 |        
|Capital expenditures                 |                                 | $             | 8,982   |                        |         | $            | 388    |        |        | $ | 9,370   |        

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IPC ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued
September 30, 2003

|                                                 |                                 |               |         |                        |        |              |        |       |        |   |         |        |        | 
|------------------------------------------------ | ------------------------------- | ------------- | ------- | ---------------------- | ------ | ------------ | ------ | ----- | ------ | - | ------- | ------ | ------ | 
|                                                 |                                 |               |         | Predecessor           
|                                                 |                                 |               |         |                       
|                                                 |                                 |               |         | Trading                |        |              |        |       |        |   |         |       
|Period from October 1, 2001 to December 20, 2001 |                                 | Systems       |         | I.T.S.                 |        | Consolidated
|                                                 |                                 |               |         |                        |        |             
|                                                 |                                 |               |         | (dollars in thousands)
|Revenue:                                         |                                 |               |         |                        |        |              |        |       |        |   |         |       
|                                                 | Product sales and installations |               | $       | 27,444                 |        |              | $      | 8,247 |        |   | $       | 35,691 |       
|                                                 | Service                         |               |         | 18,795                 |        |              |        | 4,294 |        |   |         | 23,089 |       
|                                                 |                                 |               |         |                        |        |              |        |       |        |   |         |       
|                                                 |                                 | Total revenue |         |                        | 46,239 |              |        |       | 12,541 |   |         |        | 58,780 | 
|Direct margin                                    |                                 |               | 28,690  |                        |        |              | 2,734  |       |        |   | 31,424  |       
|Depreciation and amortization                    |                                 |               | 10,729  |                        |        |              | 8      |       |        |   | 10,737  |       
|Income (loss) from operations                    |                                 |               | (6,498  | )                      |        |              | 1,090  |       |        |   | (5,408  | )     
|Interest income (expense), net                   |                                 |               | (5,987  | )                      |        |              |       |       |        |   | (5,987  | )     
|Other income (expense), net                      |                                 |               | 49      |                        |        |              |       |       |        |   | 49      |       
|Income (loss) before income taxes                |                                 |               | (12,436 | )                      |        |              | 1,090  |       |        |   | (11,346 | )     
|Income tax benefit                               |                                 |               | (318    | )                      |        |              |       |       |        |   | (318    | )     
|Goodwill, net                                    |                                 | $             | 180,328 |                        |        | $            |       |       |        | $ | 180,328 |       
|Total assets                                     |                                 | $             | 350,787 |                        |        | $            | 29,179 |       |        | $ | 379,966 |       
|Capital expenditures                             |                                 | $             | 1,897   |                        |        | $            | 5      |       |        | $ | 1,902   |       

|                                                    |                                 |               |         |                        |         |              |        |        |        |   |         |         |         | 
|--------------------------------------------------- | ------------------------------- | ------------- | ------- | ---------------------- | ------- | ------------ | ------ | ------ | ------ | - | ------- | ------- | ------- | 
|                                                    |                                 |               |         | Trading                |         |              |        |        |        |   |         |        
|Period from November 15, 2001 to September 30, 2002 |                                 | Systems       |         | I.T.S.                 |         | Consolidated
|                                                    |                                 |               |         |                        |         |             
|                                                    |                                 |               |         | (dollars in thousands)
|Revenue:                                            |                                 |               |         |                        |         |              |        |        |        |   |         |        
|                                                    | Product sales and installations |               | $       | 127,246                |         |              | $      | 29,257 |        |   | $       | 156,503 |        
|                                                    | Service                         |               |         | 66,909                 |         |              |        | 9,372  |        |   |         | 76,281  |        
|                                                    |                                 |               |         |                        |         |              |        |        |        |   |         |        
|                                                    |                                 | Total revenue |         |                        | 194,155 |              |        |        | 38,629 |   |         |         | 232,784 | 
|Direct margin                                       |                                 |               | 84,215  |                        |         |              | 5,717  |        |        |   | 89,932  |        
|Depreciation and amortization                       |                                 |               | 14,760  |                        |         |              | 305    |        |        |   | 15,065  |        
|Income (loss) from operations                       |                                 |               | 10,475  |                        |         |              | (82    | )      |        |   | 10,393  |        
|Interest income (expense), net                      |                                 |               | (21,533 | )                      |         |              |       |        |        |   | (21,533 | )      
|Other income (expense), net                         |                                 |               | (346    | )                      |         |              |       |        |        |   | (346    | )      
|Income (loss) before income taxes                   |                                 |               | (11,404 | )                      |         |              | (82    | )      |        |   | (11,486 | )      
|Income tax benefit                                  |                                 |               | (2,286  | )                      |         |              |       |        |        |   | (2,286  | )      
|Goodwill, net                                       |                                 | $             | 71,308  |                        |         | $            | 971    |        |        | $ | 72,279  |        
|Total assets                                        |                                 | $             | 415,395 |                        |         | $            | 14,837 |        |        | $ | 430,232 |        
|Capital expenditures                                |                                 | $             | 6,480   |                        |         | $            | 26     |        |        | $ | 6,506   |        

|                                             |                                 |               |         |                        |         |          |        |              |        |         |        |        |        |   |         |         |         | 
|-------------------------------------------- | ------------------------------- | ------------- | ------- | ---------------------- | ------- | -------- | ------ | ------------ | ------ | ------- | ------ | ------ | ------ | - | ------- | ------- | ------- | 
|                                             |                                 |               |         | Trading                |         |          |        |              |        | Network |        |        |        |  
|For the Fiscal Year Ended September 30, 2003 |                                 | Systems       |         | I.T.S.                 |         | Services |        | Consolidated
|                                             |                                 |               |         |                        |         |          |        |             
|                                             |                                 |               |         | (dollars in thousands)
|Revenue:                                     |                                 |               |         |                        |         |          |        |              |        |         |        |        |        |   |         |        
|                                             | Product sales and installations |               | $       | 113,057                |         |          | $      | 43,736       |        |         | $      |       |        |   | $       | 156,793 |        
|                                             | Service                         |               |         | 88,482                 |         |          |        | 9,059        |        |         |        | 10,422 |        |   |         | 107,963 |        
|                                             |                                 |               |         |                        |         |          |        |              |        |         |        |        |        |   |         |        
|                                             |                                 | Total revenue |         |                        | 201,539 |          |        |              | 52,795 |         |        |        | 10,422 |   |         |         | 264,756 | 
|Direct margin                                |                                 |               | 125,213 |                        |         |          | 6,191  |              |        |         | 4,722  |        |        |   | 136,126 |        
|Depreciation and amortization                |                                 |               | 20,235  |                        |         |          | 240    |              |        |         | 777    |        |        |   | 21,252  |        
|Income (loss) from operations                |                                 |               | 34,707  |                        |         |          | 577    |              |        |         | (329   | )      |        |   | 34,955  |        
|Interest income (expense), net               |                                 |               | (25,151 | )                      |         |          |       |              |        |         | 5      |        |        |   | (25,146 | )      
|Other income (expense), net                  |                                 |               | 2,116   |                        |         |          |       |              |        |         | (38    | )      |        |   | 2,078   |        
|Income (loss) before income taxes            |                                 |               | 11,672  |                        |         |          | 577    |              |        |         | (362   | )      |        |   | 11,887  |        
|Income tax provision                         |                                 |               | 7,744   |                        |         |          |       |              |        |         | 104    |        |        |   | 7,848   |        
|Goodwill                                     |                                 | $             | 70,595  |                        |         | $        | 971    |              |        | $       | 11,513 |        |        | $ | 83,079  |        
|Total assets                                 |                                 | $             | 391,288 |                        |         | $        | 31,290 |              |        | $       | 22,332 |        |        | $ | 444,910 |        
|Capital expenditures                         |                                 | $             | 5,731   |                        |         | $        | 60     |              |        | $       | 1,736  |        |        | $ | 7,527   |        

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IPC ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued
September 30, 2003

Information about the Companys operations by geographic location is as
follows:

|                       |              |                    |              |                   |                 |                    |                   |         |               |   |             |         |  |   |         |         | 
|---------------------- | ------------ | ------------------ | ------------ | ----------------- | --------------- | ------------------ | ----------------- | ------- | ------------- | - | ----------- | ------- |  | - | ------- | ------- | 
|                       |              |                    | Predecessors |                   |                 |                    |                   |         |               |   |            
|                       |              |                    |              |                   |                 |                    |                   |         |               |   |            
|                       |              |                    |              |                   |                 |                    | Period from       |         | Period from   |   | Fiscal Year
|                       |              |                    | Fiscal Year  |                   | October 1, 2001 |                    | November 15, 2001 |         | Ended        
|                       |              |                    | Ended        |                   | to              |                    | to                |         | September 30,
|(dollars in thousands) |              | September 30, 2001 |              | December 20, 2001 |                 | September 30, 2002 |                   | 2003   
|                       |              |                    |              |                   |                 |                    |                   |        
|Revenues:              |              |                    |              |                   |                 |                    |                   |         |               |   |             |         |  |   |         |        
|                       | Americas     |                    | $            | 213,081           |                 |                    | $                 | 44,939  |               |   | $           | 169,069 |  |   | $       | 198,638 | 
|                       | Europe       |                    |              | 47,817            |                 |                    |                   | 10,424  |               |   |             | 48,928  |  |   |         | 51,963  | 
|                       | Asia Pacific |                    |              | 18,799            |                 |                    |                   | 3,417   |               |   |             | 14,787  |  |   |         | 14,155  | 
|                       |              |                    |              |                   |                 |                    |                   |         |               |   |             |         |  |   |         |        
|                       |              | $                  | 279,697      |                   |                 | $                  | 58,780            |         |               | $ | 232,784     |         |  | $ | 264,756 |        
|                       |              |                    |              |                   |                 |                    |                   |         |               |   |             |         |  |   |         |        
|Long-lived assets:     |              |                    |              |                   |                 |                    |                   |         |               |   |             |         |  |   |         |        
|                       | Americas     |                    | $            | 287,192           |                 |                    | $                 | 275,816 |               |   | $           | 227,265 |  |   | $       | 219,846 | 
|                       | Europe       |                    |              | 58,563            |                 |                    |                   | 57,197  |               |   |             | 54,375  |  |   |         | 66,628  | 
|                       | Asia Pacific |                    |              | 13,147            |                 |                    |                   | 16,214  |               |   |             | 20,775  |  |   |         | 21,545  | 
|                       |              |                    |              |                   |                 |                    |                   |         |               |   |             |         |  |   |         |        
|                       |              | $                  | 358,902      |                   |                 | $                  | 349,227           |         |               | $ | 302,415     |         |  | $ | 308,019 |        
|                       |              |                    |              |                   |                 |                    |                   |         |               |   |             |         |  |   |         |        

Included in the Europe and Asia Pacific revenues are U.S. export sales to
unaffiliated customers of $2.0 million and $12.6 million for the fiscal year
ended September 30, 2001, $1.1 million and $0.3 million for the period October
1, 2001 to December 20, 2001, $1.1 million and $5.3 million, for the period
November 15, 2001 (date of initial capitalization) to September 30, 2002 and
$2.0 million and $5.8 million for the fiscal year ended September 30, 2003,
respectively.

Transfers from the United States to Europe and Asia Pacific, eliminated in
consolidation, were $17.8 million and $4.0 million for the fiscal year ended
September 30, 2001, $5.6 million and $1.1 million for the period October 1,
2001 to December 20, 2001, $14.1 million and $5.4 million for the period
November 15, 2001 (date of initial capitalization) to September 30, 2002 and
$12.0 million and $3.1 million for the fiscal year ended September 30, 2003.

The Company performs periodic credit evaluations of its customers
financial condition and although the Company does not generally require
collateral, it does require cash payments in advance when the assessment of
credit risk associated with a customer is substantially higher than normal.
Credit losses have consistently been within managements expectations and are
provided for in the consolidated financial statements.

For the fiscal year ended September 30, 2001, the period from October 1,
2001 to December 20, 2001 and the period from November 15, 2001 (date of
initial capitalization) to September 30, 2002, no single customer accounted for
10% or more of total consolidated revenues. For the fiscal year ended September
30, 2003, one customer accounted for approximately $56.4
million, or approximately 21% of total consolidated revenue and
approximately 25% of the Company's consolidated accounts receivable
balance at September 30, 2003. There were no
other customers that accounted for more than 10% of total consolidated revenue
in the 2003 fiscal year and our consolidated accounts receivable
balance at September 30, 2003.

