SECURITIES AND EXCHANGE COMMISSION
                     Washington, DC 20549
                               
                           FORM 10-K


Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of  1934

For the fiscal year ended September 30, 1996      
Commission file number 0-25492


                IPC INFORMATION SYSTEMS, INC.   
   (Exact Name of Registrant as Specified in Its Charter)
                              
                              
                              
                              
                              
                              
                                                     
             DELAWARE                           58-1636502
 (State or Other Jurisdiction of               (IRS Employer
  Incorporation or Organization)              Identification
                                                   No.)
                                                     
        Wall Street Plaza                            
          88 Pine Street                             
        New York, New York 				   10005
 (Address of Principal Executive                 Zip Code
             Offices)                                
                                                     
                              
                       (212) 825-9060
(Registrant's Telephone Number, Including Area Code)
                              
Securities registered pursuant to Section 12 (b) 
of the Act:None
                              
Securities registered pursuant to Section 12(g) of the Act:
                               
         Title of Class: Common Stock, $.01 Par Value
                               
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 ____

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 the  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.___

The  aggregate market value of the voting stock  held  by  non-
affiliates  of  the  Registrant as of November  29,  1996,  was
approximately  $75.3  million based upon the  last  sale  price
reported for such date on the Nasdaq Stock Market.

The   number  of  shares  of  the  Registrant's  Common   Stock
outstanding as of  November 29, 1996 was 10,650,172.

              DOCUMENTS INCORPORATED BY REFERENCE

Portions  of  the  definitive Proxy Statement  for  the  Annual
Meeting  of Stockholders of IPC Information Systems, Inc.  (the
"Proxy Statement"), scheduled to be held on February 14,  1997,
are  incorporated by reference in Part III of  this  Report  on
Form 10-K.

<PAGE>

                            PART I

ITEM 1.   BUSINESS

      IPC Information Systems, Inc. (the "Company" or "IPC") is
a  worldwide  industry leader in providing globally  integrated
telecommunications  products  and  services  to  the  financial
services  industry.  The financial services  industry  includes
securities   and   investment  banking  firms,   merchant   and
commercial  banks,  inter-dealer and foreign exchange  brokers,
securities  and commodities exchanges and insurance  companies.
The   Company   focuses  on  serving  the   financial   trading
environment:   the provisioning of products and  services  that
facilitate  the  execution of purchase  and  sale  transactions
involving  equity and debt securities, commodities,  currencies
and   other   financial  instruments.   The  Company   designs,
manufactures,   installs  and  services  trading   room   voice
communication   workstations   and   installs   and    services
comprehensive  LANs  which provide the  financial  trader  more
efficient  access  to  data and industry  specific  value-added
features.  In addition, recognizing that financial trading  has
become  a  global  industry, IPC, with  its  recently  acquired
subsidiary,  International Exchange Networks,  Ltd.  ("IXNET"),
has  implemented a facilities-based global network designed for
the  specialized international telecommunications  requirements
of the financial services industry.

      IPC's  goal is to be the preferred single source provider
of  integrated  voice, data and video communications  solutions
and  services to the financial trading industry on a  worldwide
basis.   IPC  has developed strong customer relationships  over
the past two decades by providing and servicing the specialized
telecommunications  products  which  are  utilized  to  support
trading operations.  An increasing number of financial services
institutions in the United States and abroad operate  globally,
trading  in  the  major  financial  markets  around  the  world
regardless  of time zones or national boundaries.  The  Company
believes   that  the  global  telecommunications   requirements
specific  to  the  financial services industry  are  not  being
addressed.   Such  requirements include:  maximum  reliability,
consistently  high quality transmission, bandwidth  on  demand,
capacity  for  high  speed  data  transmission,  rapid  service
provisioning, dedicated customer service, continuous  attention
to   service   enhancement   and  new   services   development.
Presently, a large portion of international communications  are
conducted through a mesh of disparate public networks  that  do
not  offer similar quality, services, reliability or timeliness
of  delivery as would be available through a dedicated  private
network.   In  addition,  the Company  believes  that  internal
dedicated  private  networks  do not  address  the  significant
international  telecommunications  traffic  that  occurs  among
financial  trading firms.  The Company intends to leverage  its
existing   extensive  customer  relationships  to   provide   a
continually   growing  portion  of  their   customers'   global
telecommunications  requirements  through  a   combination   of
products  and  services  developed by IPC  and  IXNET  and,  in
particular,  through the continued deployment of a  facilities-
based  global  network and the integration of the network  with
IPC's product offerings.

         The     Company's    highly    reliable,    customized
telecommunications systems are used on financial trading floors
where they are known as "turrets" or "dealerboards."  IPC, with
a  presence  in  over  30 countries, has  the  world's  largest
installed base of turrets.  IPC's turret systems are capable of
providing  high  speed access to as many  as  23,000  telephone
lines  and  incorporate many features designed to increase  the
trader's  productivity, speed and quality of communication.  In
1993,  leveraging  its  existing  customer  relationships,  the
Company  launched its Information Transport Systems  ("I.T.S.")
business  to  provide and support the design and implementation
of  cabling  infrastructures and an expanded  product  offering
including  local  and wide area network hubs and  routers.  IPC
also  provides its customers with network planning and  design,
project  management, asset management, and on-going  facilities
service and support.

      IXNET  has implemented a facilities-based global  network
that  comprises  a uniform technology platform, switching  hubs
located  in  New  York  and London, network  access  nodes  and
customer  premise  nodes in other financial centers,  dedicated
circuits  connecting  customers to  the  network  and  software
applications  specifically designed for the  financial  trading
industry.   The  design of the network enables the  Company  to
expand  capacity (in response to, as opposed to in advance  of)
increased customer traffic.  The IXNET Network offers  desktop-
to-desktop  connectivity  within  and  among  different   firms
connected to the IXNET Network 

<PAGE>

anywhere  in  the  world   with   the  same  high  performance 
characteristics   presently   available   only   on  expensive 
dedicated private networks.  Currently, the IXNET Network  has
network nodes in New York, London, Paris, Chicago and Frankfurt
servicing customer access nodes in 17 countries.

      The  Company  was  established in  1973  as  Interconnect
Planning    Corporation   to   provide   telephone    equipment
specifically  designed to perform in the demanding  environment
of the financial trading community.  In 1986, the Company, then
owned by Contel Corporation and known as Contel IPC, opened its
current  manufacturing  facility  in  the  United  States   and
commenced  operations in the United Kingdom.  In October  1991,
the  Company was acquired by Richard and Peter Kleinknecht (the
"Principal  Stockholders") and certain others and  renamed  IPC
Information  Systems,  Inc.  On October  3,  1994  the  Company
completed  its initial public offering of 3,250,000  shares  of
common stock at $15.00 per share.

The Industry

     Turrets

      The turret industry is characterized by a small number of
manufacturers of highly specialized telecommunications  systems
sold primarily to companies in the financial services industry.
Turret  systems must be exceptionally reliable because  of  the
time sensitive nature of trading activity.  Trading floors  may
contain  in  excess  of  1,000 turrets,  each  with  access  to
hundreds of telephone lines.  Although turrets are installed in
addition  to,  and  communicate with,  the  internal  corporate
telephone  system (the "PBX"), turrets have a  multiplicity  of
enhanced  features  when compared to the  PBX,  including,  (i)
superior  speed and reliability, (ii) non-blocking capabilities
even under the busiest trading conditions; (iii) log-on/log-off
features  to allow for trader mobility; (iv) line assignability
to  access additional direct telephone lines as needed, and (v)
multiple programmable speakers.

International Telecommunications

       The  international  telecommunications  marketplace  has
experienced a significant transformation over the last  decade.
Improved  technology and increased competition due in  part  to
regulatory   reform  in  numerous  international  markets   and
privatization  of  state owned communications  monopolies  have
contributed   to   the   rapid   expansion   of   international
telecommunications usage.  The financial services industry  has
grown  significantly, while at the same time  individual  firms
have   expanded  operations  internationally  to  compete  more
efficiently in the global marketplace.  While these  firms  are
investing  heavily  in  communications network  technology  and
infrastructure   to  remain  competitive  in   this   networked
environment, readily available alternatives do not address  the
specific   needs   for  globally  supported  high   performance
international   communications  between  the  various   trading
partners.

     To date, financial trading firms have had two alternatives
for  addressing these exacting telecommunications demands:  (i)
building   private   networks,   incurring   both   substantial
development   and   ongoing  costs  (these   private   networks
historically    have    been    created    for    intra-company
communications);  or  (ii) utilizing  the  broad  based  common
carriers'  public switched networks, which consist of  numerous
non-homogeneous systems and services offered in each market  by
a  multiplicity of local providers.  Presently, a large portion
of  international communications is conducted through a mesh of
disparate public networks that do not offer comparable quality,
services,  reliability or timeliness of delivery  as  would  be
available  through a dedicated private network.   However,  the
Company  believes that internal dedicated private  networks  do
not  address  the  significant international telecommunications
traffic that occurs among financial trading firms.

<PAGE>

Information Transport Systems

       Integrated   high  speed  internal  data  communications
networks  have become critical to financial services companies.
Companies   are   installing  increasingly  complex   computing
environments   that  consist  of  networked  desktop   personal
computers  and workstations, printers, file servers,  facsimile
machines  and LAN and WAN connections.  The increased need  for
information  distribution and the advances  in  network  design
require companies to develop and maintain internal expertise or
to  outsource  their  needs  to  independent  specialists.   In
response  to  its  awareness  of this  increasing  demand,  the
Company implemented its I.T.S. business to provide voice,  data
and video networking infrastructures and connectivity to all of
the customer owned devices which require it.

Products and Services

Turrets

     A turret is a sophisticated telephone system consisting of
desktop consoles and backroom switching equipment for personnel
involved  in activities that require rapid access to  telephone
lines,  and  a high degree of reliability, such as the  trading
activity  of  a  financial  services  company.   A  turret   is
installed in addition to, and communicates with, the  PBX,  but
has  enhanced  features  and reliability  compared  to  a  PBX.
Turrets   are   used  by  organizations  that   have   critical
communications needs, in which personnel must have rapid access
to  a  large  number  of lines to deliver or receive  essential
information. For example, on a trading floor, a lost connection
could  result  in a lost transaction. A turret system  must  be
completely  "non-blocking" and allow all users  to  be  on  the
telephone  at the same time even under the busiest  conditions.
In  sharp  contrast,  a typical PBX configuration  accommodates
only approximately 20% of users speaking at the same time.

      A  turret system installation involves extensive planning
to  ensure  that  all  materials and labor are  coordinated  to
achieve an on-time, within-budget completion. Detailed analysis
is  performed,  defining all required features and  lines.  The
cabling  infrastructure  is  installed  and  tested  prior   to
delivery  of  backroom  switching equipment,  usually  a  month
before "cut-over" (the time when the system use begins).  About
two weeks prior to cut-over, the desktop consoles are installed
and  the  complete system is rigorously tested. Currently,  the
largest trading floors have in excess of 1,200 turret positions
with access to 8,000-10,000 telephone lines and can take up  to
a year to complete.

      System architecture is a major advantage of IPC's  turret
products.  IPC's  current  turret systems  have  a  distributed
architecture  with microprocessor units distributed  throughout
the circuitry, such that no single fault in the current systems
can cause a failure of the entire system.

   TRADENET MX(R). TRADENET MX(R), a fully digital, distributed
architecture product, was designed on a patented mesh-switching
fault  tolerant  network, which is not vulnerable  to  isolated
component  failure. Its totally distributed design  avoids  the
disadvantages  of  centralized  processing  by  equipping  each
circuit  card  with  two  SPARC  microprocessors,  providing  a
combined  25  MIPS  of  processing  power  per  circuit  board.
TRADENET MX(R)is designed as a platform combining hardware  and
software upon which new features and applications can be  added
to enhance the product. Because they are mainly software based,
these enhancements can be made quickly to enable the Company to
respond  rapidly  to  developments  in  the  market  or  to   a
customer's   specific  requests.  The  customer  can   have   a
continually up-to-date system by gradual upgrading of software.
The TRADENET MX(R)platform is designed with the  capability  to
switch data and video as well as voice.  The current list price
range for the TRADENET MX(R) is $8,500 to $15,000 depending  on
the configuration and features required.

<PAGE>

      MX  Compact. During 1994, the Company determined  that  a
less  costly  version of TRADENET MX(R)was required for smaller
sized  locations.  In June 1994, the Company introduced the  MX
Compact, designed with a capacity of 40 turrets with comparable
features of TRADENET MX(R).  The MX Compact is  packaged  in  a
single  cabinet and competitively priced for branch offices  in
smaller  markets.   The current list price  range  for  the  MX
Compact is $5,000 to $7,000.

    Exchangefone. Exchangefone(R)is an extremely ruggedized key
telephone  specifically designed for use  on  exchange  floors.
Exchangefone(R)uses distributed  microprocessor  technology  to
provide   ease  of  feature  customization  and  a  significant
reduction  in  the  cable between the  trading  floor  and  the
backroom switching equipment.  The current list price range for
Exchangefone(R) is $5,000 to $7,000.