As of September 30, 2003, the Companys operations employed approximately
650 persons on a full-time or full-time equivalent basis, 40 of which are
covered under collective bargaining agreements. Additionally, the Company
subcontracts approximately 330 employees covered under collective bargaining
agreements.



|16. |  | Guarantor Subsidiaries Financial Information
|--- |  | ---------------------------------------------

Certain of the Companys domestic restricted subsidiaries guarantee the
senior secured credit facilities and the senior subordinated notes. These
subsidiary guarantees are both full and unconditional, as well as joint and
several. Information regarding the guarantors is as follows (in thousands):

63



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IPC ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued
September 30, 2003

|                                                            |                                                                  |                           |   |              |         |              |   |               |         |              |   |         |        |  |   |          |          |   |   |         |         | 
|----------------------------------------------------------- | ---------------------------------------------------------------- | ------------------------- | - | ------------ | ------- | ------------ | - | ------------- | ------- | ------------ | - | ------- | ------ |  | - | -------- | -------- | - | - | ------- | ------- | 
|                                                            |                                                                  |                           |   | IPC          |         | Guarantor    |   | Non-Guarantor |         |              |   |         |        |  |   |         
|Condensed Consolidating Balance Sheet at September 30, 2002 |                                                                  | Acquisition               |   | Subsidiaries |         | Subsidiaries |   | Eliminations  |         | Consolidated
|                                                            |                                                                  |                           |   |              |         |              |   |               |         |             
|Assets:                                                     |                                                                  |                           |   |              |         |              |   |               |         |              |   |         |        |  |   |          |          |   |   |        
|                                                            | Cash                                                             |                           | $ | 6,123        |         |              | $ | (1,610        | )       |              | $ | 20,781  |        |  | $ |         |          |   | $ | 25,294  |        
|                                                            | Restricted cash                                                  |                           |   | 7,272        |         |              |   |              |         |              |   |        |        |  |   |         |          |   |   | 7,272   |        
|                                                            | Accounts receivable, net                                         |                           |   |             |         |              |   | 32,900        |         |              |   | 19,568  |        |  |   |         |          |   |   | 52,468  |        
|                                                            | Inventories, net                                                 |                           |   |             |         |              |   | 20,089        |         |              |   | 5,518   |        |  |   | (3,389   | )        |   |   | 22,218  |        
|                                                            | Prepaid and other current assets                                 |                           |   |             |         |              |   | 1,658         |         |              |   | 2,956   |        |  |   |         |          |   |   | 4,614   |        
|                                                            | Due from affiliate                                               |                           |   | (20,023      | )       |              |   | 67,819        |         |              |   | (47,796 | )      |  |   |         |          |   |   |        |        
|                                                            |                                                                  |                           |   |              |         |              |   |               |         |              |   |         |        |  |   |          |          |   |   |        
|                                                            |                                                                  | Total current assets      |   |              | (6,628  | )            |   |               | 120,856 |              |   |         | 1,027  |  |   |          | (3,389   | ) |   |         | 111,866 | 
|                                                            | Investment in subsidiaries                                       |                           |   | 369,106      |         |              |   |              |         |              |   |        |        |  |   | (369,106 | )        |   |   |        |        
|                                                            | Property, plant and equipment, net                               |                           |   |             |         |              |   | 18,988        |         |              |   | 2,016   |        |  |   |         |          |   |   | 21,004  |        
|                                                            | Goodwill and intangibles, net                                    |                           |   |             |         |              |   | 205,298       |         |              |   | 76,113  |        |  |   |         |          |   |   | 281,411 |        
|                                                            | Deferred financing costs, net                                    |                           |   | 15,116       |         |              |   |              |         |              |   |        |        |  |   |         |          |   |   | 15,116  |        
|                                                            | Other assets                                                     |                           |   |             |         |              |   | 662           |         |              |   | 173     |        |  |   |         |          |   |   | 835     |        
|                                                            |                                                                  |                           |   |              |         |              |   |               |         |              |   |         |        |  |   |          |          |   |   |        
|                                                            |                                                                  | Total assets              |   | $            | 377,594 |              |   | $             | 345,804 |              |   | $       | 79,329 |  |   | $        | (372,495 | ) |   | $       | 430,232 | 
|                                                            |                                                                  |                           |   |              |         |              |   |               |         |              |   |         |        |  |   |          |          |   |   |        
|Liabilities and stockholders equity:                       |                                                                  |                           |   |              |         |              |   |               |         |              |   |         |        |  |   |          |          |   |   |        
|                                                            | Current portion of long-term debt                                |                           | $ | 6,460        |         |              | $ |              |         |              | $ |        |        |  | $ |         |          |   | $ | 6,460   |        
|                                                            | Accounts payable, accrued expenses and other current liabilities |                           |   | 5,072        |         |              |   | 15,196        |         |              |   | 10,830  |        |  |   |         |          |   |   | 31,098  |        
|                                                            | Customer advances and deferred revenue                           |                           |   |             |         |              |   | 17,116        |         |              |   | 6,377   |        |  |   |         |          |   |   | 23,493  |        
|                                                            | Deferred purchase price obligation                               |                           |   | 7,272        |         |              |   |              |         |              |   |        |        |  |   |         |          |   |   | 7,272   |        
|                                                            |                                                                  |                           |   |              |         |              |   |               |         |              |   |         |        |  |   |          |          |   |   |        
|                                                            |                                                                  | Total current liabilities |   |              | 18,804  |              |   |               | 32,312  |              |   |         | 17,207 |  |   |          |         |   |   |         | 68,323  | 
|                                                            | Long-term debt                                                   |                           |   | 214,602      |         |              |   |              |         |              |   |        |        |  |   |         |          |   |   | 214,602 |        
|                                                            | Other long-term liabilities                                      |                           |   | 7,190        |         |              |   | 3,119         |         |              |   |        |        |  |   |         |          |   |   | 10,309  |        
|                                                            |                                                                  |                           |   |              |         |              |   |               |         |              |   |         |        |  |   |          |          |   |   |        
|                                                            |                                                                  | Total liabilities         |   |              | 240,596 |              |   |               | 35,431  |              |   |         | 17,207 |  |   |          |         |   |   |         | 293,234 | 
|                                                            | Total stockholders equity                                       |                           |   | 136,998      |         |              |   | 310,373       |         |              |   | 62,122  |        |  |   | (372,495 | )        |   |   | 136,998 |        
|                                                            |                                                                  |                           |   |              |         |              |   |               |         |              |   |         |        |  |   |          |          |   |   |        
|                                                            | Total liabilities and stockholders equity                       |                           | $ | 377,594      |         |              | $ | 345,804       |         |              | $ | 79,329  |        |  | $ | (372,495 | )        |   | $ | 430,232 |        
|                                                            |                                                                  |                           |   |              |         |              |   |               |         |              |   |         |        |  |   |          |          |   |   |        

|                                                            |                                                                  |                           |   |              |         |              |   |               |          |              |   |         |         |  |   |          |          |   |   |         |         | 
|----------------------------------------------------------- | ---------------------------------------------------------------- | ------------------------- | - | ------------ | ------- | ------------ | - | ------------- | -------- | ------------ | - | ------- | ------- |  | - | -------- | -------- | - | - | ------- | ------- | 
|                                                            |                                                                  |                           |   | IPC          |         | Guarantor    |   | Non-Guarantor |          |              |   |         |         |  |   |         
|Condensed Consolidating Balance Sheet at September 30, 2003 |                                                                  | Acquisition               |   | Subsidiaries |         | Subsidiaries |   | Eliminations  |          | Consolidated
|                                                            |                                                                  |                           |   |              |         |              |   |               |          |             
|Assets:                                                     |                                                                  |                           |   |              |         |              |   |               |          |              |   |         |         |  |   |          |          |   |   |        
|                                                            | Cash                                                             |                           | $ | 9,088        |         |              | $ | 3,135         |          |              | $ | 13,577  |         |  | $ |         |          |   | $ | 25,800  |        
|                                                            | Accounts receivable, net                                         |                           |   |             |         |              |   | 47,025        |          |              |   | 13,176  |         |  |   |         |          |   |   | 60,201  |        
|                                                            | Inventories, net                                                 |                           |   |             |         |              |   | 28,584        |          |              |   | 4,666   |         |  |   | (2,854   | )        |   |   | 30,396  |        
|                                                            | Prepaid and other current assets                                 |                           |   |             |         |              |   | 2,110         |          |              |   | 3,413   |         |  |   |         |          |   |   | 5,523   |        
|                                                            | Due from affiliate                                               |                           |   | 213,600      |         |              |   | (190,517      | )        |              |   | (23,083 | )       |  |   |         |          |   |   |        |        
|                                                            |                                                                  |                           |   |              |         |              |   |               |          |              |   |         |         |  |   |          |          |   |   |        
|                                                            |                                                                  | Total current assets      |   |              | 222,688 |              |   |               | (109,663 | )            |   |         | 11,749  |  |   |          | (2,854   | ) |   |         | 121,920 | 
|                                                            | Investment in subsidiaries                                       |                           |   | 129,364      |         |              |   | 10,524        |          |              |   | 1,375   |         |  |   | (141,263 | )        |   |   |        |        
|                                                            | Property, plant and equipment, net                               |                           |   |             |         |              |   | 20,433        |          |              |   | 3,986   |         |  |   |         |          |   |   | 24,419  |        
|                                                            | Goodwill and intangibles, net                                    |                           |   |             |         |              |   | 195,802       |          |              |   | 87,362  |         |  |   |         |          |   |   | 283,164 |        
|                                                            | Deferred financing costs, net                                    |                           |   | 14,146       |         |              |   |              |          |              |   |        |         |  |   |         |          |   |   | 14,146  |        
|                                                            | Other assets                                                     |                           |   |             |         |              |   | 855           |          |              |   | 406     |         |  |   |         |          |   |   | 1,261   |        
|                                                            |                                                                  |                           |   |              |         |              |   |               |          |              |   |         |         |  |   |          |          |   |   |        
|                                                            |                                                                  | Total assets              |   | $            | 366,198 |              |   | $             | 117,951  |              |   | $       | 104,878 |  |   | $        | (144,117 | ) |   | $       | 444,910 | 
|                                                            |                                                                  |                           |   |              |         |              |   |               |          |              |   |         |         |  |   |          |          |   |   |        
|Liabilities and stockholders equity:                       |                                                                  |                           |   |              |         |              |   |               |          |              |   |         |         |  |   |          |          |   |   |        
|                                                            | Current portion of long-term debt                                |                           | $ | 550          |         |              | $ |              |          |              | $ |        |         |  | $ |         |          |   | $ | 550     |        
|                                                            | Accounts payable, accrued expenses and other current liabilities |                           |   | 5,299        |         |              |   | 15,384        |          |              |   | 16,206  |         |  |   |         |          |   |   | 36,889  |        
|                                                            | Customer advances and deferred revenue                           |                           |   |             |         |              |   | 26,043        |          |              |   | 6,074   |         |  |   |         |          |   |   | 32,117  |        
|                                                            | Deferred purchase price consideration                            |                           |   |             |         |              |   | 6,722         |          |              |   |        |         |  |   |         |          |   |   | 6,722   |        
|                                                            |                                                                  |                           |   |              |         |              |   |               |          |              |   |         |         |  |   |          |          |   |   |        
|                                                            |                                                                  | Total current liabilities |   |              | 5,849   |              |   |               | 48,149   |              |   |         | 22,280  |  |   |          |         |   |   |         | 76,278  | 
|                                                            | Long-term debt                                                   |                           |   | 204,450      |         |              |   |              |          |              |   |        |         |  |   |         |          |   |   | 204,450 |        
|                                                            | Other long-term liabilities                                      |                           |   | 8,720        |         |              |   | 4,159         |          |              |   | 5,124   |         |  |   | (1,000   | )        |   |   | 17,003  |        
|                                                            |                                                                  |                           |   |              |         |              |   |               |          |              |   |         |         |  |   |          |          |   |   |        
|                                                            |                                                                  | Total liabilities         |   |              | 219,019 |              |   |               | 52,308   |              |   |         | 27,404  |  |   |          | (1,000   | ) |   |         | 297,731 | 
|                                                            | Total stockholders equity                                       |                           |   | 147,179      |         |              |   | 65,643        |          |              |   | 77,474  |         |  |   | (143,117 | )        |   |   | 147,179 |        
|                                                            |                                                                  |                           |   |              |         |              |   |               |          |              |   |         |         |  |   |          |          |   |   |        
|                                                            | Total liabilities and stockholders equity                       |                           | $ | 366,198      |         |              | $ | 117,951       |          |              | $ | 104,878 |         |  | $ | (144,117 | )        |   | $ | 444,910 |        
|                                                            |                                                                  |                           |   |              |         |              |   |               |          |              |   |         |         |  |   |          |          |   |   |        

64



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##### Table of Contents



IPC ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued
September 30, 2003

|                                                       |              |             |         |              |  |               |         |              |  |              |        |        |  |   |         |        |   |   |         |         | 
|------------------------------------------------------ | ------------ | ----------- | ------- | ------------ |  | ------------- | ------- | ------------ |  | ------------ | ------ | ------ |  | - | ------- | ------ | - | - | ------- | ------- | 
|Condensed Combining Statement of Operations            |              | IPC         |         | Guarantor    |  | Non-Guarantor |         |              |  |              |        |        |  |  
|For the Fiscal Year Ended September 30, 2001           |              | Acquisition |         | Subsidiaries |  | Subsidiaries  |         | Eliminations |  | Combined    
|                                                       |              |             |         |              |  |               |         |              |  |             
|Revenue                                                |              | $           |        |              |  | $             | 245,038 |              |  | $            | 58,679 |        |  | $ | (24,020 | )      |   | $ | 279,697 |        
|Cost of goods sold                                     |              |             |        |              |  |               | 146,649 |              |  |              | 41,498 |        |  |   | (22,712 | )      |   |   | 165,435 |        
|                                                       |              |             |         |              |  |               |         |              |  |              |        |        |  |   |         |        |   |   |         |        
|                                                       | Gross profit |             |         |             |  |               |         | 98,389       |  |              |        | 17,181 |  |   |         | (1,308 | ) |   |         | 114,262 | 
|Other operating expenses                               |              |             |        |              |  |               | 81,207  |              |  |              | 15,637 |        |  |   |        |        |   |   | 96,844  |        
|                                                       |              |             |         |              |  |               |         |              |  |              |        |        |  |   |         |        |   |   |         |        
|Income (loss) from operations                          |              |             |        |              |  |               | 17,182  |              |  |              | 1,544  |        |  |   | (1,308  | )      |   |   | 17,418  |        
|Interest income (expense) and other, net               |              |             |        |              |  |               | (26,236 | )            |  |              | 393    |        |  |   |        |        |   |   | (25,843 | )      
|Income tax provision (benefit)                         |              |             |        |              |  |               | (175    | )            |  |              | 4,581  |        |  |   |        |        |   |   | 4,406   |        
|                                                       |              |             |         |              |  |               |         |              |  |              |        |        |  |   |         |        |   |   |         |        
|Net income (loss)                                      |              | $           |        |              |  | $             | (8,879  | )            |  | $            | (2,644 | )      |  | $ | (1,308  | )      |   | $ | (12,831 | )      
|                                                       |              |             |         |              |  |               |         |              |  |              |        |        |  |   |         |        |   |   |         |        
|                                                      
|Condensed Combining Statement of Operations            |              | IPC         |         | Guarantor    |  | Non-Guarantor |         |              |  |              |        |        |  |  
|For the Period October 1, 2001 to December 20, 2001    |              | Acquisition |         | Subsidiaries |  | Subsidiaries  |         | Eliminations |  | Combined    
|                                                       |              |             |         |              |  |               |         |              |  |             
|Revenue                                                |              | $           |        |              |  | $             | 52,098  |              |  | $            | 13,777 |        |  | $ | (7,095  | )      |   | $ | 58,780  |        
|Cost of goods sold                                     |              |             |        |              |  |               | 30,826  |              |  |              | 9,226  |        |  |   | (7,014  | )      |   |   | 33,038  |        
|                                                       |              |             |         |              |  |               |         |              |  |              |        |        |  |   |         |        |   |   |         |        
|                                                       | Gross profit |             |         |             |  |               |         | 21,272       |  |              |        | 4,551  |  |   |         | (81    | ) |   |         | 25,742  | 
|Other operating expenses                               |              |             |        |              |  |               | 28,211  |              |  |              | 2,939  |        |  |   |        |        |   |   | 31,150  |        
|                                                       |              |             |         |              |  |               |         |              |  |              |        |        |  |   |         |        |   |   |         |        
|Income (loss) from operations                          |              |             |        |              |  |               | (6,939  | )            |  |              | 1,612  |        |  |   | (81     | )      |   |   | (5,408  | )      
|Interest income (expense) and other, net               |              |             |        |              |  |               | (6,218  | )            |  |              | 280    |        |  |   |        |        |   |   | (5,938  | )      
|Income tax provision (benefit)                         |              |             |        |              |  |               | 639     |              |  |              | (957   | )      |  |   |        |        |   |   | (318    | )      
|                                                       |              |             |         |              |  |               |         |              |  |              |        |        |  |   |         |        |   |   |         |        
|Net income (loss)                                      |              | $           |        |              |  | $             | (13,796 | )            |  | $            | 2,849  |        |  | $ | (81     | )      |   | $ | (11,028 | )      
|                                                       |              |             |         |              |  |               |         |              |  |              |        |        |  |   |         |        |   |   |         |        
|                                                      
|Condensed Combining Statement of Operations            |              | IPC         |         | Guarantor    |  | Non-Guarantor |         |              |  |              |        |        |  |  
|For the Period November 15, 2001 to September 30, 2002 |              | Acquisition |         | Subsidiaries |  | Subsidiaries  |         | Eliminations |  | Consolidated
|                                                       |              |             |         |              |  |               |         |              |  |             
|Revenue                                                |              | $           |        |              |  | $             | 193,365 |              |  | $            | 59,907 |        |  | $ | (20,488 | )      |   | $ | 232,784 |        
|Cost of goods sold                                     |              |             |        |              |  |               | 144,585 |              |  |              | 39,611 |        |  |   | (22,248 | )      |   |   | 161,948 |        
|                                                       |              |             |         |              |  |               |         |              |  |              |        |        |  |   |         |        |   |   |         |        
|                                                       | Gross profit |             |         |             |  |               |         | 48,780       |  |              |        | 20,296 |  |   |         | 1,760  |   |   |         | 70,836  | 
|Other operating expenses                               |              |             |        |              |  |               | 49,539  |              |  |              | 10,904 |        |  |   |        |        |   |   | 60,443  |        
|                                                       |              |             |         |              |  |               |         |              |  |              |        |        |  |   |         |        |   |   |         |        
|Income (loss) from operations                          |              |             |        |              |  |               | (759    | )            |  |              | 9,392  |        |  |   | 1,760   |        |   |   | 10,393  |        
|Interest income (expense) and other, net               |              |             | (21,725 | )            |  |               | 157     |              |  |              | (311   | )      |  |   |        |        |   |   | (21,879 | )      
|Income tax provision (benefit)                         |              |             |        |              |  |               | (6,680  | )            |  |              | 4,394  |        |  |   |        |        |   |   | (2,286  | )      
|                                                       |              |             |         |              |  |               |         |              |  |              |        |        |  |   |         |        |   |   |         |        
|Net income (loss)                                      |              | $           | (21,725 | )            |  | $             | 6,078   |              |  | $            | 4,687  |        |  | $ | 1,760   |        |   | $ | (9,200  | )      
|                                                       |              |             |         |              |  |               |         |              |  |              |        |        |  |   |         |        |   |   |         |        
|                                                      
|Condensed Combining Statement of Operations            |              | IPC         |         | Guarantor    |  | Non-Guarantor |         |              |  |              |        |        |  |  
|For the Fiscal Year Ended September 30, 2003           |              | Acquisition |         | Subsidiaries |  | Subsidiaries  |         | Eliminations |  | Consolidated
|                                                       |              |             |         |              |  |               |         |              |  |             
|Revenue                                                |              | $           |        |              |  | $             | 218,013 |              |  | $            | 63,728 |        |  | $ | (16,985 | )      |   | $ | 264,756 |        
|Cost of goods sold                                     |              |             |        |              |  |               | 129,744 |              |  |              | 39,175 |        |  |   | (17,520 | )      |   |   | 151,399 |        
|                                                       |              |             |         |              |  |               |         |              |  |              |        |        |  |   |         |        |   |   |         |        
|                                                       | Gross profit |             |         |             |  |               |         | 88,269       |  |              |        | 24,553 |  |   |         | 535    |   |   |         | 113,357 | 
|Other operating expenses                               |              |             |        |              |  |               | 60,201  |              |  |              | 18,201 |        |  |   |        |        |   |   | 78,402  |        
|                                                       |              |             |         |              |  |               |         |              |  |              |        |        |  |   |         |        |   |   |         |        
|Income (loss) from operations                          |              |             |        |              |  |               | 28,068  |              |  |              | 6,352  |        |  |   | 535     |        |   |   | 34,955  |        
|Interest income (expense) and other, net               |              |             | (5,068  | )            |  |               | (19,667 | )            |  |              | 1,667  |        |  |   |        |        |   |   | (23,068 | )      
|Income tax provision (benefit)                         |              |             |        |              |  |               | 2,963   |              |  |              | 4,885  |        |  |   |        |        |   |   | 7,848   |        
|                                                       |              |             |         |              |  |               |         |              |  |              |        |        |  |   |         |        |   |   |         |        
|Net income (loss)                                      |              | $           | (5,068  | )            |  | $             | 5,438   |              |  | $            | 3,134  |        |  | $ | 535     |        |   | $ | 4,039   |        
|                                                       |              |             |         |              |  |               |         |              |  |              |        |        |  |   |         |        |   |   |         |        

65



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##### Table of Contents



IPC ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued
September 30, 2003

|                                                       |  |             |          |              |  |               |         |              |  |              |        |   |  |   |      |   |  |   |          |  
|------------------------------------------------------ |  | ----------- | -------- | ------------ |  | ------------- | ------- | ------------ |  | ------------ | ------ | - |  | - | ---- | - |  | - | -------- | -
|Condensed Combining Statement of Cash Flows            |  | IPC         |          | Guarantor    |  | Non-Guarantor |         |              |  |              |        |   |  |  
|For the Fiscal Year Ended September 30, 2001           |  | Acquisition |          | Subsidiaries |  | Subsidiaries  |         | Eliminations |  | Combined    
|                                                       |  |             |          |              |  |               |         |              |  |             
|Net cash provided by (used in) operating activities    |  | $           |         |              |  | $             | 21,213  |              |  |              | 12,093 |   |  | $ |     |   |  | $ | 33,306   |  
|Capital expenditures                                   |  |             |         |              |  |               | (9,353  | )            |  |              | (17    | ) |  |   |     |   |  |   | (9,370   | )
|                                                       |  |             |          |              |  |               |         |              |  |              |        |   |  |   |      |   |  |   |          |  
|Net cash used in investing activities                  |  |             |         |              |  |               | (9,353  | )            |  |              | (17    | ) |  |   |     |   |  |   | (9,370   | )
|Repayment of intercompany borrowings                   |  |             |         |              |  |               | (13,590 | )            |  |              | (9,596 | ) |  |   |     |   |  |   | (23,186  | )
|Principal payments on capital leases                   |  |             |         |              |  |               | (234    | )            |  |              |       |   |  |   |     |   |  |   | (234     | )
|                                                       |  |             |          |              |  |               |         |              |  |              |        |   |  |   |      |   |  |   |          |  
|Net cash used in financing activities                  |  |             |         |              |  |               | (13,824 | )            |  |              | (9,596 | ) |  |   |     |   |  |   | (23,420  | )
|Effect of exchange rate changes on cash                |  |             |         |              |  |               | 868     |              |  |              |       |   |  |   |     |   |  |   | 868      |  
|                                                       |  |             |          |              |  |               |         |              |  |              |        |   |  |   |      |   |  |   |          |  
|Net increase (decrease) in cash                        |  |             |         |              |  |               | (1,096  | )            |  |              | 2,480  |   |  |   |     |   |  |   | 1,384    |  
|Cash at beginning of period                            |  |             |         |              |  |               | 393     |              |  |              | 2,759  |   |  |   |     |   |  |   | 3,152    |  
|                                                       |  |             |          |              |  |               |         |              |  |              |        |   |  |   |      |   |  |   |          |  
|Cash at end of period                                  |  | $           |         |              |  | $             | (703    | )            |  |              | 5,239  |   |  | $ |     |   |  | $ | 4,536    |  
|                                                       |  |             |          |              |  |               |         |              |  |              |        |   |  |   |      |   |  |   |          |  
|                                                      
|Condensed Combining Statement of Cash Flows            |  | IPC         |          | Guarantor    |  | Non-Guarantor |         |              |  |              |        |   |  |  
|For the Period October 1, 2001 to December 20, 2001    |  | Acquisition |          | Subsidiaries |  | Subsidiaries  |         | Eliminations |  | Combined    
|                                                       |  |             |          |              |  |               |         |              |  |             
|Net cash provided by (used in) operating activities    |  | $           |         |              |  | $             | 19,702  |              |  | $            | (4,455 | ) |  | $ |     |   |  | $ | 15,247   |  
|Capital expenditures                                   |  |             |         |              |  |               | (1,875  | )            |  |              | (27    | ) |  |   |     |   |  |   | (1,902   | )
|                                                       |  |             |          |              |  |               |         |              |  |              |        |   |  |   |      |   |  |   |          |  
|Net cash used in investing activities                  |  |             |         |              |  |               | (1,875  | )            |  |              | (27    | ) |  |   |     |   |  |   | (1,902   | )
|Repayment of intercompany borrowings                   |  |             |         |              |  |               | (16,428 | )            |  |              | 1,294  |   |  |   |     |   |  |   | (15,134  | )
|                                                       |  |             |          |              |  |               |         |              |  |              |        |   |  |   |      |   |  |   |          |  
|Net cash provided by (used in) financing activities    |  |             |         |              |  |               | (16,428 | )            |  |              | 1,294  |   |  |   |     |   |  |   | (15,134  | )
|Effect of exchange rate changes on cash                |  |             |         |              |  |               | (1,076  | )            |  |              | (920   | ) |  |   |     |   |  |   | (1,996   | )
|                                                       |  |             |          |              |  |               |         |              |  |              |        |   |  |   |      |   |  |   |          |  
|Net increase (decrease) in cash                        |  |             |         |              |  |               | 323     |              |  |              | (4,108 | ) |  |   |     |   |  |   | (3,785   | )
|Cash at beginning of period                            |  |             |         |              |  |               | (703    | )            |  |              | 5,239  |   |  |   |     |   |  |   | 4,536    |  
|                                                       |  |             |          |              |  |               |         |              |  |              |        |   |  |   |      |   |  |   |          |  
|Cash at end of period                                  |  | $           |         |              |  | $             | (380    | )            |  | $            | 1,131  |   |  | $ |     |   |  | $ | 751      |  
|                                                       |  |             |          |              |  |               |         |              |  |              |        |   |  |   |      |   |  |   |          |  
|                                                      
|Condensed Combining Statement of Cash Flows            |  | IPC         |          | Guarantor    |  | Non-Guarantor |         |              |  |              |        |   |  |  
|For the Period November 15, 2001 to September 30, 2002 |  | Acquisition |          | Subsidiaries |  | Subsidiaries  |         | Eliminations |  | Consolidated
|                                                       |  |             |          |              |  |               |         |              |  |             
|Net cash provided by (used in) operating activities    |  | $           | 12,810   |              |  | $             | (1,475  | )            |  | $            | 21,170 |   |  | $ |     |   |  | $ | 32,505   |  
|Capital expenditures                                   |  |             |         |              |  |               | (5,043  | )            |  |              | (1,463 | ) |  |   |     |   |  |   | (6,506   | )
|Acquisitions, net of cash acquired                     |  |             | (350,246 | )            |  |               | 3,806   |              |  |              | (57    | ) |  |   | 751  |   |  |   | (345,746 | )
|                                                       |  |             |          |              |  |               |         |              |  |              |        |   |  |   |      |   |  |   |          |  
|Net cash provided by (used in) investing activities    |  |             | (350,246 | )            |  |               | (1,237  | )            |  |              | (1,520 | ) |  |   | 751  |   |  |   | (352,252 | )
|Proceeds from debt, net of issuance costs              |  |             | 237,580  |              |  |               |        |              |  |              |       |   |  |   |     |   |  |   | 237,580  |  
|Principal payments on term loan                        |  |             | (33,938  | )            |  |               |        |              |  |              |       |   |  |   |     |   |  |   | (33,938  | )
|Proceeds from equity issuances, net                    |  |             | 139,917  |              |  |               |        |              |  |              |       |   |  |   |     |   |  |   | 139,917  |  
|                                                       |  |             |          |              |  |               |         |              |  |              |        |   |  |   |      |   |  |   |          |  
|Net cash provided by financing activities              |  |             | 343,559  |              |  |               |        |              |  |              |       |   |  |   |     |   |  |   | 343,559  |  
|Effect of exchange rate changes on cash                |  |             |         |              |  |               | 1,482   |              |  |              |       |   |  |   |     |   |  |   | 1,482    |  
|                                                       |  |             |          |              |  |               |         |              |  |              |        |   |  |   |      |   |  |   |          |  
|Net increase (decrease) in cash                        |  |             | 6,123    |              |  |               | (1,230  | )            |  |              | 19,650 |   |  |   | 751  |   |  |   | 25,294   |  
|Cash at beginning of period                            |  |             |         |              |  |               | (380    | )            |  |              | 1,131  |   |  |   | (751 | ) |  |   |         |  
|                                                       |  |             |          |              |  |               |         |              |  |              |        |   |  |   |      |   |  |   |          |  
|Cash at end of period                                  |  | $           | 6,123    |              |  | $             | (1,610  | )            |  | $            | 20,781 |   |  | $ |     |   |  | $ | 25,294   |  
|                                                       |  |             |          |              |  |               |         |              |  |              |        |   |  |   |      |   |  |   |          |  