      Open Line Speaker Systems. The Company manufactures  open
line,  digital,  turnkey  speaker  systems  for  the  financial
services  industry.  These speaker systems provide  full-duplex
communications over two-wire or four-wire circuits that  enable
brokers  to react instantaneously when trading.  From a  single
microphone,  brokers can broadcast simultaneously  to  numerous
customers.  Additionally, these speaker systems contain digital
signal processor software which enables the speaker systems  to
be utilized at increased volumes with minimal distortion, echo,
feedback  and sidetone.  The current list price range for  such
systems is $5,000 to $9,000.

      During  April  1995, the Company acquired the  assets  of
Bridge Electronics Inc. ("IPC Bridge"), a recognized leader  in
the  design, manufacture and marketing of specialized open-line
speaker  systems  used  by the foreign exchange  community  and
other  traders  in  the  financial services  industry  and  the
industry's only provider of digital speaker systems.

      The  Company also manufactures multi-button key telephone
sets  and  intercom  systems sold in  conjunction  with  turret
positions.  Additionally, IPC remarkets various  other  related
products   including,   among  others,   PBX   systems,   video
conferencing equipment and voice logging and recorder devices.

      Turret  Service. Following a standard one  year  warranty
period  after  installation  of a  turret  system,  a  customer
generally enters into an annual or multi-year service contract,
paid  either  monthly  or quarterly in advance.   In  addition,
turret  services include moves, additions and changes to system
configurations.

The IXNET Network

      IXNET  was formed in 1993 and during the first 18 months,
its  current senior management team focused on researching  the
international telecommunications requirements of the  financial
trading  industry and related regulatory trends.  This research
led  to  IXNET's  plans for a value-added network  serving  the
international  financial trading industry.  Key findings  which
highlighted   the  opportunity  included:  rapid   changes   in
technology   requiring   constant  reevaluation   of   previous
technology decisions and new investments to remain competitive;
internal  telecommunications departments focused on  intra-firm
communications   via   private   networks   rather   than    on
communications with trading counterparts; an unsatisfied demand
for high performance communications between firms; difficulties
in dealing with multiple vendors, particularly in international
markets;   significant  disparity  between  the   pricing   and
underlying  costs of international communications traffic;  and
no   uniform   global  technology  platform  for  international
communications.

<PAGE>

      IXNET  has implemented a facilities based global  network
specifically  designed  for  the financial  services  industry.
Significant   features  of  the  IXNET  Network   include   the
following:

     Uniform Equipment Platforms:  IXNET has  selected Northern
     Telecom  Ltd.'s digital carrier platform for all switching
     nodes in the international network.  This will provide for
     all services to be available universally, call-set-up time
     to  be  minimized and one network management  and  control
     system  to  optimize  network performance.   In  addition,
     IXNET  has  selected  Newbridge  Networks  Corporation  to
     supply  nodal  bandwidth  management  and  customer   site
     equipment  throughout the worldwide network.  The  uniform
     platform  will provide high performance, advanced features
     and  global  network  management which  allows  for  rapid
     provisioning  and  end-to-end  network  diagnostics.   The
     Company    will   continue   to   investigate   additional
     manufacturers  and  to  test,  evaluate  and  deploy  open
     standard products to optimize the IXNET Network.

     Transport:  IXNET utilizes  multiple  carriers to  provide
     access  facilities  from customer premises  to  the  IXNET
     facility.   Such carriers include local exchange carriers,
     competitive   access  providers  and   competitive   local
     exchange carriers.  In all cases, access from the customer
     sites is via a digital facility.  In addition, the Company
     leases   and  acquires   bandwidth   from   regional   and 
     international   common   carriers  to  link  its   network 
     locations.   Diverse   multiple  routing  is  utilized  to 
     increase  reliability  beyond  the  service  level  of any 
     individual facility provider.

     Network Operation Centers ("NOCs"):  The Company currently
     has  fully  operational NOCs in New York City and  London,
     which  house  the  specialized  equipment  necessary   for
     managing the network.  The NOCs contain workstation  based
     software  systems allowing for the display of  alarms  for
     all   equipment   conditions,  testing  of   all   adverse
     conditions,  re-routing of traffic to other  equipment  or
     networks,  management notification of critical  conditions
     and  provisioning of customer bandwidth.   While  the  New
     York  City NOC will act as the overall operations  control
     center  for  the  entire  IXNET  Network,  each  NOC   can
     independently support the IXNET Network.  Additional  NOCs
     will  be  deployed  to major financial  centers  based  on
     customer demand.

IXNET Services

     IXNET services include the following:

      IXGlobal.  IXGlobal  provides a seamless  global  private
network  to  the  financial services community  over  a  single
common  global platform offering calling among all IXNET member
firms  worldwide with the same high performance characteristics
presently   available  only  on  expensive  dedicated   private
networks.   Features of IXGlobal include:  (i)  on-net  calling
privileges  to all network participants; (ii) fast  call  setup
and  enhanced  features; (iii) "virtual"  automatic  ring  down
service  which  eliminates the need for costly  private  lines;
(iv)  flexible network design and configuration; (v) rapid end-
to-end  provisioning of circuits and network architecture;  and
(vi) global network control and account management.

     IXLink.  IXLink is IXNET's dedicated private line service.
The   service  features  include:  (i)  high  quality   digital
connectivity   worldwide;   (ii)  end-to-end   circuits   which
eliminate  the  need to deal with multiple vendors;  and  (iii)
circuits available from "voice grade" to "T1/E1" capacity.

<PAGE>

       MXConnect.    MXConnect  provides  seamless  integration
between  the  IXNET  Network and the IPC TRADENET MX(R) digital
turret.   This digital private line service is being  developed
to enhance the functionality and performance of both the turret
and  the  IXNET  Network when interconnected.  Current  service
offerings   include   specialized  digital  open   conferencing
capabilities for trading positions at multiple sites,  commonly
referred   to   as   "Hoot  `n  Holler."   Additional   feature
enhancements are currently under development.

      IXPrime.   IXPrime is iXnet's off-network  long  distance
telephone  service.   Features of IXPrime include  switched  or
dedicated  access and simplified pricing for calls, eliminating
confusing multiple calling plans.

      All  IXNET  services provide flexible billing format  and
media,  including  clear and concise calendar  month  invoicing
which  allows  the user to see actual costs, without  confusing
discount  plans.   IXNET  also offers optional  local  currency
billing.

Information Transport Systems

       The  Company  markets  the  design,  implementation  and
maintenance  of  high  speed  data  networks  as  I.T.S.   This
business  line  includes four major product and service  areas:
network   implementation  and  support,  value-added  services,
networking  products  and  cabling  infrastructure.   Customers
purchase these products and services on a stand alone basis  or
in bundled combinations.

      Network Implementation and Support.  The Company offers a
full  line of technical and network implementation and  support
services  to  customers on a project basis  or  as  part  of  a
long-term technical services contract. The purpose of the long-
term  contract  is  to allow the customer  to  have  continuous
access to high quality technical expertise. Such customers will
have  access  to a wide range of IPC technical and  operational
resources,  including network engineering analysis,  help  desk
support, user training and cabling and reconfiguration.

     Value-Added Services. The Company provides a wide range of
value-added  services including coordination  of  trading  room
design,   consulting,   engineering   implementation,   project
management, the staging and burn-in of workstations, technology
and operational outsourcing.

      Networking Products.  The Company markets and services  a
full   line  of  third  party  manufactured  networking  system
products  including local area network hubs, adapters, bridges,
routers,  network management software and protocol  converters.
The  Company  sells these products on a stand  alone  basis  or
fully   installed,  configured  and  integrated  with  customer
systems.

      Cabling  Infrastructure. Cabling infrastructure  provides
physical connectivity among all communications devices, such as
telephone   switching  equipment  (turret  or  PBX),  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.  The  Company  offers its  cabling  infrastructure
customers  design  input on various system elements,  including
diversity  of  cable  routing, uninterruptable  power  systems,
security  safeguards and cable management systems. The  Company
places special emphasis on the testing and certification phases
of  the  project since today's high speed networks demand  that
products  be  installed in accordance with strict  manufacturer
specifications.  Upon  certification,  the  Company  guarantees
cabling   infrastructure  installations  as   to   transmission
characteristics against defects for a period of five years. The
Company  also  offers extensive documentation  of  the  network
infrastructure, cable layouts and all device connections.

<PAGE>

Marketing

      The  Company  presently markets  its  turret  and  I.T.S.
products  and  services domestically and in  key  international
financial  centers.  This is accomplished through a combination
of  distribution channels including both direct and distributor
sales.   The  Company presently has direct  sales  and  service
locations  in  New  York,  London,  Atlanta,  Boston,  Chicago,
Cincinnati,   Dallas,   Houston,  Los  Angeles,   New   Jersey,
Philadelphia, Pittsburgh, San Francisco, Stamford,  St.  Louis,
and Toronto, Canada.  The Company also has an extensive network
of  established distribution partners in Argentina,  Australia,
Austria,  Belgium,  Brazil,  Canada,  China,  France,  Germany,
Greece,  Hong  Kong, Indonesia, Ireland, Italy, Japan,  Kuwait,
Luxembourg,  Malaysia,  Mexico, the Netherlands,  New  Zealand,
Peru,  the  Philippines, South Africa, Singapore,  Switzerland,
Taiwan,  Thailand and Turkey.  The IPC distributor network  was
established to enable IPC to sell and service systems globally.
The  distributors have expertise in turret sales and LAN design
and   installation,  and  provide  resident  qualified  systems
engineers to support customers.

      IXNET services are presently marketed and sold by a  team
of  experienced  network sales professionals dedicated  to  the
IXNET  service  offering.   IXNET currently  has networkk sales
professionals in New York and London and will add sales  people
in other key locations globally as its expansion continues.

Team Approach

      IPC  and  IXNET  use a team approach in their  sales  and
account   management.   Each  customer  is  assigned   a   team
consisting of individuals with responsibility for sales, client
services and project management, with a team leader responsible
for  overall  coordination.  IXNET account managers  are  being
integrated  into  each team in order to leverage  existing  IPC
customer relationships, present a unified Company approach, and
coordinate service offerings.

Global Services

      IPC recently structured sales and operations globally
under  seperate  functional  organizations.   In  addition   to 
facilitating  the   "team  approach"   to  sales   and  account 
management this alignment promotes relationships with customers
who have significant global operations and complex telecommunication
needs.  This represents a   departure   from   the   historical
location-by-location  and project-by-project approach taken  by
turret vendors and reflects the trend toward a consolidation of
trading firms and a growing preference by the firms  to utilize 
common technology  standards   throughout   the   organization.   
Objectives  of  the  global  account  program  are  to  improve 
customer service levels and response time,  increase   customer
efficiency and productivity, standardize  service  deliverables
across all locations, improve customer business  processes  and 
improve the customer's  overall   communications  and   control
of its communications infrastructure. Each Global Services team
will  include  individuals  dedicated  to  account   management, 
operations and implementation, business/finance and professional
services.

Marketing

      IPC  maintains  a high profile in the financial  services
market  by  publicizing contracts won, utilizing  placement  of
advertising  in  industry  publications  and  participation  in
relevant  industry  trade  shows.  The  Company  also  actively
participates   in   industry  seminars  to  communicate   IPC's
capabilities to prospective customers and maintains a staff  of
experienced  marketing professionals who  generate  promotional
brochures and training materials.

<PAGE>

Customers

      The principal industries served by IPC include: financial
services,  banking and stock/commodity exchanges and insurance.
The   financial  services  industry  includes  securities   and
investment banking firms, merchant and commercial banks, inter-
dealer and foreign exchange brokers, securities and commodities
exchanges and insurance companies.  Historically, almost all of
the  Company's  revenues  have  been  derived  from  sales   to
customers in the financial services industry.  In fiscal  1996,
approximately 13% of total revenues were from one customer.

Backlog

      As  of  September 30, 1996, the Company had a backlog  of
purchase contracts representing approximately $77.9 million  of
future  revenues, as compared with approximately $72.5  million
as  of  September 30, 1995.  Due to the size and lead  time  of
orders,  which can vary substantially, and because the  Company
generally  recognizes  revenue  upon  the  completion   of   an
installation,  the amount of backlog at any  date  may  not  be
indicative  of  actual  sales for any subsequent  period.   The
Company's  backlog  includes only orders for new  installations
and does not reflect annual or multi-year service contracts  or
orders  for  the  reconfiguration, alteration or  expansion  of
existing systems, as such orders are normally completed  within
one month.

Research and Development

    IPC continues to be a market leader with the TRADENET MX(R)
product  family  which  sets a high standard  for  reliability,
performance,  and  functionality.  IPC works closely  with  its
customers to understand their future requirements and to ensure
its products address their needs.  During 1997, IPC intends  to
continue  to  invest in the TRADENET MX(R)family as well as its
next generation of products to sustain the Company's leadership
position  in  voice-based  trading   system  products.   Recent
additions  to  the  TRADENET  MX(R) product line  include   the
TradePhone  MX,  enhanced Integrated Services  Digital  Network
("ISDN")  connectivity and call processing, and  digital  voice
recording support.

      In addition to developing new TRADENET MX(R) features and
functionality,  IPC  intends  to  strongly  emphasize   product 
integration with IXNET's   global  network.   This  integration
removes  the  traditional   facilities   based  trading   floor   
boundaries  and  enables  customers  to  build  virtual trading 
environments   that   are  geographically  distributed.   These 
solutions are anticipated to include functionality such as line
networking, global hoot and holler, and global intercom. Market
requirements such  as improved  disaster  recovery  and  shared  
tenant or Centrex turret services will also be targeted.

      Interoperability and integration  of the traders' desktop
systems  will  remain  a  strategic  focus.  IPC
intends utilize  its  core  competencies  in  call  processing, 
Application   Programming   Interface   development,   Computer 
Telephony Integration, and  fault tolerant switching to provide  
solutions to improve trader productivity.  Tighter coupling and
integration  between  desktop systems, front office systems and 
back   office   systems   will   be   pursued   utilizing   key  
relationships with partners  in  the  video, trader workstation
and market data delivery arenas.

Manufacturing

      The  Company manufactures its products at a leased 85,000
square  foot building in Westbrook, Connecticut.  The  facility
houses  production  lines,  a repair department,  inventory,  a
training   center  and  various  support  functions,  including
production   scheduling,  purchasing  and   quality   assurance
personnel and production lines for circuit board assembly.

<PAGE>

      Management  believes that the manufacturing facility  and
its  resources are capable of handling expected demand for  the
foreseeable  future.   The  Company  believes  that  there  are
adequate  supplies  of  labor in  the  immediate  area  of  the
Westbrook facility.

      Most turret components have a relatively short lead  time
of  approximately 30 days. However, there are a few  long  lead
time items, specifically displays and buttons, that need up  to
24  weeks order time. The Company purchases certain key product
components that are made to order from single source suppliers.
Materials are ordered to a production forecast that is  derived
by  constantly monitoring sales activity. Furthermore, IPC  has
developed  an  extensive  "point-of-use"  program  whereby  its
suppliers  pre-position their inventory in IPC's warehouse  and
IPC  does  not take ownership until the components are  needed.
The  Company believes that its relationships with its suppliers
are good and it has not experienced supply difficulties.

Competition

     The markets for sophisticated communications equipment and
I.T.S.  are highly competitive.  Although some of the Company's
competitors   are   substantially  larger  and   have   greater
resources,   management  believes  that  IPC's  strong   market
position  is  the result of its consistent ability  to  produce
high  quality  products,  its established  reputation  for  the
highest  quality service, strong relationships with  customers,
and experienced management and sales and technical staffs.

      In  the worldwide market for trading turrets, IPC's  main
competitors    are    V    Band   Corporation    and    British
Telecommunications plc ("BT"). The Company also  competes  with
Hitachi  Ltd.,  Telaid Industries Inc., Etrali S.A.,  Telenorma
GmbH  (a  division of Robert Bosch GmbH) and LM  Ericsson  Ltd.
Management  believes  it has significant  advantages  over  its
competitors   by  providing  superior  quality   products   and
outstanding customer service on a global basis.

      Direct  competition  to  IPC in the  I.T.S.  business  is
difficult  to  identify due  to  the  level  of  fragmentation.
Although a number of  companies  compete   for  parts  of  what
the Company includes in its customer solutions  (for   example,
cable installation), management believes that its expertise and
capability  to  support  the  full range of I.T.S. requirements
of large national and international customers provide  it  with
significant competitive advantages.

International Telecommunications Competition

        The    institutional   structure    of    international
telecommunications is changing dramatically.  These changes may
have   significant   implications  for  how  telecommunications
providers  will operate in international markets in the  future
and may create new regulatory issues.  Three major interrelated
trends are apparent.

      The first is a trend toward market liberalization and the
introduction  of facilities-based competition.  This  trend  is
accelerating  a  shift from single national  carriers,  whether
government  or privately owned, to multiple carriers  and  more
competitive  markets.  To further this trend, a  working  group
within  the  new World Trade Organization, which  replaced  the
General  Agreement on Tariffs and Trade, has  been  negotiating
market-opening  measures concerning trade in basic  and  value-
added   telecommunications   services   and   networks.     The
negotiations  recently have been extended until February  1997,
to    reach    agreement   on   measures   to   open   national
telecommunications markets to international competition.

      The second trend is increased private sector ownership of
telecommunications providers, manifested most  notably  in  the
privatization of national carriers.  This trend is  spurred  by
(i)  the  growing recognition that investment requirements  for
expansion  of  telecommunications infrastructures will  require
access  to  private  sector  capital  and  (ii)  concerns  that
government  controlled carriers cannot keep pace  with  rapidly
changing technology and market demands.

<PAGE>

      The third trend is the  increasing  participation  among 
major  international  carriers  in   global   alliances.  Such 
alliances, which may be based on either equity  or  non-equity
relations, are   attempting   to   provision  global  products  
through   single   points   of   contact    to    global
markets.   The trend toward alliances has been further  spurred
by   the   carriers'  desire  to  protect   and   enhance   the
profitability  of international traffic, the pricing  of  which
reflects  a  system  of  settlement rates  among  international
telecommunications carriers.

      Most  global  alliances  are  still  new  and  not  fully
developed,  either  in  terms  of  corporate  form  or   market
strategy.   To  date,  revenues to the  alliances  from  target
markets,   which  include  the  global  provision  of  enhanced
services  to multinational corporations, are small relative  to
traditional  international voice traffic revenue.  Nonetheless,
such  alliances  are  of  significance because  they  represent
individual  national carriers attempting to learn how  to  work
together  in  non-traditional  ways  and  on  a  much   greater
geographic scale.

      The  Company  believes  that it has  certain  competitive
advantages over existing carriers and the developing alliances,
including  its  network design and its ability to  execute  its
business  plan, for several reasons.  The participants  in  the
alliances,  as  common  carriers,  have  designed  broad  based
networks  for providing service to the public at large.   These
networks utilize a variety of hardware and software, making  it
difficult  to  implement  a  uniform global  telecommunications
system  and  offer  a common set of services with features  and 
performance characteristics demanded  by the financial services
industry.   While  the  alliances  are  a response  to customer
demand for a single point of  contact,  by their   nature   the
alliances  have difficulty implementing projects  and servicing
customers across corporate and national  borders.   The   IXNET
Network is designed to meet the  specific performance standards
demanded  by  the  financial   services industry.   This single
market focus and the Company's ability to integrate its products
and services allow the  Company to provide comprehensive single
source   solutions   for its customers, a competitive advantage
over global alliances.

      The  key global alliances include the following:  Concert
Communications Company (MCI Communications Corp.,  BT),  Global
One (Sprint Corp., France Telecom, Deutsche Telecom AG), World-
Partners (AT&T Corp., Singapore Telecom, KDD Corp. (Japan), and
Uniworld),  Uniworld (AT&T Corp., Telia AB, Swiss Telecom  PTT,
Koninkl_ke PTT Nederland, Telefonica de Espana, S.A.), and  The
Cable and Wireless Federation.

Regulatory Environment

Government Regulation

      Telecommunications services provided by the  Company  are
subject to regulation by international entities as well  as  by
United  States  federal, state and local  government  agencies.
The  primary  regulatory  policy of the  United  States  is  to
promote   effective   competition   in   the   United    States
telecommunications service market, particularly the market  for
international  services.  It is the view of the  United  States
government that competitive international markets will  provide
incentives  for further market entry both in the United  States
and  foreign markets.  Competitive markets will also  stimulate
technological   innovation  by  United  States   suppliers   of
information technology.

      The  existing  international  telecommunications  service
regulatory environment is very different than that which exists
for  United  States domestic telecommunications services.   For
domestic services, the FCC and State Public Utility Commissions
have  direct jurisdiction, granted by statute, over all aspects
of  the  service.   With  international traffic,  however,  the
United   States'  regulatory  structure  is  limited   to   the
origination or termination of service in the United States.  As
a  result,  the  United States and each foreign  country  share
jurisdiction   over   policies  and   regulations   controlling
international  telecommunications  services  between  the

<PAGE>

two.  Thus,  the United States cannot  unilaterally   implement
a  regulatory  policy  for  international   telecommunications,
thereby limiting the impact a domestic  statute, such as   the 
Communications Act of  1934,  as amended  ("the Communications 
Act")can have in  developing a new structure for international
telecommunications.

     Presently, the Company is required to file tariffs listing
the  terms, conditions and rates for its services for both  its
intrastate  and  international  services.   In  addition,   the
Company  is  required  to obtain FCC authorization  to  provide
international   telecommunications   services.     Under    the
Communications Act, the FCC has the authority to  forbear  from
imposing   any  regulations  it  deems  unnecessary,  including
requiring non-dominant carriers to file tariffs.

      IXNET  currently  holds  an FCC authorization  to  resell
private  lines  that  are  not  interconnected  to  the  public
switched  telephone network for communication services  between
the  United  States and numerous international  points.   IXNET
also  holds  an  FCC  authorization  to  resell  private  lines
interconnected  to  the public switched telephone  network  for
communication services between the United States and the United
Kingdom,  Canada  and Sweden. IXNET has received  a  reciprocal
authorization  from the United Kingdom to resell private  lines
interconnected  to  the  public switched  network  between  the
United States and the United Kingdom.

      State  regulatory commissions exercise jurisdiction  over
intrastate  services.  Intrastate services  are  communications
that originate and terminate in the same state.  IXNET holds  a
certificate of public convenience and necessity to resell forms
of  telephone service within New York State.  IXNET is  in  the
process  of obtaining similar authorizations from other states.
As  the  regulatory  regimes change in the  United  States  and
elsewhere, the authorizations held by the Company also may need
to be adjusted.

International Regulatory Considerations

      The regulation of IXNET services in foreign jurisdictions
will  differ from country to country depending on the  progress
each  country has made in developing a competitive  market  for
telecommunications services.  For instance, the United  Kingdom
has   established  a  market  structure  that  encourages   the
operation   of   new   competitive  telecommunication   service
providers.   IXNET  has  been granted a  license  by  the  U.K.
Department of Trade and Industry to offer international  simple
resale and facility-based services.  This allows IXNET to offer
such services from  the  United Kingdom.   There  are  a number
of other  countries  that  have  liberalized   or  are  in  the
process  of liberalizing their telecommunications environments.
IXNET  is  in   the   process   of  obtaining  the  appropriate 
authorizations in a number  of  these jurisdictions.

      Other  foreign jurisdictions take the position  that  all
telecommunication services are under the exclusive jurisdiction
of   the   state-sanctioned  monopoly.   In   these   countries
competition  is strictly prohibited.  However,  even  in  these
countries, iXnet may have a special status that would enable it
to provide service.  A number of countries will allow so-called
"closed  user  groups" ("CUGs") to operate outside  the  state-
sanctioned monopoly.  CUGs are communities of interest that are
common  among  a  company  and its  subsidiaries  or  group  of
companies.  The European Union definition of CUGs looks to  see
if  the  link  between the members of the group  is  a  "common
business  activity."   IXNET fits this definition  of  CUGs  in
several  countries.   This is because IXNET  is  not  like  the
large, international telecommunications service providers  that
market  to the public at large.  Rather, its marketing  efforts
and  network  design are focused on the needs  of  institutions
within  the financial community, with this focus narrowed  even
further  to trading room telecommunications services.  The  CUG
categorization  would enable iXnet to provide service where  it
would otherwise be prohibited.

     In those countries where IXNET is strictly prohibited from
offering service, IXNET may enter into a relationship with  the
state  sanctioned  telecommunications  monopoly  so  that   its
services  can  be  offered  in  that  jurisdiction.   In  these
situations, the local telecommunications service provider would
provide  the  facilities  and offer  local  services  to  IXNET
customers.  It is likely that services would be of higher  cost
in  these  situations.  There are, however,  certain  countries
which   do   not   require  licensing  for  the  provision   of
telecommunications 

<PAGE>

network services.

      IXNET  is  in  the  process of  obtaining  the  necessary
authorizations to provide service in a number of  European  and
Asian countries and is exploring the regulatory environment  in
additional   countries  targeted  for  service.  It  intends to 
establish   its   services   either   through  licensing  as  a 
telecommunications  service  provider, CUG or through bilateral
agreements  with  a   telecommunications   monopoly.   As   the
regulatory regimes change, IXNET  will  adjust  its  regulatory 
strategy.

Intellectual Property

      The  Company  relies on a combination of  patents,  trade
secrets, trademarks, copyrights and other intellectual property
law, nondisclosure agreements and other protective measures  to
protect its proprietary rights.  The Company currently  has  13
United States patents, including design patents, and five  more
pending  patent applications for its technologies.  The Company
also  relies  on  unpatented know-how  and  trade  secrets  and
employs  various methods, including confidentiality  agreements
with  employees and consultants, to protect its  trade  secrets
and  know-how.  The Company also may desire to develop, produce
and  market commercially viable new products, such as  personal
communications  systems,  that  may  require  new  or   renewed
licenses from others.

Employees

      As  of September 30, 1996, the Company had 741 full-time,
non-union  employees worldwide, including  615  in  the  United
States and 126 in the United Kingdom. Of these, 69 were engaged
in marketing and sales, 90 in research, development and product
engineering,    131   in   finance,   branch   and    corporate
administration, 221 in manufacturing and 230 in operations.

     An additional 465 United States workers are represented by
collective bargaining units, including 413 within the New  York
metropolitan  area  provided  under  labor  pooling  agreements
between the Company and two of its affiliates.  Contracts  with
unions  are  negotiated every three years.  Current  agreements
expiring  through June 11, 1998 provide benefits,  wage  rates,
wage  increases and grievance and termination procedures.   The
Company  has  never  experienced a work  stoppage.   Management
believes  that current  relations with labor  are good and that
existing union contracts will be renewed.