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IPC ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued
September 30, 2003

|                                                                                                      |  |             |         |              |  |               |        |              |  |              |        |   |  |   |   |  |  |   |         |  
|----------------------------------------------------------------------------------------------------- |  | ----------- | ------- | ------------ |  | ------------- | ------ | ------------ |  | ------------ | ------ | - |  | - | - |  |  | - | ------- | -
|Condensed Combining Statement of Cash Flows                                                           |  | IPC         |         | Guarantor    |  | Non-Guarantor |        |              |  |              |        |   |  |  
|For the Fiscal Year Ended September 30, 2003                                                          |  | Acquisition |         | Subsidiaries |  | Subsidiaries  |        | Eliminations |  | Consolidated
|                                                                                                      |  |             |         |              |  |               |        |              |  |             
|Net cash provided by (used in) operating activities                                                   |  | $           | 20,612  |              |  | $             | 5,962  |              |  | $            | (7,216 | ) |  | $ |  |  |  | $ | 19,358  |  
|Capital expenditures                                                                                  |  |             |        |              |  |               | (5,629 | )            |  |              | (1,898 | ) |  |   |  |  |  |   | (7,527  | )
|Proceeds from restricted cash account and other amounts in
connection with Global Crossing settlement |  |             |        |              |  |               | 9,419  |              |  |              |       |   |  |   |  |  |  |   | 9,419   |  
|Cash payments in connection with Global Crossing settlement                                           |  |             |        |              |  |               | (5,200 | )            |  |              |       |   |  |   |  |  |  |   | (5,200  | )
|Acquisitions, net of cash acquired                                                                    |  |             |        |              |  |               | 193    |              |  |              | 2,606  |   |  |   |  |  |  |   | 2,799   |  
|                                                                                                      |  |             |         |              |  |               |        |              |  |              |        |   |  |   |   |  |  |   |         |  
|Net cash provided by (used in) investing activities                                                   |  |             |        |              |  |               | (1,217 | )            |  |              | 708    |   |  |   |  |  |  |   | (509    | )
|Proceeds from term loan, net of issuance costs                                                        |  |             | 1,279   |              |  |               |       |              |  |              |       |   |  |   |  |  |  |   | 1,279   |  
|Principal payments on term loan                                                                       |  |             | (18,616 | )            |  |               |       |              |  |              |       |   |  |   |  |  |  |   | (18,616 | )
|Debt issue cost for term loan amendment                                                               |  |             | (310    | )            |  |               |       |              |  |              |       |   |  |   |  |  |  |   | (310    | )
|                                                                                                      |  |             |         |              |  |               |        |              |  |              |        |   |  |   |   |  |  |   |         |  
|Net cash used in financing activities                                                                 |  |             | (17,647 | )            |  |               |       |              |  |              |       |   |  |   |  |  |  |   | (17,647 | )
|Effect of exchange rate changes on cash                                                               |  |             |        |              |  |               |       |              |  |              | (696   | ) |  |   |  |  |  |   | (696    | )
|                                                                                                      |  |             |         |              |  |               |        |              |  |              |        |   |  |   |   |  |  |   |         |  
|Net increase (decrease) in cash                                                                       |  |             | 2,965   |              |  |               | 4,745  |              |  |              | (7,204 | ) |  |   |  |  |  |   | 506     |  
|Cash at beginning of period                                                                           |  |             | 6,123   |              |  |               | (1,610 | )            |  |              | 20,781 |   |  |   |  |  |  |   | 25,294  |  
|                                                                                                      |  |             |         |              |  |               |        |              |  |              |        |   |  |   |   |  |  |   |         |  
|Cash at end of period                                                                                 |  | $           | 9,088   |              |  | $             | 3,135  |              |  | $            | 13,577 |   |  | $ |  |  |  | $ | 25,800  |  
|                                                                                                      |  |             |         |              |  |               |        |              |  |              |        |   |  |   |   |  |  |   |         |  



|17. |  | Quarterly Financial Information (Unaudited):
|--- |  | --------------------------------------------

The following table sets forth unaudited quarterly financial information
for the fiscal years ended September 30, 2002 and 2003:

|                                      |                   |      |              |         |              |           |               |          |   |               |   |        |   |  |   |        |   |  |   |        | 
|------------------------------------- | ----------------- | ---- | ------------ | ------- | ------------ | --------- | ------------- | -------- | - | ------------- | - | ------ | - |  | - | ------ | - |  | - | ------ | 
|                                      |                   |      | Predecessor  |         |              |           |               |          |   |               |   |        |   |  |   |        |   |  |  
|                                      |                   |      |              |         |              |           |               |          |   |               |   |        |   |  |   |        |   |  |  
|                                      |                   |      | Period from  |         | Period from  |           |               |          |   |               |   |        |   |  |   |        |  
|                                      |                   |      | October 1,   |         | November 15, |           |               |          |   |               |   |        |   |  |   |        |  
|                                      |                   |      | 2001 to      |         | 2001 to      |           | Quarter Ended
|                                      |                   |      | December 20, |         | December 31, |           |              
|(dollars in thousands)                |                   | 2001 |              | 2001    |              | March 31, |               | June 30, |   | September 30,
|                                      |                   |      |              |         |              |           |               |          |   |              
|Fiscal year ended September 30, 2002: |                   |      |              |         |              |           |               |          |   |               |   |        |   |  |   |        |   |  |   |       
|                                      | Revenue           |      | $            | 58,780  |              |           | $             | 14,329   |   |               | $ | 78,205 |   |  | $ | 62,808 |   |  | $ | 77,442 | 
|                                      | Gross profit      |      | $            | 25,742  |              |           | $             | 362      |   |               | $ | 17,375 |   |  | $ | 18,621 |   |  | $ | 34,478 | 
|                                      | Net income (loss) |      | $            | (11,028 | )            |           | $             | (1,382   | ) |               | $ | (5,310 | ) |  | $ | (5,385 | ) |  | $ | 2,877  | 

|                                      |                   |  |  |  |  |  |  |  |   |        |              |        |               |        |          |        |               |        |   |        |  
|------------------------------------- | ----------------- |  |  |  |  |  |  |  | - | ------ | ------------ | ------ | ------------- | ------ | -------- | ------ | ------------- | ------ | - | ------ | -
|                                      |                   |  |  |  |  |  |  |  |   |        |              |        | Quarter Ended
|                                      |                   |  |  |  |  |  |  |  |   |        |             
|                                      |                   |  |  |  |  |  |  |  |   |        | December 31, |        | March 31,     |        | June 30, |        | September 30,
|                                      |                   |  |  |  |  |  |  |  |   |        |              |        |               |        |          |        |              
|Fiscal year ended September 30, 2003: |                   |  |  |  |  |  |  |  |   |        |              |        |               |        |          |        |               |        |   |        |  
|                                      | Revenue           |  |  |  |  |  |  |  |   |        | $            | 48,383 |               |        | $        | 56,305 |               |        | $ | 60,992 |  
|                                      | Gross profit      |  |  |  |  |  |  |  | $ | 22,797 |              |        | $             | 24,432 |          |        | $             | 22,574 |   |        | $
|                                      | Net income (loss) |  |  |  |  |  |  |  |   |        | $            | (202   | )             |        | $        | (611   | )             |        | $ | (967   | )



|18. |  | Subsequent Events (Unaudited):
|--- |  | ------------------------------

The Company expects to declare and
pay a special cash dividend of $18.0 million by December 31, 2003 to all shareholders of record of its outstanding common stock.

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Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

None.




Item 9A. Controls and Procedures

The Company maintains disclosure controls and procedures designed to
ensure that information required to be disclosed in the Companys Exchange Act
reports is recorded, processed, summarized and reported within the time periods
specified by the SEC and that such information is accumulated and communicated
to the Companys management, including its Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosures.

As of the end of the period covered by this report, the Company performed
an evaluation of the effectiveness of the design and operation of its
disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e)
and 15d-15(e). The evaluation was performed under the supervision and with the
participation of the Companys management, including the Companys Chief
Executive Officer and Chief Financial Officer. Based upon the evaluation, the
Chief Executive Officer and Chief Financial Officer concluded that the
Companys disclosure controls and procedures were effective in ensuring that
material information relating to the Company (including its consolidated
subsidiaries) was made known to them by others within the Companys
consolidated group during the period in which this report was being prepared
and that the information required to be included in the report has been
recorded, processed, summarized and reported on a timely basis.

During the Companys most recent fiscal quarter, there have been no
significant changes in the Companys internal controls that has materially
affected, or is reasonably likely to materially affect, the Companys internal
controls over financial reporting.

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PART III




Item 10. Directors and Executive Officers of the Registrant

Our directors and executive officers are as follows:

|                    |  |     |    |                  |  |                                                           
|------------------- |  | --- | -- | ---------------- |  | ----------------------------------------------------------
|Name                |  | Age |    | Present Position
|                    |  |     |    |                 
|Lance Boxer         |  |     | 49 |                  |  | Chief Executive Officer and Director                      
|Greg Kenepp         |  |     | 42 |                  |  | President, Chief Operating Officer and Director           
|Timothy Whelan      |  |     | 37 |                  |  | Chief Financial Officer                                   
|Michael Sheehan     |  |     | 51 |                  |  | Managing Director, Sales                                  
|Don Carlos Bell III |  |     | 34 |                  |  | Senior Vice President, Marketing and Corporate Development
|Colin Knight        |  |     | 62 |                  |  | President, EMEA                                           
|Jack Daly           |  |     | 37 |                  |  | Director                                                  
|Robert Gheewalla    |  |     | 36 |                  |  | Director                                                  
|Joseph Gleberman    |  |     | 45 |                  |  | Chairman of the Board                                     
|Eric Schwartz       |  |     | 41 |                  |  | Director                                                  

Lance Boxerhas been the Chief Executive Officer since July 2003 and a
Director of our company since February 2002. From July 2002 to July 2003, Mr.
Boxer was the interim President and Chief Executive Officer of Universal
Access, a telecommunications service provider. From October 2001 to July 2002,
Mr. Boxer was the President and Chief Executive Officer of Sphera Optical
Network, Inc., an optical metropolitan network infrastructure provider which
filed a petition for relief under Chapter 11 of Title 11 of the United States
Code in February 2002. From July 2000 to June 2001, Mr. Boxer was President and
Chief Executive Officer of XOSoft, a content delivery solutions provider. From
October 1998 to June 2000, Mr. Boxer held a variety of positions at Lucent
Technologies, serving most recently as President of Lucents Communications
Software Group. Prior to that, Mr. Boxer held a variety of positions at MCI,
serving most recently as Chief Information Officer from September 1995 to
October 1998. He received a BS and an MBA from New York University.