Environmental Matters

     The Company is 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  its  manufacturing  process.    Although
management  believes that its 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  the  Company's
facilities or operations.

ITEM 2.   PROPERTIES

       The   Company  leases  its  manufacturing  facility   in
Westbrook,  Connecticut,  its  executive  offices  and  network
switching   facility  in  New  York  City,  its  research   and
development  facility in Stamford, Connecticut and  its  branch
offices and sales offices in the United States, Canada  and  in
the  United  Kingdom.  The Company believes  that  its  current
facilities are adequate for its near-term requirements and does
not  anticipate  the  need  for significant  expansion  in  the
foreseeable future.

<PAGE>

ITEM 3.   LEGAL PROCEEDINGS

       The  Company  is  not  a  party  to  any  pending  legal
proceedings  except  for  claims and lawsuits  arising  in  the
normal  course of business.  The Company does not believe  that
these claims or lawsuits will have a material adverse effect on
the  Company's  financial condition or results  of  operations.
See Note 9 to "Notes to the Consolidated Financial Statements".

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          None


                            PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
          STOCKHOLDER MATTERS.

           The  Company's common stock is listed on the  Nasdaq
Stock  Market (Nasdaq - IPCI).  The following table sets  forth
the  high  and  low sales prices reported by  the  Nasdaq.  The
common stock began trading on September 27, 1994.
                                   
<TABLE>
<CAPTION> 
                              
                       For the year ended September 30,
                            1996               1995 
                        High     Low       High     Low
<S>                      <C>      <C>       <C>      <C>
First Quarter           19 1/4   13 1/2    15 1/4   11 
Second Quarter          26 1/4   16 1/2    14       11 1/4 
Third Quarter           25       17 1/16   15 1/2   11 1/2 
Fourth Quarter          21       13 1/2    18 3/4   

</TABLE>

As  of November 30, 1996 there were 92 holders of record of the
Company's stock.

To  date,  the Company has not paid any cash dividends  to  its
stockholders.  Any future payment of cash dividends will depend
upon  the  Company's earnings and financial condition,  capital
requirements and other relevant factors. The Company  does  not
intend   to  pay  cash  dividends  in  the  foreseeable  future
but intends to retain its earnings for use in its business.

<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA (unaudited)
        (amounts in thousands, except per share amounts

<TABLE>
<CAPTION>


								       For the eleven
			  				              months ended
			    For the year ended September 30,  September 30,
			         1996     1995      1994      1993	1992	
<S>                         <C>      <C>       <C>       <C>       <C>
Statement of Operations:							
											
   Revenues			 $249,508  $206,254  $163,671  $112,714  $68,687 
									
   Gross Profit		   76,818    63,173    48,043    31,152   20,346 
									
   Net income (loss)	   12,129    13,267    16,549(1)  1,753  (3,478)
										
   Earnings per share	    $1.15     $1.26 	
									
   Weighted average 
     shares outstanding	   10,590    10,506 	
									
   Pro forma earnings 
     per share			     		      $1.11(2)
								
   Pro forma weighted average 
     shares outstanding				      8,535(2)
							
   Supplemental pro forma 
     earnings per share				       0.88(3)

</TABLE>
							
<TABLE>							
							September 30,		
Balance Sheet Data:	    1996     1995     1994     1993     1992
<S>                          <C>      <C>      <C>      <C>      <C>
								
    Working capital	  $50,268 	$46,851  $27,661  $16,696   $7,077
    Total Assets		  140,957 	128,036  110,702   70,120   44,488
    Notes payable		   13,900		     1,411    1,411    1,411
    Long-term debt				    10,663   12,916    5,338
    Long-term lease 
     commitments            3,429 	
    Stockholders' equity   71,715    58,504   21,122    7,328    5,985

<FN>
</TABLE>
										
(1)   Net income includes the cumulative effect of the Company's 
      termination  of its S corporation status which resulted in 
      a tax benefit of $3,295.
					
(2) 	Pro forma  earnings per share was  computed by dividing pro 
      forma net  income (income before provision for income taxes 
      less pro  forma  provision  for  income taxes) by pro forma 
      weighted  average  number  of  shares outstanding.  The pro 
      forma provision  for income  taxes  assumes that IPC-US was 
      subject to corporate  federal income taxes for the year and 
      excludes the tax benefit associated with the termination of
      the Company's  S  corporation  status (See (1) above).  Pro 
      forma weighted  average number of shares outstanding is the 
      historical weighted  average  number  of shares outstanding 
      during the year adjusted to  give  effect  to the number of 
      shares whose proceeds  were  necessary to pay the remaining 
      S corporation distribution to pre-Offering stockholders.
							
(3)	Effective  October 1, 1994,  and  in  connection with the 
      Company's initial public offering, IPC  converted from an 
      S corporation to a C corporation.  Supplemental pro forma 
      earnings per share for 1994 has been calculated	using the 
      Company's reported income before taxes  and giving effect 
      for both the Company's fiscal 1995 effective tax rate and 
      weighted average shares outstanding.
				
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
         CONDITION AND RESULTS OF OPERATIONS (unaudited)
						 	
The following tables set forth certain statements of operations
data and its percentage to total revenues for the periods indicated:
				
<TABLE>
<CAPTION>			
					For the year ended September 30,
			
(Dollars in Thousands)                1996      1995      1994
<S>                                    <C>       <C>       <C>
Revenues:				
  Turret sales and installation.... $109,659  $100,851   $70,166 
  Turret service...................   55,484 	50,057    51,433
  Information Transport Systems 
  sales, installation and service..   78,842    55,346    42,072
  Network services.................    5,523         -         - 
    Total revenues.................  249,508   206,254   163,671
  Cost of revenues.................  172,690   143,081   115,628
    Gross profit...................   76,818 	63,173    48,043
  Research and development 
  expenses.........................   11,467    10,108     7,654
  Selling, general and 
  administrative expenses..........   45,143    31,038    23,727
    Income from operations.........   20,208    22,027    16,662
  Interest (expense)/income, net...     (678)	   233    (1,568)
  Gain on renegotiation of lease 
  obligation on vacant facilities..      -   	   -         517
  Other income/(expense), net......      591 	   226        65
    Income before provision for 
    income taxes...................   20,121    22,486    15,676
  Provision/(benefit) for 
  income taxes.....................    7,992     9,219      (873)
     Net income....................  $12,129   $13,267   $16,549
					
Revenues:					
  Turret sales and installation....    44.0%	 48.9%      42.9%
  Turret service...................    22.2 	 24.3       31.4 
  Information Transport Systems 
  sales, installation and service..    31.6 	 26.8 	25.7
  Network services.................     2.2	    -	        -
    Total revenues.................   100.0     100.0      100.0
  Cost of revenues.................    69.2 	 69.4 	70.6
    Gross profit...................    30.8 	 30.6 	29.4
  Research and development 
  expenses.........................     4.6 	  4.9 	 4.7
  Selling, general and 
  administrative expenses..........    18.1 	 15.0 	14.5
    Income from operations.........     8.1 	 10.7 	10.2
  Interest (expense)/income, net...    (0.3)	  0.1 	(1.0)
  Gain on renegotiation of lease 
  obligation on vacant facilities..       -   	    -        0.3
  Other income/(expense), net......     0.2 	  0.1 	 0.0
    Income before provision for 
    income taxes...................     8.1 	 10.9 	 9.6
  Provision/(benefit) for 
  income taxes.....................     3.2 	  4.5 	(0.5)
     Net income....................     4.9%	  6.4%	10.1%

</TABLE>
								
<PAGE>

Overview

      IPC  is a worldwide industry leader in providing globally
integrated   telecommunications  services  to   the   financial
services  industry.  The Company's highly reliable,  customized
telecommunications systems are used on financial trading floors
where  they are known as "turrets" or "dealerboards."  In 1993,
the Company launched its I.T.S. business to provide and support
the design and implementation of cabling infrastructures and an
expanded  product  offering including  LAN  and  WAN  hubs  and
routers,  and  video  conferencing  systems.   IPC,  with   its
recently   acquired  subsidiary,  IXNET,  has   implemented   a
facilities-based global network (the "IXNET Network")  designed
for    the    specialized   international    telecommunications
requirements of the financial services industry.

      IPC's  goal is to be the preferred single source provider
of  integrated  voice, data and video communications  solutions
and  services to the financial trading industry on a  worldwide
basis.   The Company intends to leverage its existing extensive
customer relationships to provide a continually growing portion
of  their  customers'  global  telecommunications  requirements
through a combination of products and services developed by IPC
and  IXNET.  This is to be accomplished  through  the continued
deployment  of  a  facilities-based  global  network   and  the 
integration of the network with IPC's product offerings.

     The Company's operations are separated into three lines of
business: turret systems, I.T.S. and network services  (IXNET).
The   Company   accounts  for  sales  of  turret   systems   to
distributors  and  direct  sales and  installations  of  turret
systems  as  "turret  sales  and  installation."   The  Company
accounts for revenues from turret system maintenance, including
annual  and  multi-year  service  contracts,  and  from   moves
additions  and  changes to existing turret system installations
as  "turret  service."  The Company accounts for revenues  from
I.T.S.  design,  integration and implementation projects,  from
sales  of  intelligent network products, such as hubs,  bridges
and  routers,  from  on-site maintenance  of  customer  I.T.S.,
including  annual  and  multi-year  contracts,  and  from   the
provision  of  outsourcing services for the support,  expansion
and  upgrading of existing customer networks as "I.T.S.  sales,
installation and service."  Additionally, the Company  accounts
for   revenues  derived  from  the IXNET  Network  as  "network
services".

      Revenue from turret and I.T.S. sales and installation  is
recognized  upon  completion of the  installation,  except  for
revenue from sales of turret systems to distributors, which  is
recognized  upon shipment of turret products by IPC.   Invoices
are  submitted during various stages of the installation.   The
revenue attributable to such advance payments is deferred until
system  installation is completed.  In addition, contracts  for
annual  recurring  turret  and I.T.S.  services  are  generally
billed in advance, and are recorded as revenues  ratably (on  a
monthly  basis) over   the contractual periods.   Revenue  from
moves,  additions and changes to turret systems  is  recognized
upon completion, which usually occurs in the same month or  the
month  following the order for services.  Revenue from  network
services are recognized in the month the service is provided.

      Due to the substantial sales price of the Company's large
turret  and  I.T.S. installations and the Company's recognition
of  revenue only upon completion of installations, revenues and
operating results could fluctuate significantly from quarter to
quarter.   However, the Company's service business generates  a
more consistent revenue stream than sales and installation and,
consequently, these fluctuations could be somewhat diminished in
the future as the Company's service business expands.

<PAGE>

Comparison  of the year ended September 30, 1996  to  the  year
ended September 30, 1995

      Revenues.   Total revenues increased by $43.3 million  or
21.0%,  to $249.5 million in the year ended September 30,  1996
from $206.3 million in the year ended September 30, 1995.

     Turret installation and related service revenues increased
by  $14.2 million, or 9.4%, to $165.1 million in the year ended
September  30,  1996  from $150.9 million  in  the  year  ended
September 30, 1995. This increase is primarily attributable  to
the increased acceptance of TRADENET MX(R).  Management expects
that  sales  of  TRADENET  MX(R) will continue to generate  the
majority  of  turret  sales and installation  revenue  for  the
foreseeable future.

      Revenues  from I.T.S. sales and related service increased
by  $23.5 million, or 42.5%  to $78.8 million in the year ended
September  30,  1996  from  $55.3 million  in  the  year  ended
September  30, 1995. These increases were attributable  to  the
continuing development and expansion of  the I.T.S. business.

      Revenues from network services of $5.5 million  for   the
year   ended   September  30,  1996  resulted   from    IXNET's
implementation  of its international telecommunication  network
during  1996,  achieving  recurring  monthly  revenues  at   an
annualized rate exceeding $10 million at fiscal year end.

      Cost  of Revenues.  Cost of Revenues (as a percentage  of
revenues) decreased to 69.2% for the year  ended September  30,
1996  from  69.4% for the year ended September 30,  1995.  This
decrease  is  due  to continued installation  efficiencies  and
manufacturing cost reductions.

       Research   and   Development  Expenses.   Research   and
development  expenses increased by $1.4 million, or  13.4%,  to
$11.5  million in the year ended September 30, 1996 from  $10.1
million in the year ended September 30, 1995. The increase  was
due  to  the  development of new products and  enhancements  to
existing products.  Also, research and development expenses for
the  year  ended  September 30, 1996 include  expenses  by  IPC
Bridge.  Bridge Electronics, Inc., now known as IPC Bridge, was
acquired  by  the Company in April 1995.  The Company  believes
that  development of new products and enhancements to  existing
products   are   essential  to  its  continuing  success,   and
management intends to continue to devote substantial  resources
to research and product development in the future.

      Selling,  General  and Administrative Expenses.  Selling,
general and administrative expenses increased by $14.1 million,
or 45.4%, to $45.1 million in the year ended September 30, 1996
from  $31.0 million in the year ended September 30, 1995. These
increases  are  attributable to an increase  in  headcount  and
other  expenses  to support higher business  levels,  start  up
costs  associated with IXNET and the continued development  and
geographic expansion of the Company's I.T.S. business.  As  the
Company   deploys   its   international   network,   management
anticipates  that  selling  and  administrative  expenses  will
increase.  These expenses will likely be incurred prior to  the
realization of revenues.