Greg Kenepphas been the President, Chief Operating Officer and a Director
of our company since July 2003. From December 2001 to July 2003, Mr. Kenepp was
the President and a Director of our company. From September 2001 to December
2001, Mr. Kenepp was President of IPC Information Systems, Inc. From July 2000
to September 2001, Mr. Kenepp was Senior Vice President of Global Crossings
Financial Markets unit, which included IPC Information Systems, Inc. and IXnet.
From June 1995 to June 2000, Mr. Kenepp held a variety of positions at IPC
Information Systems, Inc., serving most recently as Senior Vice President of
Product Development. Prior to that, Mr. Kenepp held senior management positions
at Integrated Network Corporation, a telecommunications company, and AT&T Bell
Laboratories. He received a BS from Clarkson University and an MS from Stanford
University.

Timothy Whelanhas been our Chief Financial Officer since December 2001.
From January 2001 to December 2001, Mr. Whelan was the Sales and Marketing
Chief Financial Officer of Global Crossing. From July 2000 to January 2001, Mr.
Whelan was Divisional Chief Financial Officer of Global Crossings Financial
Markets division. From December 1999 to June 2000, Mr. Whelan was Vice
President, Finance and Chief Financial Officer of IPC Information Systems, Inc.
and IXnet. Mr. Whelan was Vice President of IPC Information Systems, Inc. and
IXnet from May 1999 to December 1999. Mr. Whelan is a certified public
accountant and previously worked for Ernst &Young from 1992 to 1999. He
previously spent four years as a U.S. Naval Officer.

Michael Sheehanhas been our Managing Director, Sales since August 2003.
From December 2001 to August 2003, Mr. Sheehan was Senior Vice President,
Global Sales of our company. From December 2000 to December 2001, Mr. Sheehan
was Senior Vice President, Global Sales of IPC Information Systems, Inc. Since
September 1987, Mr. Sheehan had held a variety of positions at IPC Information
Systems, Inc., serving most recently as Vice President of Sales, New York and
Eastern Region. From September 1986 to September 1987, Mr. Sheehan was a Senior
Director at Walsh Lowe, a financial industry consulting firm. Prior to that, he
held a variety of global account positions at AT&T.

Don Carlos Bell IIIhas been our Senior Vice President, Marketing and
Corporate Development since May 2003. From August 2001 to May 2003, Mr. Bell
was Vice President at Clearwire Technologies, a wireless broadband service
provider. From July 1998 to August 2001, Mr. Bell was a member of the
Investment Banking Division of Goldman, Sachs & Co. Mr. Bell earned a BS from
St. Johns College and an MBA from the Wharton School of Business.

Colin Knighthas been our President, EMEA since October 2002. From August
2001 to October 2002, Mr. Knight was Vice President of Operations for mmO2
Ltd., a cellular and mobile data operator. From October 1987 to August 2001,
Mr. Knight held a variety of positions at Syntegra, an affiliate of British
Telecommunications that focuses on financial trading systems, serving most
recently as its deputy managing director.

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Jack Dalyhas been a Director of our company since December 2001. Mr. Daly
is a Vice President in the Principal Investment Area of Goldman, Sachs & Co.,
where he has worked since 2000. From 1998 to 2000, he was a member of the
Investment Banking Division of Goldman, Sachs & Co. From 1991 to 1997, Mr. Daly
was a Senior Instructor of Mechanical & Aerospace Engineering at Case Western
Reserve University. He earned a BS and MS in Engineering from Case Western
Reserve University and an MBA from the Wharton School of Business.

Robert Gheewallahas been a Director of our company since December 2001.
Mr. Gheewalla is a Managing Director in the Principal Investment Area of
Goldman, Sachs & Co., where he has worked since 1994. He currently serves as a
director of R.R. Donnelley. He received a B. A. from Tufts University, an MSc
from The London School of Economics while on a Fulbright Scholarship and an MBA
from Harvard Business School.

Joseph Glebermanhas been Chairman of the Board since December 2001. Mr.
Gleberman has been a Managing Director of Goldman, Sachs & Co. since 1996. From
1990 to 1996, Mr. Gleberman was a Partner of Goldman, Sachs & Co. Mr. Gleberman
serves as a director of aaiPharma, Inc., BPC Holdings, Inc. and MCG Capital
Corporation. He earned a BA in Engineering and an MA in Economics from Yale
University and an MBA from Stanford University Graduate School of Business.

Eric Schwartzhas been a Director of our company since December 2001. Mr.
Schwartz has been a Managing Director of Goldman, Sachs & Co. since 1996 and is
currently Co-Chief Operating Officer of the Equities Division of Goldman, Sachs
& Co., a position he has held since May 2000. From 1994 to 1996, Mr. Schwartz
was a Partner of Goldman, Sachs & Co. From 1998 to May 2000, he was responsible
for derivatives, convertibles, and Global Securities Services and, from 1991 to
1998, he worked in Equity Capital Markets. Mr. Schwartz earned a BSE from the
University of Pennsylvania and an MBA from the Wharton School of Business.

Board of Directors

Our board of directors currently consists of six directors.

Committees of the Board of Directors

Our board of directors has two committees: an audit committee and a
compensation committee. The audit committee recommends the annual appointment
of auditors with whom the audit committee reviews the scope of audit and
non-audit assignments and related fees, accounting principles we use in
financial reporting, internal auditing procedures and the adequacy of our
internal control procedures. The current members of the audit committee are
Jack Daly, Robert Gheewalla and Lance Boxer. The compensation committee reviews
and approves the compensation and benefits for our employees, directors and
consultants, administers our employee benefit plans, authorizes and ratifies
stock option grants and other incentive arrangements and authorizes employment
and related agreements. The current members of the compensation committee are
Greg Kenepp, Joseph Gleberman and Eric Schwartz.

Audit Committee Financial Expert

The company has determined that Robert Gheewalla, a member of the audit
committee of the board of directors, qualifies as an audit committee financial
expert as defined in Item 401(h) of Regulation S-K,
and that he is not independent as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the
Securities Exchange Act.

Code of Ethics

The company has adopted a code of ethics applicable to specific employees,
including its principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions. A copy of the code of ethics is available on the companys website
at www.ipc.com and has also been filed as an exhibit to this annual report on
Form 10-K. The company intends to post on its website any amendments to, or
waivers from, its code of ethics applicable to such senior officers.

Compensation of Directors

Directors who are also our employees or employees of our principal
stockholders will receive no additional compensation for their services as
directors.

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Indemnification of Directors and Officers

As permitted by Delaware law, our certificate of incorporation provides
that no director will be personally liable to us or our stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability:



| |  |  | for any breach of duty of loyalty to us or to our stockholders;                                                                             
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;                               
|
| |  |  | for unlawful payment of dividends or unlawful stock repurchases or
redemptions under Section 174 of the Delaware General Corporation Law;
or
|
| |  |  | for any transaction from which the director derived an improper
personal benefit.                                                           

Our certificate of incorporation also provides that if Delaware law is amended
to permit further elimination or limitation of the personal liability of
directors, then the liability of a director of our company will be eliminated
or limited to the fullest extent permitted by Delaware law. Any repeal or
modification by our stockholders or otherwise of the charter provision relating
to the personal liability of directors will not adversely affect any right or
protection of a director of our company existing at the time of such repeal or
modification.

In addition, our amended and restated bylaws provide that:



| |  |  | we are required to indemnify our directors and officers to the
fullest extent permitted by Delaware law, subject to specified
exceptions;                                                                        
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | we may indemnify our other employees and agents to the extent that we
indemnify our officers and directors, unless otherwise prohibited by
law, our certificate of incorporation, our bylaws or other agreements;
|
| |  |  | we may be required to advance expenses to our directors and executive
officers as incurred in connection with legal proceedings against them
for which they may be indemnified; and                              
|
| |  |  | the rights conferred in the bylaws are not exclusive.                                                                                                                                                            

We have purchased insurance on behalf of our directors and officers
against various liabilities that may be asserted against, or incurred by, such
persons in their capacities as directors or officers of our company, or that
may arise out of their status as directors or officers of our company.

Employee Agreements

Lance Boxer entered into an employment agreement, dated as of June 19,
2003, whereby he is to be employed as Chief Executive Officer reporting to the
board of directors and will serve as a director of the company. The agreement
has a three-year term and provides for Mr. Boxer to receive a signing bonus of
$50,000, a minimum annual base salary of $350,000 and a discretionary cash
bonus with a minimum annual target of $175,000. Mr. Boxer also receives
medical, dental and other benefits that are commensurate with his position,
including reimbursement for annual premiums on a $2 million life term insurance
policy. Under his employment agreement, Mr. Boxer was granted an option to
purchase 500,000 shares of our common stock pursuant to our 2002 Stock Option
Plan. The company has a right to terminate Mr. Boxers employment with or
without cause. If Mr. Boxers employment is terminated prior to the expiration
of the term by the company without cause or by Mr. Boxer for good reason, the
company must pay Mr. Boxer severance equal to his annual base salary and full
target bonus payable in installments over a period of one year following the
termination date. During the term of his employment and for one year
thereafter, Mr. Boxer will be subject to restrictions on competition and the
solicitation of customers and employees, and for all periods during and after
the term, he will be subject to nondisclosure and confidentiality restrictions
relating to the confidential information and trade secrets of the company and
its affiliates.

Greg Kenepp entered into an employment agreement, dated as of September
18, 2003, whereby he is to be employed as President and Chief Operating
Officer, reporting to the Chief Executive Officer. The agreement has a
three-year term and provides for Mr. Kenepp to receive a minimum annual base
salary of $275,000 and a discretionary cash bonus with a minimum annual target
of $137,500. Mr. Kenepp also receives medical, dental and other benefits that
are commensurate with his position. The company has a right to terminate Mr.
Kenepps employment with or without cause. If Mr. Kenepps employment is
terminated prior to the expiration of the term by the company without cause,
the company must pay Mr. Kenepps base salary and

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75% of his target bonus payable in installments over a period of nine
months following the termination date. During the term of his employment and
for one year thereafter, Mr. Kenepp will be subject to restrictions on
competition and the solicitation of customers and employees, and for all
periods during and after the term, he will be subject to nondisclosure and
confidentiality restrictions relating to the confidential information and trade
secrets of the company and its affiliates.

In connection with Stefanie Sovaks resignation from her position as
Senior Vice President, Business Development, the company entered into a
separation and release agreement with Ms. Sovak, dated as of July 25, 2003.
Under the agreement, Ms. Sovak agreed to continue to assist the company on
special projects through a transition period ending on April 26, 2004. The
agreement provides that during the transition period, Ms. Sovak will be paid at
her base salary in effect prior to her resignation through the end of September
2003 and at an annual rate of $100,000 for the period beginning on October 1,
2003 and ending April 26, 2004. In addition, pursuant to the agreement, the
company paid Ms. Sovak a lump sum of $100,000 in August 2003. During the
transition period and for one year thereafter, Ms. Sovak will be subject to
restrictions on competition and the solicitation of customers and employees,
and during and after the transition period, she will be subject to
nondisclosure and confidentiality restrictions relating to the confidential
information and trade secrets of the company and its affiliates.




Item 11. Executive Compensation

The following table provides summary information concerning all
compensation earned by our Chief Executive Officer and each of our other four
most highly compensated executive officers for the fiscal years ended September
30, 2002 and 2003 and a former executive officer who would have qualified as
one of our four most highly compensated executive officers but for the fact
that the individual was not serving as an executive officer on September 30,
2003:

SUMMARY COMPENSATION TABLE

|                            |                                             |  |      |      |  |        |                     |           |            |         |           |                  |  |  |              |         |  |   |        |        | 
|--------------------------- | ------------------------------------------- |  | ---- | ---- |  | ------ | ------------------- | --------- | ---------- | ------- | --------- | ---------------- |  |  | ------------ | ------- |  | - | ------ | ------ | 
|                            |                                             |  |      |      |  |        |                     |           |            |         |           |                  |  |  | Long-Term    |         |  |   |       
|                            |                                             |  |      |      |  |        |                     |           |            |         |           |                  |  |  | Compensation |         |  |   |       
|                            |                                             |  |      |      |  |        |                     |           |            |         |           |                  |  |  | Awards       |         |  |   |       
|                            |                                             |  |      |      |  |        |                     |           |            |         |           |                  |  |  |              |         |  |   |       
|                            |                                             |  |      |      |  |        | Annual Compensation |           | Securities |         |           |                  | 
|                            |                                             |  |      |      |  |        |                     |           | Underlying |         | All Other
|Name and Principal Position |                                             |  |      |      |  | Salary |                     | Bonus (1) |            | Options |           | Compensation (2)
|                            |                                             |  |      |      |  |        |                     |           |            |         |           |                 
|Lance Boxer (3)             |                                             |  | 2003 |      |  | $      | 71,400              |           |            | $       | 50,000    |                  |  |  | 505,000      |         |  |   |       |       
|                            | Chief Executive Officer                     |  |      | 2002 |  |        |                     |          |            |         |           |                 |  |  |              | 5,000   |  |   |        |       | 
|Greg Kenepp                 |                                             |  | 2003 |      |  | $      | 275,000             |           |            | $       | 127,900   |                  |  |  | 78,200       |         |  | $ | 5,500  |       
|                            | President and Chief Operating Officer       |  |      | 2002 |  |        | $                   | 275,000   |            |         | $         | 175,000          |  |  |              | 105,000 |  |   |        |       | 
|Timothy Whelan              |                                             |  | 2003 |      |  | $      | 225,000             |           |            | $       | 104,600   |                  |  |  | 31,800       |         |  | $ | 5,500  |       
|                            | Chief Financial Officer                     |  |      | 2002 |  |        | $                   | 225,000   |            |         | $         | 140,000          |  |  |              | 56,250  |  |   |        |       | 
|Michael Sheehan             |                                             |  | 2003 |      |  | $      | 202,600             |           |            | $       | 69,800    |                  |  |  | 3,000        |         |  | $ | 45,100 |       
|                            | Managing Director, Sales                    |  |      | 2002 |  |        | $                   | 180,000   |            |         | $         | 170,000          |  |  |              | 52,500  |  |   | $      | 24,200 | 
|Colin Knight                |                                             |  | 2003 |      |  | $      | 208,900             |           |            |         |          |                  |  |  | 27,000       |         |  | $ | 39,200 |       
|                            | President, EMEA                             |  |      | 2002 |  |        |                     |          |            |         |           |                 |  |  |              |        |  |   |        |       | 
|Stefanie Sovak (4)          |                                             |  | 2003 |      |  | $      | 190,000             |           |            | $       | 192,200   |                  |  |  | 3,000        |         |  | $ | 5,000  |       
|                            | Senior Vice President, Business Development |  |      | 2002 |  |        | $                   | 190,000   |            |         | $         | 140,000          |  |  |              | 52,500  |  |   |        |       | 