      Interest  Income / (Expense). Interest income / (expense)
decreased  to  $0.7  million  in expense  for  the  year  ended
September  30, 1996 from $0.2 million in income  for  the  year
ended  September 30, 1995.  This decrease was primarily due  to
the  Company's' utilization of its line of credit during fiscal
1996.   Total interest expense for the fiscal year  ended  1996
was  $1.1  million compared to $.4 million in the  fiscal  year
ended 1995.

      Provision  for Income Taxes. The Company's effective  tax
rate, excluding minority interest, for the year ended September
30, 1996 was 41.0%.

<PAGE>

Comparison  of the year ended September 30, 1995  to  the  year
ended September 30, 1994

      Revenues.   Total revenues increased by $42.6 million  or
26.0%, to $206.3  million  in the year ended September 30, 1995
from $163.7 million in the year ended September 30, 1994.

      Revenues  from  turret installation and  related  service
increased by $29.3 million, or 24.1%, to $150.9 million in  the
year  ended September 30, 1995 from $121.6 million in the  year
ended   September  30,  1994.  This  increase   was   primarily
attributable to the increased acceptance of TRADENET MX(R).

      Revenues  from I.T.S. sales and related service increased
by  $13.3 million, or 31.6%  to $55.3 million in the year ended
September  30,  1995  from  $42.1 million  in  the  year  ended
September  30,  1994.  This increase was  attributable  to  the
continuing development and expansion of the I.T.S. business.

      Gross  Profit. The gross profit as a percentage of  total
revenues  increased to 30.6% for the year  ended September  30,
1995  from  29.4% for the year ended September 30, 1994.   This
increase  in  gross  profit  percentage  is  due  to  continued
installation efficiencies and manufacturing cost reductions.

       Research   and   Development  Expenses.   Research   and
development  expenses increased by $2.5 million, or  32.1%,  to
$10.1  million in the year ended September 30, 1995  from  $7.7
million in the year ended September 30, 1994.  The increase was
due to the ongoing development of new products and enhancements
to existing products.

      Selling,  General  and Administrative Expenses.  Selling,
general  and administrative expenses increased by $7.3 million,
or  30.8%,  to $31.0   million in the year ended September  30,
1995  from $23.7 million in the year ended September 30,  1994.
As  a  percentage of revenues, expenses increased to 15.0%  for
the  year  ended September 30, 1995, from 14.5%  for  the  year
ended September 30, 1994.  This increase was attributable to  a
rise in headcount and other expenses to support higher business
levels  and  the  continued development and  expansion  of  the
Company's I.T.S. business.

      Interest  Income / (Expense). Interest income / (expense)
increased  to  $0.2  million  in  income  for  the  year  ended
September  30, 1995 from $1.6 million in expense for  the  year
ended  September  30,  1994.  This  increase  was  due  to  the
repayment  of long-term debt from the proceeds of the Company's
initial public offering in October 1994 and interest earned  on
temporary   cash   investments   and   short-term   investments
throughout fiscal 1995.

      Gain  on  Renegotiation  of Lease  Obligation  on  Vacant
Facilities.    The  Company  renegotiated  its  obligation   in
connection with certain vacant facilities resulting in  a  $0.5
million gain for the year ended September 1994.

      Provision  for Income Taxes. The Company's effective  tax
rate  for the year ended September 30, 1995 was 41%.  Effective
October  1,  1994,  the Company terminated  its  S  corporation
status  and,  as  a  result, was subject to  corporate  federal
income  taxes  in  fiscal 1995.  Accordingly,  the  year  ended
September  30,  1995 reflects an increase in the provision  for
income  taxes as the comparable prior year's tax provision  was
based  on  the Company's S corporation status.  On a comparable
basis,  assuming  the same effective tax  rate  and  number  of
shares  outstanding  after the Company's October  1994  initial
public  offering, net income would have been  $9.2  million  or
$0.88 per share for the year ended September 30, 1994.

<PAGE>

Liquidity and Capital Resources

     Net cash used in operations was $14,737 for the year ended
September  30,  1996 which resulted primarily from  changes  in
accounts receivable and customer advances and deferred  revenue
offset,  in  part, by changes in depreciation and  amortization
and  net  income.   Accounts receivable  increased  during  the
period  due  to  higher  business volumes  and  the  timing  of
customer  billings.   The  decrease in  customer  advances  and
deferred  revenue was due to jobs in progress at September  30,
1996  being at an earlier stage of completion when compared  to
1995.

      Net cash provided by operations was $7.3 million for  the
year ended September 30, 1995.  Net cash provided by operations
resulted  from  operating profits and inventory decreases  from
production   efficiencies,  offset  by   increases   in   trade
receivables primarily from higher sales levels.

      Net  cash provided by operations was $7.3 million in  the
year  ended September 30, 1994. Increases in inventory  due  to
higher  product demands and increases in trade receivables  due
to  higher sales levels were more than offset by funds provided
by  increases  in  customer advances and deferred  revenue  and
accounts payable and higher operating profits.

      Cash used in investing activities was $12.7 million, $8.5
million  and  $1.2  million for the years ended  September  30,
1996,  1995 and 1994, respectively.  Cash was used in investing
activities   for  acquisition  payments  for  IPC  Bridge   and
property, plant and equipment expenditures, primarily  composed
of  machinery  and equipment and leasehold improvements.   This
cash  use  was offset in part by proceeds from the  sale  of  a
short-term investment.

     In April 1996, the Company signed a promissory note with a
bank  increasing the Company's line of credit from  $15,000  to
$25,000.   At  September  30,  1996  $13,900  of  the  line  is
outstanding.  The weighted average interest rate on  borrowings
for  fiscal  year 1996 was 6.31%.  At September 30, 1995  there
was no amount outstanding on the line of credit.

    In connection with the implementation of the IXNET Network,
IXNET  has  entered  into  capital  lease  agreements  totaling
approximately  $4.6  million  for  certain  network   switching
equipment.

     On October 3, 1994 the Company completed an initial public
offering  (the "Offering") of 3,250,000 shares of common  stock
at  $15.00 per share and received Offering proceeds of $45,337,
net  of underwriting discounts and commissions. During the year
ended  September 30, 1995, Offering proceeds were used to repay
long-term  debt of $10,663, repay notes payable to stockholders
of  $1,411 and pay an S corporation distribution of $18,530  to
pre-Offering stockholders. The remaining proceeds were invested
in temporary cash investments and short term investments.

      The Company believes that cash flows from operations  and
existing  credit  facilities will be  sufficient  to  meet  its
working  capital  and capital expenditure needs  for  the  near
future.


Quarterly Fluctuations and the Effects of Inflation

       The   size  and  lead  time  of  new  orders  can   vary
substantially  and,  since  the  Company  generally  recognizes
revenue  from the sale and installation of turret  systems  and
Information   Transport  Systems  on  the  completion   of   an
installation, the Company's quarterly results of operations may
fluctuate  significantly.  Management  does  not  believe  that
inflation has a significant effect on the Company's results.

<PAGE>

Foreign Exchange

      The  Company's  shipments  to  foreign  distributors  are
generally  invoiced  in US Dollars.  As a result,  the  Company
believes  its foreign exchange transaction exposure  caused  by
these  shipments  is  insignificant.  Sales  to  the  Company's
customers  in  the  United Kingdom are denominated  in  British
Pounds  Sterling.   The Company does not hedge  its  net  asset
exposure  to  fluctuations  in  the  US  Dollar/British   Pound
Sterling exchange rate.  Accordingly, the Company is subject to
risks  associated with such fluctuation.  However,  adjustments
to  the  Company's financial position as a result  of  currency
fluctuations have not been significant.

      This Report on Form 10-K contains certain forward-looking
statements concerning, among other things, the Company's  plans
and  objectives  for  future operations, planned  products  and
services, potential expansion into new markets, and anticipated
customer  demand  for  our  existing and  future  products  and
services.  The Private Securities Litigation Reform Act of 1995
provides  a  "safe  harbor" for forward-looking  statements  to
encourage the inclusion of prospective information so  long  as
those  statements  are  accompanied  by  meaningful  cautionary
statements identifying factors that could cause actual  results
to  differ  materially.   Among the factors  that  could  cause
actual results, performance or achievement to differ materially
from   those   described  or  implied  in  the  forward-looking
statements   are  general  economic  conditions,   competition,
potential  technology  changes,  changes  in  or  the  lack  of
anticipated  changes in the regulatory environment  in  various
countries,   changes  in  customer  purchasing   policies   and
practices,  the ability to raise additional capital to  finance
expansion,  and the risks inherent in new product  and  service
introductions and the entry into new geographic markets.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

          See  Financial  Statements and  Financial  Statement
          Schedule beginning on page 25.


ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
          ACCOUNTING AND FINANCIAL DISCLOSURE

          Not applicable.

                           PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND OTHER OFFICERS OF
          THE REGISTRANT

     a. Identification of Directors:

      The  information  required by this Item  is  incorporated
herein  by  reference  to the information contained  under  the
caption,  "Election of Directors" in the Proxy Statement  which
will be filed with the SEC within 120 days after the end of the
fiscal  year covered by this Form 10-K (the "Proxy Statement").
Such  information  is  incorporated by  reference  pursuant  to
General Instruction G(3).

     b. Identification of Executive Officers:

     The  information  required by this  Item  is  incorporated
     herein by reference to the information contained under the
     captions "Election of Directors" and "Management"  in  the
     Proxy  Statement.   Such information  is  incorporated  by
     reference, pursuant to General Instruction G(3).

<PAGE>

ITEM 11.  EXECUTIVE COMPENSATION

      The  information  required by this Item  is  incorporated
herein  by  reference  to the information contained  under  the
caption "Executive Compensation" in the Proxy Statement.   Such
information is incorporated by reference, pursuant  to  General
Instruction G(3).

ITEM 12.  SECURITY  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS  AND
          MANAGEMENT

      The  information  required by this Item  is  incorporated
herein  by  reference  to the information contained  under  the
caption  "Security Ownership of Certain Beneficial  Owners  and
Management"  in  the  Proxy  Statement.   Such  information  is
incorporated  by  reference, pursuant  to  General  Instruction
G(3).


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      The  information  required by this Item  is  incorporated
herein  by  reference  to the information contained  under  the
caption  "Certain Transactions and Relationships" in the  Proxy
Statement.   Such  information is  incorporated  by  reference,
pursuant to General Instruction G(3).

                            PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
          ON FORM 8-K

   (a)(1) Financial Statements                         Page(s)

          Report of Independent Accountants                25

          Consolidated Balance Sheets as of September 30,  26
          1996 and 1995                                    

          Consolidated and Combined Statements of          27
          Operations for the Years Ended September 30,
          1996, 1995 and 1994

          Consolidated and Combined Statements of Cash     28
          Flows for the Years Ended September 30, 1996,
          1995 and 1994

          Consolidated and Combined Statements of          29
          Stockholders' Equity for the Years Ended 
          September 30, 1996, 1995 and 1994

          Notes to Consolidated and Combined Financial  30-41
          Statements                       

   (a)(2) Financial Statement Schedule

          Schedule II - Valuation and Qualifying Accounts  42

     Schedules  not listed have been omitted because  they  are
     not  applicable  or  are not required or  the  information
     required  to  be  set  forth therein is  included  in  the
     Consolidated  and Combined Financial Statements  or  notes
     thereto.

<PAGE>

   (a)(3) Exhibits

Exhibit No.    Exhibit Title

    3.1*       Restated Certificate of Incorporation.
    3.2*       Amended and Restated Bylaws of Registrant.
    4.1*       Specimen Common Stock of the Registrant.
   10.2*       Employment Agreement, dated May 9, 1994, between
               the Registrant and Richard P. Kleinknecht.
   10.2.1**    Letter Agreement, dated October 17, 1995, amending
               the Employment Agreement between the Registrant 
               and Richard P. Kleinknecht.
   10.3*       Employment Agreement, dated May 9, 1994, between 
               the Registrant and Peter J. Kleinknecht.
   10.3.1**    Letter Agreement, dated October 17, 1995, amending
               the Employment Agreement between the Registrant 
               and Peter J. Kleinknecht.
   10.4*       Employment Agreement, dated August 29, 1994, 
               between the Registrant and Jeffrey M. Gill.
   10.4.1**    Letter Agreement, dated October 17, 1995, amending
               the Employment Agreement between the Registrant 
               and Jeffrey M. Gill.
   10.13*      Registration Rights Agreement between the Registrant
               and Richard P. Kleinknecht and Peter J. Kleinknecht.
   10.14**     Employment Agreement, dated as of October 17, 1995,
               between the Registrant and Steven Terrell Clontz.
   21.3        Subsidiaries of the Registrant.
   23          Consent of Coopers & Lybrand L.L.P.
   27          Financial Data Schedule (for SEC use).

                      
     *  Previously filed as an exhibit to the  Registrant's
        Registration  Statement  on Form  S-1  (No.  33-78754)
        or Amendment No. 1, Amendment No. 2, or Amendment  No.  3
        to the  Registration  Statement, and incorporated  herein 
        by reference.
    **  Previously filed as an exhibit to the  Registrant's Report
        on Form 8-K, filed November 30, 1995, and incorporated 
        herein by reference.

<PAGE>

                          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.

                              IPC INFORMATION SYSTEMS, INC.



Date: December 27, 1996            By:/s/ Terry Clontz
                                    Terry Clontz
                                    President and Chief
                                    Executive Officer

      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
                                                   

 /s/ RICHARD P. KLEINKNECHT  Chairman         December 27, 1996
   Richard P. Kleinknecht                          
                              
  /s/ PETER J. KLEINKNECHT   Vice Chairman    December 27, 1996
    Peter J. Kleinknecht                           
                              
      /s/ TERRY CLONTZ       Chief Executive  December 27, 1966
        Terry Clontz          Officer,            
                              President and        
                              Director
                              (Principal           
                              Executive Officer)
                                                   
   /s/  KEVIN M. ESPOSITO    Chief Accounting December 27, 1996
      Kevin M. Esposito       Officer              
                              (Principal           
                              Financial Officer)
                              (Principal           
                              Accounting Officer)
                                                   
   /s/ ROBERT J. MCINERNEY   Director         December 27, 1996
     Robert J. McInerney
                                
                              
                              

<PAGE>                               
                               
                               
                               
                               
               REPORT OF INDEPENDENT ACCOUNTANTS



To the Stockholders
of IPC Information Systems, Inc.:
     
     
     
     We  have  audited the consolidated and combined  financial
statements  and  the  financial  statement  schedule   of   IPC
Information Systems, Inc. listed in Item 14(a) of this Form 10-
K.  These financial statements and financial statement schedule
are  the  responsibility  of  the  Company's  management.   Our
responsibility  is  to express an opinion  on  these  financial
statements  and  financial  statement  schedule  based  on  our
audits.
     
     We  conducted  our  audits  in accordance  with  generally
accepted auditing standards.  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 Information  Systems,  Inc.  as  of
September  30,  1996 and 1995 and the consolidated  results  of
their  operations  and their cash flows  for  the  years  ended
September 30, 1996 and 1995 and the combined results  of  their
operations  and  their cash flows for the year ended  September
30,  1994,  in  conformity with generally  accepted  accounting
principles.   In  addition,  in  our  opinion,  the   financial
statement  schedule  referred  to  above,  when  considered  in
relation  to the basic financial statements taken as  a  whole,
presents  fairly,  in  all material respects,  the  information
required to be included therein.
                                        
                                        
                                       COOPERS & LYBRAND L.L.P.
                                        
                                        
New York, New York
December 11, 1996

<PAGE>

		IPC INFORMATION SYSTEMS, INC.
		 CONSOLIDATED BALANCE SHEETS
	(Dollars in Thousands, Except Per Share Amounts)

<TABLE>
<CAPTION>

						  September 30,
						 1996       1995
<S>                                   <C>        <C>

ASSETS:					
Current assets:						
 Cash and temporary cash investments...   $2,306    $15,786 
   Trade receivables, less allowance 
   of $1,521 and $1,572................   66,468     50,513
   Inventories.........................   36,367     35,111
   Prepaid expenses and other current 
   assets..............................    7,284	9,526 	
	Total current assets.............  112,425    110,936 	
			
Property, plant and equipment, net.....   21,867      9,236
Other assets, net......................    6,665      7,864
	Total assets..................... $140,957   $128,036
			
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:		
  Note payable.........................  $13,900
  Accounts payable.....................   14,369    $14,807
  Accrued liabilities..................   13,502     19,366
  Customer advances and deferred 
  revenue..............................   19,446     29,912
  Short-term lease commitments.........      940
	Total current liabilities........   62,157     64,085
		
Long-term lease commitments............    3,429
Other liabilities......................    3,656      5,447
	Total liabilities................   69,242     69,532 
			
Commitments and contingencies
		
Stockholders' equity:
  Preferred stock - $0.01 par value, 
    authorized 10,000,000 shares,	
    none issued and outstanding
  Common stock - $0.01 par value, 
    authorized 25,000,000 shares; 
    issued 10,860,000 and 10,763,740
    shares at September 30, 1996 
    and 1995, respectively.............      109        107
  Paid-in capital......................   46,831     45,853
  Retained earnings ...................   25,493     13,262
     Less treasury stock, at cost, 
       242,185 shares..................     (718)      (718)	
	Total stockholders' equity.......   71,715     58,504
	Total liabilities and 
        stockholders' equity........... $140,957   $128,036
				
<FN>				
				
				
See Notes to Consolidated and Combined Financial Statements.

</TABLE>


<PAGE>
				
IPC INFORMATION SYSTEMS, INC.
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Per Share Amount)
					
<TABLE>
<CAPTION>
					    For the year ended September 30,
						 1996		   1995	   1994
					  Consolidated  Consolidated  Combined
<S>                                  <C>           <C>          <C>

Revenues:			
 Product sales and installation... $178,513 	 $139,947 	 $103,529 
 Service..........................   70,995        66,307      60,142
					      249,508 	  206,254 	  163,671
Cost of revenues:						
 Product sales and installation...  122,897 	   95,174      74,233 
 Service..........................   49,793 	   47,907 	   41,395 
					      172,690 	  143,081 	  115,628

    Gross profit..................   76,818 	   63,173 	   48,043 
					
Research and development expenses.   11,467 	   10,108       7,654 
Selling, general and 
 administrative expenses..........   45,143        31,038      23,727

	Income from operations......   20,208 	   22,027      16,662 
				
Interest income/(expense), net....     (678)	      233 	   (1,568)
Gain on renegotiation of lease 
 obligation on vacant facilities..                                517
Other income/(expense), net.......      591           226          65

	Income before provision for
       income taxes...............   20,121        22,486      15,676
Provision/(benefit) for 
 income taxes.....................    7,992         9,219        (873)

	Net income..................  $12,129       $13,267     $16,549 
					
Earnings per share................    $1.15 	    $1.26
						
Weighted average shares
 outstanding......................   10,590 	   10,506 
					
Pro forma data (unaudited) (See Note 7):
				
Pro forma provision for income taxes........................   $6,184 
					
Pro forma earnings per share ...............................    $1.11 
					
Pro forma weighted average shares outstanding...............    8,535 
				
<FN>			
			
See Notes to Consolidated and Combined Financial Statements.
	
</TABLE>
				
<PAGE>

IPC INFORMATION SYSTEMS, INC.
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
			
<TABLE>
<CAPTION>

					 For the year ended September 30,
					         1996	   1995        1994
					     Consolidated Consolidated Combined	
<S>                                     <C>         <C>         <C>

Cash flows from operating activities:
  Net income.......................    $12,129 	    $13,267   $16,549
  Adjustments to reconcile net 
   income to net cash provided by 	
   (used in) operating activities:	
   Depreciation and amortization...      4,351 	      2,058     2,317 
   Other amortization..............      2,037 	      1,782     1,971 
   Provision for doubtful accounts.        240          861       786 
   Deferred income taxes...........        674 	     (1,084)   (4,256)
   Gain on renegotiation of lease 
    obligation.....................    	 		          (517)
  Changes in operating assets and liabilities:	
   Trade receivables...............    (16,385)     (11,804)  (11,783)
   Inventories.....................     (1,678)      15,440   (23,100)
   Prepaid expenses and other 
    current assets.................       (288)      (1,606)   (3,545)
   Other assets....................        130 	       (342)      142 
   Accounts payable................       (950)        (717)    3,044 
   Accrued liabilities and other 
    liabilities....................     (4,691)        (630)    3,190 
   Customer advances and deferred 
    revenue........................    (10,306)	     (9,882)   22,455 
	Net cash (used in) provided 
       by operating activities.....    (14,737)	      7,343     7,253 


Cash flows from investing activities:
   Capital expenditures............    (11,747)	     (6,499)   (1,173)
   Purchase of short-term 
    investment.....................                  (2,007)
   Proceeds from sale of short-term
    investment.....................      2,007 
   Acquisition of Bridge 
    Electronics, Inc...............     (2,997)	
	Net cash (used in) investing
       activities..................    (12,737)	     (8,506)   (1,173)


Cash flows from financing activities:
   Net proceeds from note payable..     13,900 
   Proceeds from long-term debt....		   		        123,211 
   Principal payments on capital
    leases.........................       (221)
   Repayment of long-term debt..... 		    (10,663) (125,464)
   Repayment of notes payable to 
    affiliates..................... 	           (1,411)
   Proceeds from the exercise of 
    stock options..................        106 
   Proceeds from the sale of common
    stock.......................... 		     45,337 
   Purchase of treasury stock...... 		       (396)	    (72)
   S corporation distribution......		          (18,530)   (2,470)
	Net cash provided by (used in)
       financing activities........     13,785 	     14,337    (4,795)


Effect of exchange rate changes 
  on cash..........................        209 		 (4)     (243)
Net (decrease) increase in cash....    (13,480)	     13,170     1,042
Cash and temporary cash investments,
  beginning of period..............     15,786 	      2,616     1,574
Cash and temporary cash investments,
  end of period....................     $2,306 	    $15,786    $2,616

		
Supplemental disclosures of cash flow information:
Cash paid during the year for-
   Income taxes....................     $6,863	     $9,876	   $1,390
   Interest........................     $  756	     $   18	   $1,157
Non-cash investing and financing activities-	
   Capital lease obligations.......     $4,369
   Issuance of stock for the 
   acquisition of Bridge 
   Electronics, Inc.  .............     $  700	
				
<FN>
				
See Notes to Consolidated and Combined Financial Statements.	
			

</TABLE>

<PAGE>


IPC INFORMATION SYSTEMS, INC.	
CONSOLIDATED AND COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY	
(Dollars in Thousands)

<TABLE>
<CAPTION>

									        Total
					    Paid-   Retained            stock-
  				  Common   in     earnings Treasury   holders'
			         stock  capital (deficit)  stock	  equity
<S>                         <C>    <C>       <C>      <C>      <C>  

Combined balance,
 September 30, 1993.....     $75   $8,986   ($1,483)	 ($250)  $7,328 
 Translation adjustment.                       (213)		    (213)
 Net income.............   		         16,549 	         16,549 
 Purchase of treasury 
  stock................. 				         (72)     (72)
 S corporation 
  distribution..........  		          (2,470)	         (2,470)
Combined balance, 
 September 30, 1994......      75    8,986    12,383 	  (322)  21,122

 Translation adjustment.  		             (34)	            (34)
 Net income.............		          13,267           13,267
 Net proceeds from initial
  public offering.......      32   42,219 			   42,251
 Issuance of common stock 
  under employment
   contract.............              824 			      824
 Purchase of treasury 
  stock.................   				        (396)    (396)
 S corporation 
  distribution..........	    (6,176)   (12,354)          (18,530)
Consolidated balance, 
 September 30, 1995.....     107   45,853    13,262 	  (718)  58,504


 Translation adjustment.	                  102 		      102 
 Net income.............			   12,129 		   12,129 
 Issuance of common stock
  in acquisition.........      1 	  699 			      700 
 Issuance of common stock
  under stock purchase
  plan...................      1    171 				      172 
 Issuance of common stock
  under stock option plan.          108 				      108 
Consolidated balance, 
 September 30, 1996......   $109  $46,831   $25,493 	 ($718) $71,715 

<FN>				
			
See Notes to Consolidated and Combined Financial Statements.
		
</TABLE>


<PAGE>
                  IPC INFORMATION SYSTEMS, INC.
                                
    NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS,
                                
        (Dollars in Thousands, Except Per Share Amounts)
                                
                                
1. The Company:

   IPC   Information  Systems,  Inc.  ("the  Company")   provides
   globally  integrated telecommunications products and  services
   to  the  financial services industry primarily in  the  United
   States and United Kingdom.  The Company is in the business  of
   designing,  manufacturing, installing  and  servicing  trading
   room  voice  communication  workstations  and  installing  and
   servicing  comprehensive Local Area  Networks.   In  addition,
   International Exchange Networks Ltd. ("IXNET"),  a  subsidiary
   of  the  Company,  has  implemented a facilities-based  global
   network    designed   for   the   specialized    international
   telecommunications  requirements  of  the  financial  services
   industry.

2. Summary of Significant Accounting Policies:

   Principles of Consolidation and Combination
   The consolidated financial statements include the accounts  of
   IPC  Information  Systems,  Inc. and  its  subsidiaries.   The
   combined  financial statements include the accounts of  IPC-US
   and  its  affiliated  company, IPC-UK.  Intercompany  balances
   and transactions have been eliminated.

   Revenue Recognition
   Revenue  from  product  sales and installation  is  recognized
   upon  completion of the installation except for  revenue  from
   sales  to  distributors,  which is recognized  upon  shipment.
   Under   contract  provisions,  customers  are  progress-billed
   prior  to  the completion of the installations.   The  revenue
   related  to  these  advance payments  is  deferred  until  the
   system    installations   are   completed.    Contracts    for
   maintenance  are  billed  in  advance,  and  are  recorded  as
   deferred  revenue and recognized ratably over the  contractual
   periods.  Revenue from network services are recognized in  the
   month the related service is provided.

   Cash and Temporary Cash Investments
   The  Company  places cash with several high quality  financial
   institutions and thereby limits the amount of credit  exposure
   to   any   single   financial  institution.   Temporary   cash
   investments  with  original  maturities  of  less  than  three
   months  are  considered cash equivalents and consist  of  high
   grade  municipal bond funds and time deposits. 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.