---

|(1) |  | 2003 bonus amounts for all
executive officers other than Mr. Boxer are for 2002 performance. Mr. Boxers 2003 bonus was paid as a sign on bonus.
2002 bonus amounts for all executive officers are for 2001 performance.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Includes commission payments and 401(k)matching contributions received
during fiscal year 2003.                                                                                                                         
|   
|(3) |  | Mr. Boxer was appointed as our Chief Executive Officer in July 2003.                                                                                                                                                    
|   
|(4) |  | As of July 25, 2003, Ms. Sovak is no longer an executive officer of the
company.                                                                                                                                        

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OPTION GRANTS IN THE LAST COMPLETED FISCAL YEAR

|                   |  |                   |         |           |  |            |       |                |  |                              |        |                                       |  |   |           |  |  |   |           | 
|------------------ |  | ----------------- | ------- | --------- |  | ---------- | ----- | -------------- |  | ---------------------------- | ------ | ------------------------------------- |  | - | --------- |  |  | - | --------- | 
|                   |  | Individual Grants |         |           |  |            |       |                |  |                             
|                   |  |                   |         |           |  |            |       |                |  |                             
|                   |  | Number of         |         |           |  |            |       |                |  |                              |        | Potential
Realizable Value at Assumed
|                   |  | Securities        |         |           |  |            |       |                |  |                              |        | Annual Rates of Stock Price          
|                   |  | Underlying        |         | Exercise  |  |            |       |                |  | Appreciation for Option Term
|                   |  | Options           |         | Price     |  | Expiration |       |               
|Name               |  | Granted           |         | ($/Share) |  | Date (1)   |       | Gain at 5% (2) |  | Gain at 10% (2)             
|                   |  |                   |         |           |  |            |       |                |  |                             
|Lance Boxer        |  |                   | 500,000 |           |  | $          | 10.00 |                |  |                              | 7/9/13 |                                       |  | $ | 3,150,000 |  |  | $ | 7,950,000 | 
|                   |  |                   | 5,000   |           |  | $          | 10.00 |                |  |                              | 4/5/13 |                                       |  | $ | 31,500    |  |  | $ | 79,500    | 
|Greg Kenepp        |  |                   | 70,000  |           |  | $          | 10.00 |                |  |                              | 7/9/13 |                                       |  | $ | 441,000   |  |  | $ | 1,130,000 | 
|                   |  |                   | 8,200   |           |  | $          | 10.00 |                |  |                              | 4/5/13 |                                       |  | $ | 51,660    |  |  | $ | 130,380   | 
|Timothy Whelan     |  |                   | 25,000  |           |  | $          | 10.00 |                |  |                              | 7/9/13 |                                       |  | $ | 157,500   |  |  | $ | 397,500   | 
|                   |  |                   | 6,800   |           |  | $          | 10.00 |                |  |                              | 4/5/13 |                                       |  | $ | 42,840    |  |  | $ | 108,120   | 
|Michael Sheehan    |  |                   | 3,000   |           |  | $          | 10.00 |                |  |                              | 4/5/13 |                                       |  | $ | 18,900    |  |  | $ | 47,700    | 
|Colin Knight       |  |                   | 27,000  |           |  | $          | 10.00 |                |  |                              | 4/5/13 |                                       |  | $ | 170,100   |  |  | $ | 429,300   | 
|Stefanie Sovak (3) |  |                   | 3,000   |           |  | $          | 10.00 |                |  |                              | 4/5/13 |                                       |  | $ | 18,900    |  |  | $ | 47,700    | 



|(1) |  | The expiration dates set forth in this column represent the latest dates
on which the options could be exercised by the option holder if such
option holder remained employed by us.                                                                                                                                                                                                                                  
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The dollar amounts set forth in these columns are based on assumed annual
rates of stock appreciation from the market price at the date of grant of
5% and 10% (compounded annually) over the full term of the grant. The 5%
and 10% assumed rates of appreciation are mandated by the rules of the
SEC, and do not represent our estimates or projection of the future
appreciation of the value of our common stock.
|   
|(3) |  | As of July 25, 2003, Ms. Sovak is no longer an executive officer of the
company.                                                                                                                                                                                                                                                                                                                                      

AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

For each named executive officer, as of September 30, 2003, the following
table provides:



| |  |  | the total number of shares of our common stock received upon the
exercise of options during the fiscal year ending September 30, 2003;                                
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the value realized upon such exercises; and                                                                                                                           
|
| |  |  | the total number of shares of our common stock underlying stock
options held by the named executive officers (exercisable and
unexercisable) as of September 30, 2003.

|                  |  |              |   |              |  |             |   |               |  |                                    |        |                              |  |  |         |  |  |  |   |  |  |  |   | 
|----------------- |  | ------------ | - | ------------ |  | ----------- | - | ------------- |  | ---------------------------------- | ------ | ---------------------------- |  |  | ------- |  |  |  | - |  |  |  | - | 
|                  |  |              |   |              |  |             |   |               |  | Number of Securities Underlying    |        | Value of Unexercised In-the-
|                  |  |              |   |              |  |             |   |               |  | Unexercised Options at Fiscal Year |        | Money Options at Fiscal Year
|                  |  | Shares       |   |              |  |             |   | End           |  | End (1)                           
|                  |  | Acquired on  |   | Value        |  |             |   |              
|Name              |  | Exercise (#) |   | Realized ($) |  | Exercisable |   | Unexercisable |  | Exercisable                        |        | Unexercisable               
|                  |  |              |   |              |  |             |   |               |  |                                    |        |                             
|Lance Boxer       |  |              |  |              |  |             |  |               |  |                                    | 1,250  |                              |  |  | 508,750 |  |  |  |  |  |  |  |  | 
|Greg Kenepp       |  |              |  |              |  |             |  |               |  |                                    | 26,250 |                              |  |  | 156,950 |  |  |  |  |  |  |  |  | 
|Timothy Whelan    |  |              |  |              |  |             |  |               |  |                                    | 14,063 |                              |  |  | 73,988  |  |  |  |  |  |  |  |  | 
|Michael Sheehan   |  |              |  |              |  |             |  |               |  |                                    | 13,125 |                              |  |  | 42,375  |  |  |  |  |  |  |  |  | 
|Colin Knight      |  |              |  |              |  |             |  |               |  |                                    |       |                              |  |  | 27,000  |  |  |  |  |  |  |  |  | 
|Stefanie Sovak(2) |  |              |  |              |  |             |  |               |  |                                    | 13,125 |                              |  |  | 13,125  |  |  |  |  |  |  |  |  | 



---

|(1) |  | As of September 30, 2003, the value of shares of our common stock did not
exceed the exercise price per share for the options in the above table.
Management has made this determination based upon, among other factors,
the value of our common stock as of December 20, 2001 (the date of the
acquisition of IPC Information Systems), previous reports prepared by
management and others, our operating performance and financial results,
and our recent acquisitions.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | As of July 25, 2003, Ms. Sovak is no longer employed by the company.                                                                                                                                                                                                                                                                                                                                                                                                       

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Stock Option Plan

In February 2002, the Company adopted the 2002 Stock Option Plan. The
option plan provides for the grant of options to purchase shares of the
Companys common stock to selected employees, officers, consultants and
directors. The purpose of the option plan is to provide an incentive to
employees, officers, consultants and directors to devote their abilities and
industry to the Companys success. The maximum number of shares that may be
made the subject of options granted under the option plan is 1,900,000. The
Company accounts for these options pursuant to APB Opinion No. 25 Accounting
for Stock Options Issued to Employees. Accordingly, no compensation expense
was recognized for these grants.

The option plan is administered by the compensation committee of the
Companys board of directors, which determines the individuals to whom options
are awarded, the number of shares subject to each award, the exercise price of
the option and other terms and conditions of the awards. Unless otherwise
provided by the compensation committee, an option becomes exercisable for 25%
of the shares subject to the option on each of the first four anniversaries of
the date the compensation committee grants the option. Options granted under
the option plan are non-transferable and the shares acquired upon exercise of
options are subject to certain transfer restrictions. The terms and conditions
of each option are set forth in an option agreement.

The option plan provides that the effect, if any, on an option upon a
change in control or sale or the consummation of a merger, consolidation, or
reorganization which results in certain of the Companys current stockholders
no longer owning any interests in the Company or any successor corporation will
be set forth in the option agreement. Under the form option agreements that
have been approved by the Companys compensation committee for current use
under the plan, upon a change in control, 50% of the unvested portion of each
option will immediately become vested and exercisable. In the event an option
holders employment is terminated by the Company for any reason other than
cause or disability within one year following the change in control, the option
will immediately become fully vested and exercisable and remain exercisable for
180 days. The form agreements also provide that in the event of a sale or the
consummation of a merger, consolidation or reorganization which results in
certain of the Companys stockholders no longer having any ownership interest
in the Company or any successor corporation, the option will become fully
vested and exercisable.

Key Employee Equity Investment Plan

In February 2002, we adopted the Key Employee Equity Investment Plan.
Under the plan, certain key employees, officers and directors may be given the
opportunity to purchase shares of our common stock at its current fair market
value. The plan is administered by the compensation committee of our board of
directors, which determines the individuals who may participate in the plan,
the number of shares offered to each participant and the terms and conditions
of each offer. Up to 100,000 shares in the aggregate may be sold under the
plan. The shares will be subject to certain transfer restrictions. Prior to the
adoption of the Sarbanes-Oxley Act in July 2002, all participants were
permitted to pay for up to two-thirds of the purchase price with a promissory
note that is secured by the purchased shares. Since the adoption of the
Sarbanes-Oxley Act, certain participants may no longer be permitted to purchase
shares under the plan with such promissory notes. Through September 30, 2003,
60,000 shares had been purchased under the plan by certain directors, officers
and other key employees. Promissory notes received by us for shares purchased
by directors, officers and other of our key employees prior to the adoption of
the Sarbanes-Oxley Act totaled $0.4 million.

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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

PRINCIPAL STOCKHOLDERS

The following table sets forth information regarding beneficial ownership
of our common stock as of September 30, 2003 by (1) each person who is the
beneficial owner of more than five percent of the outstanding shares of our
common stock, (2) each of our directors, (3) each of our named executive
officers, and (4) all of our executive officers and directors as a group.
Except as otherwise indicated, the persons or entities listed below have sole
voting and investment power with respect to all shares of common stock
beneficially owned by them. For the purposes of this table, beneficial
ownership is determined in accordance with Rule 13d-3 under the Exchange Act
pursuant to which a person or group of persons is deemed to have beneficial
ownership of any shares of common stock that such person has the right to
acquire within 60 days after the date of this report.

|                                                            |  |                           |            |            |  |  |      |  
|----------------------------------------------------------- |  | ------------------------- | ---------- | ---------- |  |  | ---- | -
|                                                            |  | Shares Beneficially Owned
|                                                            |  |                          
|Name                                                        |  | Number                    |            | Percentage
|                                                            |  |                           |            |           
|5% Stockholders:                                            |  |                           |            |            |  |  |      |  
|Entities affiliated with The Goldman Sachs Group, Inc. (a)  |  |                           | 14,564,380 |            |  |  | 98.9 | %
|Directors and named executive officers:                     |  |                           |            |            |  |  |      |  
|Lance Boxer                                                 |  |                           | 1,000      |            |  |  | *    |  
|Greg Kenepp                                                 |  |                           | 12,000     |            |  |  | *    |  
|Timothy Whelan                                              |  |                           | 9,000      |            |  |  | *    |  
|Stefanie Sovak                                              |  |                           | 9,000      |            |  |  | *    |  
|Michael Sheehan                                             |  |                           | 2,000      |            |  |  | *    |  
|Colin Knight                                                |  |                           |           |            |  |  |     |  
|Jack Daly (b)                                               |  |                           |           |            |  |  |     |  
|Robert Gheewalla (c)                                        |  |                           |           |            |  |  |     |  
|Joseph Gleberman (d)                                        |  |                           |           |            |  |  |     |  
|Eric Schwartz (e)                                           |  |                           |           |            |  |  |     |  
|All directors and executive officers as a group (10 people) |  |                           | 24,000     |            |  |  | *    |  