   Inventories
   Inventories are stated at the lower of FIFO (first  in,  first
   out)  cost  or  market.  Inventory costs  include  all  direct
   manufacturing costs and applied overhead.

<PAGE>

                   IPC INFORMATION SYSTEMS, INC.
                                
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS,Continued
                                
        (Dollars in Thousands, Except Per Share Amounts)
                                



   Property, Plant and Equipment
   Property,  plant  and  equipment  are  stated  at   cost   and
   depreciated  on  a  straight-line basis over  their  estimated
   useful  lives.   Network  switching equipment  are  stated  at
   cost.   Various costs are capitalized during the  installation
   and  expansion  of  the network.  Depreciation  is  calculated
   using  the  straight  line method over  the  estimated  useful
   lives  beginning  in  the  year  the  asset  was  placed  into
   service.

   Capitalized Product Development Costs
   Capitalized   product   development  costs   represent   costs
   incurred  after  technological feasibility is established  for
   the  related product.  The amortization of capitalized product
   development  costs  is, the greater of  the  amounts  computed
   based  on the estimated revenue distribution over the products
   revenue-producing lives, or the straight-line  basis,  not  to
   exceed   four  years,  beginning  when  the  product   becomes
   available  for  general  release  to  customers.   No  product
   development   costs  were  capitalized  in  the  years   ended
   September  30,  1996  and  1995.   There  are  no  unamortized
   product  development costs at September 30, 1996.  Unamortized
   product  development costs at September 30, 1995 was $626  and
   is  included in other assets.  Amortization expense  for  each
   of  the  years  ended September 30, 1996, 1995  and  1994  was
   $626.
     
   Intangible Assets
   Intangible  assets, which are carried at cost less accumulated
   amortization,  consist  primarily of acquired  technology  and
   goodwill.   Goodwill represents the excess of  the  cost  over
   the  fair  value  of the identifiable tangible and  intangible
   assets  acquired in various acquisitions. Costs  allocated  to
   technology   and   goodwill  acquired  in   acquisitions   are
   amortized   on   a  straight-line  basis  over   the   periods
   benefited,  principally 7 to 10 years.  The  Company  measures
   the  recoverability of acquired technology and goodwill  based
   on anticipated gross operating income.
     
   Research and Development
   Research  and development expenditures are charged to  expense
   as incurred.
   
   Income Taxes
   In   accordance   with   Statement  of  Financial   Accounting
   Standards  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.  Provision for income taxes is the  tax
   payable  for  the period and the change during the  period  in
   deferred tax assets and liabilities.
   
   Use of Estimates
   The   preparation  of  financial  statements   in   conformity
   with   generally   accepted  accounting  principles   requires
   management  to make estimates and assumptions that affect  the
   reported  amounts  of  assets and liabilities,  disclosure  of
   contingent  assets  and  liabilities  at  the  date   of   the
   financial statements and the reported amounts of revenues  and
   expenses  during  the reported period.  Actual  results  could
   differ from those estimates.


<PAGE>

                   IPC INFORMATION SYSTEMS, INC.
                                
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS,Continued
                                
        (Dollars in Thousands, Except Per Share Amounts)
                                   
   Foreign Currency Translation Adjustment
   The  balance sheets and statements of operations of  IPC's  UK
   subsidiary  ("IPC-UK") are measured using the  local  currency
   as  the  functional currency. Assets and liabilities of IPC-UK
   are  translated  at the year end exchange rate.   Revenue  and
   expense  amounts  are  translated  at  the  average  rate   of
   exchange  prevailing during the year.  Translation adjustments
   arising  from the use of differing exchange rates from  period
   to   period   are  included  in  the  cumulative   translation
   adjustment account in stockholders' equity.
   
   Earnings Per Share
   Earnings  per  share are based on the weighted average  number
   of  shares  of  common  stock  and  common  stock  equivalents
   outstanding  during  the period, computed in  accordance  with
   the  treasury stock method.  Historical earnings per share was
   $2.27 for the year ended September 30, 1994.
   
3. Acquisitions:
   
   During  June 1995, the Company acquired a controlling interest
   in  International  Exchange  Networks,  Ltd.  ("IXNET").   The
   Company  acquired 80% of IXNET for providing $5,500 in working
   capital.    The  acquisition  was  accounted  for  using   the
   purchase  method  of accounting. Included in other  assets  is
   $1,041   and   $1,222  at  September  30,   1996   and   1995,
   respectively,  representing the excess of the  cost  over  the
   fair  value  of  the  identifiable tangible  assets  acquired,
   allocated to acquired technology.
   
   During  April 1995, the Company acquired the assets of  Bridge
   Electronics,   Inc.  ("IPC  Bridge").   The   terms   of   the
   acquisition  included a payment in January 1996 of  $2,025  in
   cash  and 76,923 shares of the Company's common stock,  valued
   at  $700.  Additionally, during fiscal 1996, the Company  made
   $1,000  in  contingent  acquisition  payments  based  on   IPC
   Bridge's  performance.   The  acquisition  was  accounted  for
   using  the purchase method of accounting.  Included  in  other
   assets  is  $3,202 and $2,501 at September 30, 1996 and  1995,
   respectively,  representing the excess of the  cost  over  the
   fair  value of the identifiable tangible and intangible assets
   acquired.
   
4. Inventories:
`
<TABLE>
<CAPTION>
                                                  September 30,
                                                  1996      1995
<S>                                               <C>       <C>
                                         
Components and manufacturing work in process    $13,913   $ 9,245
Inventory on customer sites awaiting 
  installation                                   12,503    18,984
   Parts and maintenance supplies                 9,951     6,882

                                                $36,367   $35,111
</TABLE>

<PAGE>

                   IPC INFORMATION SYSTEMS, INC.
                                
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS,Continued
                                
        (Dollars in Thousands, Except Per Share Amounts)
                                   
     
5. Property, Plant and Equipment:

<TABLE>
<CAPTION>
     
                                               September 30,
                                              1996       1995
<S>                                            <C>        <C>
                                    
Machinery and Equipment                     $19,479    $13,027
Furniture and Fixtures                        2,006      1,654 
Leasehold Improvements                        5,424      2,789
Network Switching Equipment                   1,600          -
Network Switching Equipment 
 under capital leases                         4,619          -
Total depreciable property, plant and        33,128     17,470
 equipment
   Less, accumulated depreciation and      
    amortization                            (13,376)    (9,037)
                                            $19,752    $ 8,433 
Land                                            329        329
Construction in Progress                      1,786        474 
                                             $21,86    $ 9,236

</TABLE>

6. Note Payable:

   In  April  1996, the Company signed a promissory note  with  a
   bank  increasing the Company's line of credit from $15,000  to
   $25,000.   At  September 30, 1996, $13,900  of  the  line  was
   outstanding and is payable upon demand.  The weighted  average
   interest  rate on borrowings for fiscal year 1996  was  6.31%.
   At  September 30, 1995 there was no amount outstanding on  the
   line of credit.

7. Initial Public Offering:

   The   Company  completed  an  initial  public  offering   (the
   "Offering") of 3,250,000 shares of common stock at $15.00  per
   share  on  October 3, 1994.  In connection with the  Offering,
   on  May  9, 1994, the Company's stockholders approved a change
   in  the Company's capital stock to authorize 25,000,000 shares
   of  $.01 par value common stock and 10,000,000 shares of  $.01
   par   value   preferred   stock.   Pre-Offering   stockholders
   exchanged their shares for new common shares on a 620.991  for
   1  basis  prior to consummation of the Offering. The financial
   statements reflect this change in capitalization.

   Pro Forma Information
   Pro  forma  provision for income taxes for 1994  assumes  that
   IPC  was  subject to corporate federal income  taxes  for  the
   year  and  excludes  the  tax  benefit  associated  with   the
   termination  of the Company's S corporation status  (see  Note
   11).   The  pro  forma  weighted  average  number  of   shares
   outstanding  is  the  historical weighted  average  number  of
   shares outstanding during the year adjusted to give effect  to
   the  number of shares, at the initial offering price of $15.00
   per  share, whose proceeds were necessary to pay the remaining
   S  corporation  distribution. The pro  forma  net  income  per
   share  has  been  computed by dividing pro  forma  net  income
   (income  before  provision for income  taxes  less  pro  forma
   provision for income taxes) by the pro forma weighted  average
   number of shares outstanding.
   
<PAGE>

                   IPC INFORMATION SYSTEMS, INC.
                                
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS,Continued
                                
        (Dollars in Thousands, Except Per Share Amounts)
                                   
   
8. Deferred Compensation and Other Benefit Plans:

   The   Company   has   assumed  responsibility   for   deferred
   compensation  agreements with certain past  key  officers  and
   employees.   Amounts  to  be  paid  range  from  $20-$75   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  $7,300  and  $3,732  at  September  30,  1996  and
   $7,450 and $3,606 at September 30, 1995, respectively.
   
   Approximate payments for subsequent annual periods related  to
   the  deferred compensation agreements, at September 30,  1996,
   are as follows:

<TABLE>

   <S>                                                 <C>
   1997                                                $187
   1998                                                 225
   1999                                                 280
   2000                                                 320
   2001                                                 390
   Thereafter                                         5,898   
                                                     $7,300
   
</TABLE>

   In  April 1995, IPC terminated its participation in a  defined
   contribution  plan sponsored by Kleinknecht  Electric  Company
   ("KEC"),  an affiliated company, and adopted its own plan  for
   all  eligible US employees. According to plan provisions,  IPC
   contributions are discretionary  and are subject  to  approval
   by  the Board of Directors.  Eligible employees may contribute
   up  to 15% of their annual compensation. IPC contributed  $556
   and  $520  for  the years ended September 30, 1996  and  1995,
   respectively.  For  the  year ended September  30,  1994,  the
   Company elected not to contribute to the plan.
   
   IPC-UK  has  a  defined  contribution  plan  covering  all  UK
   employees.   Employee  contributions are limited  by  statute,
   generally  not  to  exceed  17.5%  of  base  salary.    IPC-UK
   contributions,  net  of  forfeitures,  for  the  years   ended
   September  30,  1996, 1995 and 1994 were $229,  $92  and  $76,
   respectively.
   
   The  Company  paid to KEC and Kleinknecht Electric  Company  -
   New   Jersey  ("KEC-NJ"),  also  an  affiliated  company,   in
   accordance   with  labor  pooling  agreements,   approximately
   $7,750,  $5,074 and $4,744 for the years ended  September  30,
   1996,  1995 and 1994, respectively, representing pass  through
   contributions to various union sponsored pension plans.
   
   
   
 <PAGE>

                   IPC INFORMATION SYSTEMS, INC.
                                
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS,Continued
                                
        (Dollars in Thousands, Except Per Share Amounts)
                                     
   
   
   
   
   
   Stock Option and Incentive Plan

   The following table summarizes stock option plan activity:

<TABLE>
<CAPTION>

                                Shares 
                             Under Option        Option Prices
<S>                               <C>                 <C>
Balance, September 30, 1994
       Granted                 263,500         $13.50 - $18.00
       Canceled                (16,000)            $15.00
Balance, September 30, 1995    247,500         $13.50 - $18.00
       Granted                 573,000        $14.125 - $19.00
       Granted                  25,000             $25.00
       Granted                  25,000             $40.00
       Exercised                (8,964)        $13.75 - $15.00
       Canceled                (35,335)        $13.75 - $19.00
Balance, September 30, 1996    826,201

Exerciseable,
  September 30, 1996           776,201 

</TABLE>
   
   Employees  generally vest in stock options over  a  period  of
   three  to  five years.  As of September 30, 1996, the  Company
   had   reserved  1,579,337  shares  of  common  stock  for  the
   exercise of options.
   
   The  option  plan  also  provides for the  issuance  of  stock
   appreciation rights and restricted stock features under  which
   shares  of  common stock may be issued to eligible  employees.
   No such awards have been made.
   
   During October 1995, the Financial Accounting Standards  Board
   issued  Statement of Financial Accounting Standards  No.  123,
   "Accounting  for  Stock Based Compensation."   The  disclosure
   requirements  under  this  Standard will  affect  the  Company
   beginning in fiscal 1997 for all of its stock options  granted
   after  September  30,  1995.  The Statement  allows  alternate
   accounting  methods  and the Company intends  to  account  for
   stock  options  as  in  the past under  Accounting  Principles
   Board  Opinion No. 25.  The Company will disclose certain  pro
   forma  information  required by the Statement  beginning  with
   the Company's next annual report.

   Employee Stock Purchase Plan
   In  1994, the Company adopted an employee stock purchase  plan
   and  reserved  526,813  shares of common  stock  for  issuance
   thereunder.   Under  the stock purchase  plan,  the  Company's
   employees  may purchase shares of common stock at a price  per
   share  that  is  the  lesser of the common stock  fair  market
   value on the first business day of the purchase period or  90%
   of  the common stock fair market value on the last day of  the
   purchase  period, but in no event less than 85% of the  common
   stock  fair  market value on either the option grant  date  or
   option  exercise  date.  Through September  30,  1996,  10,373
   shares  have  been issued and 516,440 shares are reserved  for
   future issuances under this plan.
   
   
<PAGE>

                   IPC INFORMATION SYSTEMS, INC.
                                