---

|*   |  | Less than one percent.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(a) |  | Of these shares 8,279,500 shares are owned by GS Capital Partners 2000,
L.P., 3,008,448 shares are owned by GS Capital Partners 2000 Offshore,
L.P., 2,629,031 shares are owned by GS Capital Partners 2000 Employee
Fund, L.P., 346,064 shares are owned by GS Capital Partners 2000 GmbH &
Co. Beteiligungs KG, 200,887 shares are owned by Stone Street Fund 2000,
L.P., and 100,450 shares are owned by Bridge Street Special Opportunities
Fund, L.P. Affiliates of The Goldman Sachs Group, Inc. and Goldman, Sachs
& Co. are the general or managing partners or investment managers of these
partnerships. The Goldman Sachs Group, Inc. and Goldman, Sachs & Co. each
disclaims beneficial ownership of the shares owned by these partnerships
to the extent that partnership or membership interests, as the case may
be, in such partnerships are held by persons other than The Goldman Sachs
Group, Inc., Goldman, Sachs & Co. and its affiliates. The address of each
of these partnerships, Goldman, Sachs & Co. and The Goldman Sachs Group,
Inc. is 85 Broad Street, New York, New York 10004.
|   
|(b) |  | Mr. Daly, who is a Vice President in the Principal Investment Area of
Goldman, Sachs & Co., disclaims beneficial ownership of the securities
owned by The Goldman Sachs Group, Inc., Goldman, Sachs & Co., and its
affiliates. The address for Mr. Daly is 85 Broad Street, New York, New
York 10004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(c) |  | Mr. Gheewalla, who is a Managing Director in the Principal Investment
Area of Goldman, Sachs & Co., disclaims beneficial ownership of the
securities owned by The Goldman Sachs Group, Inc., Goldman, Sachs & Co.
and its affiliates. The address for Mr. Gheewalla is 85 Broad Street, New
York, New York 10004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|(d) |  | Mr. Gleberman, who is a Managing Director of Goldman, Sachs & Co.,
disclaims beneficial ownership of the securities owned by The Goldman
Sachs Group, Inc., Goldman, Sachs & Co. and its affiliates. The address
for Mr. Gleberman is 85 Broad Street, New York, New York 10004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(e) |  | Mr. Schwartz, who is a Managing Director of Goldman, Sachs & Co.,
disclaims beneficial ownership of the securities owned by The Goldman
Sachs Group, Inc., Goldman, Sachs & Co. and its affiliates. The address
for Mr. Schwartz is 85 Broad Street, New York, New York 10004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

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Equity Compensation Plan Information

The following table provides certain information with respect to all of
our equity compensation plans in effect as of September 30, 2003:

|                                                               |  |                   |           |                   |  |                          |       |                      |  |  |         | 
|-------------------------------------------------------------- |  | ----------------- | --------- | ----------------- |  | ------------------------ | ----- | -------------------- |  |  | ------- | 
|                                                               |  | Number of         |           |                   |  |                          |       | Number of securities
|                                                               |  | securities to be  |           | Weighted         |  | remaining available for 
|                                                               |  | issued upon       |           | average exercise  |  | future issuance under   
|                                                               |  | exercise of       |           | price of          |  | the equity              
|                                                               |  | outstanding       |           | outstanding       |  | compensation plans      
|                                                               |  | options, warrants |           | options, warrants |  | (excluding securities   
|                                                               |  | and rights        |           | and rights        |  | reflected in column (a))
|Plan Category                                                  |  | (a)               |           | (b)               |  | (c)                     
|                                                               |  |                   |           |                   |  |                         
|Equity compensation plans approved by security holders         |  |                   |          |                   |  |                          |      |                      |  |  |        | 
|Equity compensation plans not approved by security holders (1) |  |                   | 1,681,900 |                   |  | $                        | 10.00 |                      |  |  | 258,100 | 
|Total                                                          |  |                   | 1,681,900 |                   |  | $                        | 10.00 |                      |  |  | 258,100 | 



|(1) |  | For a description of the material features of our equity compensation
plans not approved by security holders, see the description of the Stock
Option Plan and Key Employee Equity Investment Plan in Item 11 of this
report.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




Item 13. Certain Relationships and Related Transactions

Goldman, Sachs & Co.

GSCP 2000 and other private equity funds affiliated with Goldman, Sachs &
Co. own substantially all of our common stock. Goldman, Sachs & Co., an
affiliate of GSCP 2000 and its related investment funds, provided advisory and
other services to GSCP 2000 and us in connection with sourcing, structuring and
arranging the acquisition of IPC Information Systems and received fees of $8.0
million for those services. Goldman, Sachs & Co. also acted as an initial
purchaser in the offering of our notes and an affiliate of Goldman, Sachs & Co.
acted as the arranger and syndication agent under our senior secured credit
facilities. In connection with these transactions, Goldman, Sachs & Co. and its
affiliates received aggregate fees of approximately $9.3 million. The fees
charged by Goldman, Sachs & Co. were commensurate with the fees that Goldman,
Sachs & Co. charges for acting in a similar capacity on comparable
transactions. Goldman, Sachs & Co. and its affiliates may in the future provide
commercial banking, investment banking or other financial advisory services to
us and its affiliates. Goldman, Sachs & Co. and/or its affiliates also purchase
goods and services from us from time to time and may do so in the future.

We provide project sales and installation and maintenance services
negotiated on an arms-length basis to Goldman, Sachs & Co. Services provided
by us are billed to Goldman, Sachs & Co, and settled through the collection of
trade receivables and are consistent with pricing offered to comparable
globally positioned customers. Revenue related to these services amounted to
$4.5 million and $9.3 million for the period from November 15 (date of initial
capitalization) to September 30, 2002 and the fiscal year ended September 30,
2003, respectively. For the periods ending September 30, 2002 and 2003, we
recorded on our balance sheet $1.1 million and $2.9 million of trade
receivables, respectively, and $2.7 and $0.9 million of customer advances,
respectively, related to maintenance from Goldman, Sachs & Co.

In connection with the amendment and restatement of our senior secured
credit facilities in September 2003, Goldman Sachs Credit Partners L.P. acted
as the sole lead arranger and syndication agent. Goldman Sachs Credit Partners
L.P. received $0.6 million in fees for this service, which was commensurate
with the fees that they charge for acting in a similar capacity on comparable
transactions.

Gains Acquisition

On April 30, 2003, we exercised our option to purchase Gains International
(US) Inc. and Gain International (Europe) Limited from GSCP 2000 and other
private equity funds affiliated with Goldman, Sachs & Co., who own
substantially all of our common stock, for 664,380 shares of common stock
valued at approximately $5.7 million plus the assumption of deferred
consideration of $3.1 million and an October 2003 payment of
earn-out consideration of
approximately $3.6 million based on current exchange rates. With the
acquisition of these entities, we now offer network voice and data services to
the financial services community under the name Network Services. This
transaction followed the completion of a transaction involving the sale of
Gains International (US) Inc., Gains International (Europe) Limited and Gains
International Asia Holdings Limited to entities formed by GSCP 2000 and other
private equity funds affiliated with Goldman, Sachs & Co.

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Stockholders Agreement

We have entered into a stockholders agreement with GSCP 2000 and the other
private equity funds affiliated with Goldman, Sachs & Co. who own our common
stock and Richard Kleinknecht, a minority holder of our common stock. This
agreement provides GSCP 2000 and the other Goldman, Sachs & Co. funds with
various management rights, including the right to designate at least one member
of our board of directors. The agreement also provides specified restrictions
on Kleinknechts ability to transfer shares of our common stock. GSCP 2000 has
advised us that it and the other Goldman, Sachs & Co. funds may seek additional
minority stockholders to invest in up to approximately twenty percent of our
common stock held by them. In connection with any investment by minority
stockholders, we may enter into stockholders agreements with those minority
stockholders. We expect any stockholders agreement to contain customary terms,
including terms regarding corporate governance and other rights relating to the
stockholders investment in our common stock.




Item 14. Principal Accountant Fees and Services

Fees For Independent Accountants

Audit
Fees.Fees for audit services totaled approximately
$1.0 million in fiscal year 2002 and approximately $0.8 million
in fiscal year 2003 for professional services rendered by
Ernst & Young LLP, including fees associated with the
annual audit of our financial statements, reviews of the quarterly
financial statements included in our quarterly reports and statutory
audits required internationally, as well as for services rendered in
connection with our filings with the Securities and Exchange
Commission. The fiscal year 2002 amount also includes fees incurred in
connection with the audit of our predecessor for the period from
October 1, 2001 to December 20, 2001.

Audit
Related Fees.Fees for audit related services rendered by
Ernst & Young LLP totaled approximately
$0.6 million in fiscal year 2002 and approximately $0.4 million
in fiscal year 2003. Audit-related services for both years principally
include due diligence services in connection with acquisitions, and,
in fiscal year 2003, accounting consultations.

Tax
Fees.Fees for tax services rendered by
Ernst & Young LLP, primarily tax compliance and tax
advice, totaled approximately $0.3 million in fiscal year 2002 and
$0.1 million in fiscal year 2003.

All
Other Fees. No other services were rendered by
Ernst & Young LLP in fiscal year 2002 or fiscal year 2003.

Our audit committee
has determined that the provision of the non-audit
services described above is compatible with maintaining the independence of
Ernst & Young LLP. Our audit committee has also pre-approved all
services (audit and non-audit) to be provided to us by Ernst & Young LLP.

In the 2002
fiscal year, none of the non-audit services were pre-approved by our
audit committee. In the 2003 fiscal year, all of our audit and
non-audit services engaged after May 6, 2003 were pre-approved
by our audit committee.

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PART IV




Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

The following documents are filed as part of this report:

|       |  |                                                                                  
|------ |  | ---------------------------------------------------------------------------------
|(a)(1) |  | Financial Statements See index to Financial Statements in Item 8 of this report.
|       |  |                                                                                  
|(a)(2) |  | Financial Statement Schedules                                                    
|       |  |                                                                                  
|       |  | Schedule II: Valuation and Qualifying Accounts                                   

Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is included elsewhere in
the financial statements or notes thereto.

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Schedule II

IPC Acquisition Corp.
Schedule of Valuation and Qualifying Accounts

|                                 |                                                     |        |              |         |            |             |              |        |            |  |             |        |   |  |   |       | 
|-------------------------------- | --------------------------------------------------- | ------ | ------------ | ------- | ---------- | ----------- | ------------ | ------ | ---------- |  | ----------- | ------ | - |  | - | ----- | 
|                                 |                                                     |        |              |         |            |             |              |        |            |  | Deductions- |        |   |  |  
|                                 |                                                     |        |              |         |            |             |              |        |            |  | Write-offs, |        |   |  |  
|                                 |                                                     |        | Balance at   |         | Additions- |             | Payments and |        | Balance at
|                                 |                                                     |        | Beginning of |         | Charged to |             | Other        |        | End of    
|                                 |                                                     | Period |              | Expense |            | Adjustments |              | Period
|(dollars in thousands)           |                                                     |        |              |         |            |             |              |       
|Allowance for doubtful accounts: |                                                     |        |              |         |            |             |              |        |            |  |             |        |   |  |   |      
|                                 | IPC Acquisition Corp:                               |        |              |         |            |             |              |        |            |  |             |        |   |  |   |       | 
|                                 | Year ended September 30, 2003                       |        | $            | 1,245   |            |             | $            | 374    |            |  | $           | (516   | ) |  | $ | 1,103 | 
|                                 | Period from November 15, 2001 to September 30, 2002 |        | $            |        |            |             | $            | 1,288  |            |  | $           | (43    | ) |  | $ | 1,245 | 
|                                 | PredecessorIPC Information Systems:                |        |              |         |            |             |              |        |            |  |             |        |   |  |   |       | 
|                                 | Period from October 1, 2001 to December 20, 2001    |        | $            | 2,648   |            |             | $            | 1,018  |            |  | $           | 847    |   |  | $ | 4,513 | 
|                                 | Year ended September 30, 2001                       |        | $            | 2,601   |            |             | $            | 793    |            |  | $           | (746   | ) |  | $ | 2,648 | 
|Inventory obsolescence:          |                                                     |        |              |         |            |             |              |        |            |  |             |        |   |  |   |      
|                                 | IPC Acquisition Corp:                               |        |              |         |            |             |              |        |            |  |             |        |   |  |   |       | 
|                                 | Year ended September 30, 2003                       |        | $            | 5,235   |            |             | $            | 1,041  |            |  | $           | (819   | ) |  | $ | 5,457 | 
|                                 | Period from November 15, 2001 to September 30, 2002 |        | $            | 7,702   |            |             | $            | 528    |            |  | $           | (2,995 | ) |  | $ | 5,235 | 
|                                 | PredecessorIPC Information Systems:                |        |              |         |            |             |              |        |            |  |             |        |   |  |   |       | 
|                                 | Period from October 1, 2001 to December 20, 2001    |        | $            | 6,843   |            |             | $            | 471    |            |  | $           | 388    |   |  | $ | 7,702 | 
|                                 | Year ended September 30, 2001                       |        | $            | 7,042   |            |             | $            | 2,088  |            |  | $           | (2,287 | ) |  | $ | 6,843 | 
|Warranty Claims:                 |                                                     |        |              |         |            |             |              |        |            |  |             |        |   |  |   |      
|                                 | IPC Acquisition Corp:                               |        |              |         |            |             |              |        |            |  |             |        |   |  |   |       | 
|                                 | Year ended September 30, 2003                       |        | $            | 2,159   |            |             | $            | 2,136  |            |  | $           | (2,406 | ) |  | $ | 1,889 | 
|                                 | Period from November 15, 2001 to September 30, 2002 |        | $            | 2,352   |            |             | $            | 1,745  |            |  | $           | (1,938 | ) |  | $ | 2,159 | 
|                                 | PredecessorIPC Information Systems:                |        |              |         |            |             |              |        |            |  |             |        |   |  |   |       | 
|                                 | Period from October 1, 2001 to December 20, 2001    |        | $            | 2,373   |            |             | $            | 314    |            |  | $           | (335   | ) |  | $ | 2,352 | 
|                                 | Year ended September 30, 2001                       |        | $            | 2,261   |            |             | $            | 2,920  |            |  | $           | (2,808 | ) |  | $ | 2,373 | 

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|       |  |                                                                  
|------ |  | -----------------------------------------------------------------
|(a)(3) |  | Exhibits                                                         
|       |  |                                                                  
|       |  | The following is a list of exhibits filed as part of this report.




Exhibit Index

|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Number  |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|2.1     |  | Purchase Agreement dated as of November 16, 2001 among Global Crossing Ltd., Asia Global
Crossing Ltd, Global Crossing North America Holdings Inc., Saturn Global Network Services
Holdings Limited, IXnet Hong Kong Ltd., Asia Global Crossing Pte Ltd, GS Capital Partners 2000,
L.P., GS Capital Partners 2000 Offshore, L.P., GS Capital Partners 2000 Offshore L.P., GS
Capital Partners 2000 GMBH & Co. Beteiligungs KG, Bridge Street Special Opportunities Fund 2000,
L.P., GS Capital Partners 2000 Employee Fund, L.P., Stone Street Fund 2000 and GS IPC
Acquisition Corp. (Certain exhibits and schedules to this agreement have been omitted. Such
exhibits and schedules are described in the agreement. The company hereby agrees to furnish to
the SEC, upon its request, any or all of such omitted exhibits or schedules.) (incorporated by
reference to exhibit 2.1 to the companys Registration Statement on Form S4 (No. 33382540)).
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|2.2     |  | Amendment date as of December 20, 2001 among Global Crossing Ltd., Asia Global Crossing Ltd,
Global Crossing North America Holdings Inc., Saturn Global Network Services Holdings Limited,
IXnet Hong Kong Ltd., Asia Global Crossing Pte Ltd, GS Capital Partners 2000, L.P., GS Capital
Partners 2000 Offshore, L.P., GS Capital Partners 2000 Offshore L.P., GS Capital Partners 2000
GMBH & Co. Beteiligungs KG, Bridge Street Special Opportunities Fund 2000, L.P., GS Capital
Partners 2000 Employee Fund, L.P., Stone Street Fund 2000, L.P. and IPC Acquisition Corp. to the
Purchase Agreement dated as of November 16, 2001 among the parties to this Amendment
(incorporated by reference to exhibit 2.2 to the companys Registration Statement on Form S4
(No. 33382540)).                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|3.1     |  | Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to
exhibit 3.1 to the companys Registration Statement on Form S4 (No. 33382540)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|3.2     |  | Amended and Restated Bylaws of the Company (incorporated by reference to exhibit 3.2 to the
companys Registration Statement on Form S4 (No. 33382540)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.1     |  | Indenture, dated as of December 20, 2001, among the company, the subsidiary guarantors listed on
schedule I thereto and The Bank of New York as trustee relating to the 11.50% senior
subordinated notes due 2009 (incorporated by reference to exhibit 4.1 to the companys
Registration Statement on Form S4 (No. 33382540)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.2     |  | The Exchange and Registration Rights Agreement, dated December 20, 2001, among the company, the
guarantors listed on schedule I thereto, Goldman, Sachs & Co. and Scotia Capital (USA) Inc.
relating to the 11.50% senior subordinated notes due 2009 (incorporated by reference to exhibit
4.2 to the companys Registration Statement on Form S4 (No. 33382540)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.3     |  | Supplemental Indenture, dated February 28, 2003, among the company, the subsidiary guarantors
parties thereto and The Bank of New York, as trustee. (incorporated by reference to exhibit 4.3
to the companys Registration Statement on Form S1 (No. 333103264)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.4     |  | Supplemental Indenture, dated May 13, 2003, among the company, the subsidiary guarantors parties
thereto and The Bank of New York, as trustee. (incorporated by reference to exhibit 4.4 to the
companys Registration Statement on Form S1 (No. 333103264)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.1    |  | Amended and Restated Stockholders Agreement dated as of December 19, 2001, among GS Capital
Partners 2000, L.P., GS Capital Partners 2000 Offshore, L.P., GS Capital Partners 2000 GMBH &
Co. Beteiligungs, GS Capital Partners 2000 Employee Fund, L.P., Stone Street Fund 2000, L.P.,
Bridge Street Special Opportunities Fund 2000, L.P., Richard Kleinknecht and IPC Acquisition
Corp. (incorporated by reference to exhibit 10.1 to the companys Registration Statement on Form
S4 (No. 33382540)).                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.2    |  | Amended and Restated Credit and Guaranty Agreement dated August 29, 2003 among the company,
certain subsidiaries of the company, various lenders, Goldman Sachs Credit Partners L.P., as
sole lead arranger and syndication agent, General Electric Capital Corporation as administrative
agent and collateral agent, and CIT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

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|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Number  |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        |  | Lending Services Corporation, as documentation agent
(incorporated by reference to exhibit 99.2 to the companys Form 8-K filed on September 8,
2003).                                                                                                                                                                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.3    |  | Amended and Restated Labor Pooling Agreement, dated as of December 18, 1997, by and between
Kleinknecht Electric Company, Inc. (NY) and IPC Information Systems, Inc. (incorporated by
reference to exhibit 10.3 to the companys Registration Statement on Form S4 (No. 33382540)).                                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.4    |  | Amended and Restated Labor Pooling Agreement, dated as of December 18, 1997, by and between
Kleinknecht Electric Company, Inc. (NJ) and IPC Information Systems, Inc. (incorporated by
reference to exhibit 10.4 to the companys Registration Statement on Form S4 (No. 33382540)).                                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.5    |  | Network Services, Channel Sales and Transition Services Agreement, dated December 20, 2001,
among the Company, IPC Information Systems, Inc., Asia Global Crossing, IPC Trading Systems
Australia Pty Ltd., Asia Global Crossing Asia Pacific Commercial Ltd., Global Crossing Limited
and Global Crossing Telecommunications, Inc. (incorporated by reference to exhibit 10.5 to the
companys Registration Statement on Form S4 (No. 33382540)).                                                    
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.6    |  | Amendment dated as of July 3, 2002 among IPC Acquisition Corp., IPC Information Systems, Inc.,
IPC Information Systems Australia Pty Ltd, Asia Global Crossing Asia Pacific Commercial Ltd.,
Global Crossing Limited and Global Crossing Telecommunications Inc., to the Network Services,
Channel Sales and Transition Services Agreement dated as of December 20, 2001 (incorporated by
reference to exhibit 10.1 to the companys quarterly report for the quarterly period ended June
30, 2002).    
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.7    |  | Second Amendment, dated as of March 13, 2003, among the company, IPC Information Systems, Inc.,
IPC Information Systems (Australia) Pty. Ltd., Global Crossing Limited and Global Crossing
Telecommunications Inc., to the Network Services, Channel Sales and Transition Services
Agreement, dated as of December 20, 2001, as amended pursuant to the Amendment, dated July 3,
2002. (incorporated by reference to exhibit 10.7 to the companys Registration Statement on Form
S1 (No. 333103264)).
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.8    |  | Form of Change In Control Agreement (incorporated by reference to exhibit 10.6 to the companys
Registration Statement on Form S4 (No. 33382540)).                                                                                                                                                                                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.9    |  | Form of Change In Control Waiver Agreement. (incorporated by reference to exhibit 10.8 to the
companys annual report for the year ended September 30, 2002).                                                                                                                                                                                                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.10   |  | 2002 Stock Option Plan, dated February 15, 2002 (incorporated by reference to exhibit 10.7 to
the companys Registration Statement on Form S4 (No. 33382540)).                                                                                                                                                                                                                                                                                                                                        
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.11   |  | Key Employee Equity Investment Plan, dated February 15, 2002 (incorporated by reference to
exhibit 10.8 to the companys Registration Statement on Form S4 (No. 33382540)).                                                                                                                                                                                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.12   |  | Settlement and Rejection Agreement, dated March 13, 2003, among IPC Acquisition Corp., Global
Crossing Ltd., and Global Crossing North America Holdings Inc. (incorporated by reference to
exhibit 10.11 to the companys annual report for the year ended September 30, 2002).                                                                                                                                                                                                                         
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.13   |  | Employment agreement between the company and Lance Boxer, dated June 19, 2003 (incorporated by
reference to exhibit 10.1 to the companys quarterly report for the quarterly period ended June
30, 2003).                                                                                                                                                                                                                                                                                               
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.14   |  | Employment agreement between the company and Greg Kenepp, dated September 18, 2003 (incorporated
by reference to exhibit 10.14 to the companys Registration Statement on Form S1 (No.
333103264)).                                                                                                                                                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.15   |  | Separation agreement and release between the company and Stephanie Sovak, dated July 25, 2003
(incorporated by reference to exhibit 10.15 to the companys Registration Statement on Form S1
(No. 333103264)).                                                                                                                                                                                                                                                                                        
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.16   |  | Share Purchase Agreement, dated January 22, 2003, between Gains Acquisition Corp., Gains Asia
Acquisition Corp. and Gains International Infocom Holdings BV (incorporated by reference to
exhibit 10.2 to the companys quarterly report for the quarterly period ended June 30, 2003)                                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.17   |  | Call Option Deed, dated January 22, 2003, between Gains International Infocom Holdings BV, IPC
Acquisition Corp. and IPC Information Systems, Inc (incorporated by reference to exhibit 10.3 to
the companys quarterly                                                                                                                                                                                                                                                                                 

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|        |  |                                                                                                                                      
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                      
|Number  |  | Description                                                                                                                          
|        |  |                                                                                                                                      
|        |  | report for the quarterly period ended June 30, 2003).                                                                                
|        |  |                                                                                                                                      
|*12.1   |  | Ratio of Earnings to Fixed Charges.                                                                                                  
|        |  |                                                                                                                                      
|*14.1   |  | IPC Acquisition Corp. Code of Ethics.                                                                                                
|        |  |                                                                                                                                      
|21.1    |  | List of Subsidiaries (incorporated by reference to exhibit 21.1 to the Companys Registration
Statement on Form S4 (No. 33382540)).
|        |  |                                                                                                                                      
|*23.1   |  | Consent of Ernst & Young LLP, Independent Auditors.                                                                                  
|        |  |                                                                                                                                      
|*23.2   |  | Notice Regarding Consent of Arthur Andersen LLP.                                                                                     
|        |  |                                                                                                                                      
|*31.1   |  | Certificate of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                    
|        |  |                                                                                                                                      
|*31.2   |  | Certificate of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                    
|        |  |                                                                                                                                      
|*32.1   |  | Certificate of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                    
|        |  |                                                                                                                                      
|*32.2   |  | Certificate of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                    



---

|* |  | Filed herewith
|- |  | --------------

| |  |     |  |                                                                                                                                                                                                                                 
| |  | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | (b) |  | Reports on Form 8-K                                                                                                                                                                                                             
| |  |     |  |                                                                                                                                                                                                                                 
| |  |     |  | The company filed a report on Form 8-K on September 8, 2003. The Form 8-K was for the purpose of
announcing that on September 2, 2003, the company completed the amending and restating of its
senior secured credit facilities.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of New
York, State of New York, on the 24th day of December 2003.

|                                    
|------------------------------------
|IPC Acquisition Corp.               
|                                    
|By: /s/ Lance Boxer

Lance Boxer    
|Chief Executive Officer and
Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

|                                           |  |                                                                     |  |                  
|------------------------------------------ |  | ------------------------------------------------------------------- |  | -----------------
|Signature                                  |  | Title                                                               |  | Date             
|                                           |  |                                                                     |  |                  
|By: /s/   LANCE BOXERLance Boxer           |  | Chief Executive Officer and Director(Principal Executive Officer)   |  | December 24, 2003
|                                          
|By: /s/ GREG KENEPPGreg Kenepp             |  | Chief Operating Officer and Director                                |  | December 24, 2003
|                                          
|By: /s/   TIMOTHY WHELANTimothy Whelan     |  | Chief Financial Officer(Principal Financial and Accounting
Officer) |  | December 24, 2003
|                                          
|By: /s/   JOSEPH GLEBERMANJoseph Gleberman |  | Chairman of the Board                                               |  | December 24, 2003
|                                          
|By: /s/   JACK DALYJack Daly               |  | Director                                                            |  | December 24, 2003
|                                          
|By: /s/   ROBERT GHEEWALLARobert Gheewalla |  | Director                                                            |  | December 24, 2003
|                                          
|By: /s/   ERIC SCHWARTZEric Schwartz       |  | Director                                                            |  | December 24, 2003

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Supplemental Information to be Furnished With Reports Filed Pursuant to Section
15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant
to Section 12 of the Act.

The registrant has not sent an annual report or proxy materials to its
security holders during the last fiscal year. The registrant does not currently
intend to send an annual report or proxy materials to security holders
subsequent to this filing.

84