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS,Continued
                                
        (Dollars in Thousands, Except Per Share Amounts)
                                      
   
9. Commitments and Contingencies:

  Litigation

  Knight  Ventures, Inc. ("KVI"), a company principally owned  by
  Richard   P.   Kleinknecht  and  Peter  J.   Kleinknecht   (the
  "Principal  Stockholders"),  and  the  former  parent  of   the
  Company,   agreed   to  settle  its  litigation   with   Contel
  Corporation    ("Contel")    over,    among    other    claims,
  responsibility  for taxes, tax liens, tax assessments  and  tax
  warrants with respect to Contel IPC, for periods prior  to  the
  acquisition of the Company from Contel.
  
  As  of  May  9,  1994,  the  Company,  KVI  and  the  Principal
  Stockholders  entered into a Tax Allocation and Indemnification
  Agreement  (the  "Tax Agreement") relating to their  respective
  income  tax  liabilities  and  certain  related  matters  as  a
  consequence  of the Company's termination of its S  Corporation
  status  and  its  initial public offering.   In  addition,  the
  Company,  KVI  and the Principal Stockholders  agreed,  to  the
  extent  that either KVI or the Principal Stockholders  receives
  any  cash  proceeds or other benefit in the form of a reduction
  in   amounts  payable  to  Contel,  as  a  consequence  of  the
  litigation,  they  will pay to the Company the  lesser  of  (i)
  such  benefit or (ii) the amount paid by the Company for  taxes
  and related charges subject to the dispute, plus the amount  of
  any  expenses  of  such  litigation  incurred  by  the  Company
  following  the  consummation of the  Company's  initial  public
  offering.

  As  of  May  15, 1996, Contel, KVI, the Principal  Stockholders
  and  the  Company,  although not a  party  to  the  litigation,
  entered  into  a settlement agreement and mutual releases.   In
  connection  with this settlement agreement, KVI  has  executed,
  and  the Principal Stockholders have guaranteed, a note payable
  to   the   Company,  in  the  amount  of  $1,300,  to   fulfill
  obligations under the Tax Agreement.
   
   Operating Leases
   The  Company  has  entered into various operating  leases  for
   real estate, equipment and automobiles.
   
   Rental  expenses under operating leases (excluding rentals  on
   vacant  facilities)  were $6,513, $5,587 and  $5,252  for  the
   years  ended  September 30, 1996, 1995 and 1994, respectively.
   Future   minimum   annual  rental  payments   required   under
   noncancellable operating leases (including rentals  on  vacant
   facilities) at September 30, 1996 are as follows:
   
<TABLE>

   <S>                                                   <C>
   1997                                                 $5,688
   1998                                                  4,707
   1999                                                  3,270
   2000                                                  2,757
   2001                                                  2,474
   Thereafter                                            4,282
                                                       $23,178

</TABLE>
   
   The  Company  has  accrued for the minimum annual  rental  and
   estimated   building  operating  costs  under   noncancellable
   operating leases for vacated facilities.  These leases  extend
   through  May 1998. The gross and discounted present  value  of
   the  accrued  liability,  net of payments  made,  

<PAGE>

                   IPC INFORMATION SYSTEMS, INC.
                                
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS,Continued
                                
        (Dollars in Thousands, Except Per Share Amounts)
                                   
   approximated  $1,224  and  $1,200  at  September 30, 1996  and
   $1,958 and $1,844 at September 30,  1995,  respectively.   The
   discount  rate applied was 6.8%.

   Capital Leases
   IXNET  has entered into two capital leases during fiscal  1996
   to  purchase  certain  network switching  equipment  used  for
   IXNET's international private network.

   Future  minimum  lease payments required under  noncancellable
   capital leases at September 30, 1996 are as follows:

<TABLE>

   <S>                                                   <C>
   1997                                                 $1,326
   1998                                                  1,327
   1999                                                  1,208
   2000                                                    850
   2001                                                    638
                                                         5,349
   Less, amount representing interest                     (980)
  
   Present value of net minimum lease payments under 
   capital leases                                       $4,369

</TABLE>
  
   Employment Agreements
   The  Company  has  executed employment  contracts  for  future
   services,  that  vary  in length up to 5 years,  with  certain
   senior   executives  for  which  the  Company  has  a  minimum
   commitment  aggregating approximately $6,466 at September  30,
   1996.
   
10.Related Party Transactions:
   
   Services Provided
   Affiliated  companies performed various services and  provided
   certain  equipment to the Company.  Services and/or  equipment
   provided  by affiliates are billed to the Company and  settled
   through  a periodic cash transfer to the respective affiliate.
   Approximately  $52,592,  $38,666  and  $36,293  of   technical
   labor,  and $2,327, $2,083 and $1,767 of administrative  labor
   was  provided  through agreements with KEC and  KEC-NJ  during
   the   years   ended  September  30,  1996,  1995   and   1994,
   respectively.
   
   Effective  October 1, 1993, the Company formalized in  writing
   existing  arrangements with KEC and KEC-NJ with respect  to  a
   pool  of  field  technicians utilized by all three  companies.
   KEC  and  KEC-NJ are responsible for administering the payroll
   and  related services for these technical and clerical workers
   and  the Company reimburses all compensation and benefits paid
   by  KEC and KEC-NJ attributable to services performed for  the
   Company  plus  a  fee equal to 2.5% of such  costs.   For  the
   years  ended September 30, 1996, 1995 and 1994, KEC and KEC-NJ
   billed  the Company payroll administrative services of $1,374,
   $1,024 and $922, respectively.
   
   A  portion of the Company's New York branch operation  is  co-
   located  with  KEC  in  a  building  owned  by  the  Principal
   Stockholders.   For  each  of the years  ended  September  30,
   1996,  1995  and  1994, the Company was charged  approximately
   $430  for  rent  expense.  In addition, for  the  years  

<PAGE>

                   IPC INFORMATION SYSTEMS, INC.
                                
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS,Continued
                                
        (Dollars in Thousands, Except Per Share Amounts)

   ended September 30, 1996, 1995 and 1994, the Company rented on
   a month to month  basis,  two other facilities  from  entities
   controlled  by  the  Principal  Stockholders  for  which   the
   Company   was  charged  approximately  $30,  $55   and   $130,
   respectively.
   
   Equipment Rentals
   Equipment  rentals from an affiliated company were $898,  $975
   and  $1,201 for the years ended September 30, 1996,  1995  and
   1994, respectively.
   
   Subcontracts and Other
   The  Company  and other companies controlled by the  Principal
   Stockholders  periodically subcontract  certain  work  to  one
   another.   Amounts  charged  to companies  controlled  by  the
   Principal  Stockholders under subcontracts with  IPC  for  the
   years   ended   September  30,  1996,  1995  and   1994   were
   approximately  $993,  $2,220  and  $128,  respectively,  while
   amounts  charged  to  IPC  under subcontracts  with  companies
   controlled  by  the Principal Stockholders were  approximately
   $703, $587 and $993, respectively.
   
   In  addition  to  the foregoing, the Company, KEC  and  KEC-NJ
   entered  into  a 20 year agreement dated as of  May  9,  1994,
   with  respect to business opportunities regarding  cabling  of
   communication  infrastructures.  KEC and  KEC-NJ  have  agreed
   not  to bid for or accept cabling jobs in competition with the
   Company,  if  it  intends  to bid or  accept  such  work.   In
   addition,  because  the Company is not a  licensed  electrical
   contractor,  it  has  agreed to refrain from  bidding  for  or
   accepting  without the consent of KEC or KEC-NJ, as  the  case
   may  be,  all  opportunities that combine both electrical  and
   cabling  work.   The Company has also agreed  to  continue  to
   refer  to  KEC  and KEC-NJ certain electrical contracting  bid
   opportunities identified from time to time.  Pursuant to  such
   agreement,  all estimates for cabling work shall be  generated
   by  the Company on behalf of KEC, and KEC will pay the Company
   a nominal amount for preparing such estimates.
   
   The   Company  and  companies  controlled  by  the   Principal
   Stockholders  also  charge  each other  certain  miscellaneous
   expenses,  including,  but not limited  to,  office  equipment
   rentals and certain other administrative expenses.
   
11.Income Taxes:

   Pretax earnings consisted of the following:

<TABLE>
<CAPTION>
                              For the year ended September 30,
                                1996        1995        1994
<S>                              <C>         <C>         <C>

     Pretax earnings:
     United States            $10,020     $17,158     $ 9,760
     Foreign                   10,101       5,328       5,916
     Total pretax earnings    $20,121     $22,486     $15,676

</TABLE>

  Effective October 1, 1992,  IPC-US elected to be treated as  an
  S  corporation for federal income tax purposes.   In  the  year
  ended  September  30,  1994  the Company  was  not  subject  to
  federal  income taxes.  The Company's income was passed through
  and taxed directly to the stockholders.
   

<PAGE>

                   IPC INFORMATION SYSTEMS, INC.
                                
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS,Continued
                                
        (Dollars in Thousands, Except Per Share Amounts)
                                   


    On   September   29,  1994,  IPC-US  filed   a   notification
    terminating  its S corporation status, effective  October  1,
    1994.   For the years ended September 30, 1996 and 1995,  the
    Company was subject to corporate federal income taxes.
    
    
    The provision (benefit) for income taxes consisted of the
    following:
     
<TABLE>
<CAPTION>
                                                               
                                For the year ended September 30,
                                1996          1995          1994
     <S>                        <C>           <C>           <C>

     Current:                                       
      Federal                  $1,844       $ 5,887
      State and local           1,967         2,558        $1,160
      Foreign                   3,507         1,858         2,223
                                7,318        10,303         3,383
     Deferred:                                      
      Termination of                               
       S corporation
       status                                              (3,295)
      Federal                     513          (673)
      State and local             207          (359)         (744)
      Foreign                     (46)          (52)         (217)
                                  674        (1,084)       (4,256)
     Income tax           
      provision / (benefit)    $7,992       $ 9,219        $ (873)

</TABLE>

   The components of net deferred tax assets are as follows:
                                                                 
<TABLE>
<CAPTION>
                                       September 30,
                              1996                   1995
                        US   Foreign  Total    US   Foreign  Total
<S>                     <C>    <C>     <C>     <C>   <C>      <C>

Deferred tax assets:                                          
 Excess of book over
  tax depreciation     $917     $59    $976  $1,133    $26  $1,159
 Amortization 
  intangibles            66              66      25             25
 Inventory and
  receivables         2,172     221   2,393   2,602    214   2,816
Accrued expenses      1,228       5   1,233   1,570	       1,570
                                                              
Total deferred tax
assets                4,383     285   4,668   5,330    240   5,570
                  
Deferred tax 
liabilities:

 Amortization of
  intangibles                                  (227)    (1)   (228)
                       ____    ____    ____    ____    ____   ____   
                                      
Total deferred tax
liabilities                                    (227)    (1)   (228)
                       ____    ____    ____    ____    ____   ____
Net deferred 
 tax asset           $4,383    $285  $4,668  $5,103    $239  $5,342


</TABLE>
   
   These   net   deferred   tax  assets  arise   from   temporary
   differences  related  to  depreciation,  the  amortization  of
   intangible  assets,  the  allowance  for  doubtful   accounts,
   inventory  valuation and the Company's various  accruals.   No
   valuation  allowance was required at September  30,  1996  and
   1995.
   
<PAGE>

                   IPC INFORMATION SYSTEMS, INC.
                                
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS,Continued
                                
        (Dollars in Thousands, Except Per Share Amounts)
                                   

   A  reconciliation between the statutory US federal income  tax
   rate  and the Company's effective tax rate, excluding minority
   interest, is as follows:
   

<TABLE>
<CAPTION>

                                        For the year ended
                                           September 30,
                                         1996        1995

<S>                                      <C>         <C>

   Statutory US federal tax rate         35.0%       35.0%
   State and local income taxes,
     net of federal benefit               6.8         6.4
   Tax exempt interest income                        (0.5)
   Other, net                             0.8         0.1
                                         41.0%       41.0%

</TABLE>
   
12.  Operations by Geographic Areas:

   Information about the Company's operations by geographic area
   is as follows:

<TABLE>
<CAPTION>
     
                           For the year ended September 30,
                         1996           1995            1994
<S>                       <C>            <C>             <C>

Revenues:                                                   
United States         $ 202,926      $ 186,355       $ 142,130
United Kingdom           46,582         19,899          21,541
                      $ 249,508      $ 206,254       $ 163,671
                                                       
Operating Profits:
United States         $  24,485      $  30,714       $  20,371
United Kingdom            9,745          4,192           5,345
Corporate               (14,022)       (12,879)         (9,054)
                        $20,208        $22,027         $16,662
                                                       
Identifiable Assets:
United States         $ 111,829      $  98,228       $  94,530
United Kingdom           17,547         25,417           8,799
Corporate                11,581          4,391           7,373
                      $ 140,957      $ 128,036       $ 110,702

</TABLE>
   
   Included  in  the  United States revenues are export  sales  to
   unaffiliated customers of $16,126, $17,063 and $12,849 for  the
   years  ended  September 30, 1996, 1995 and 1994,  respectively.
   Transfers  from  the  United  States  to  the  United  Kingdom,
   eliminated  in consolidation, were $12,681, $7,999  and  $6,764
   for  the  years  ended  September  30,  1996,  1995  and  1994,
   respectively.
   
   For  the year ended September 30, 1996, approximately  13%  of
   total  revenues were from one customer.  Corporate assets  are
   principally prepaids, intangibles and other assets.
   
<PAGE>

                   IPC INFORMATION SYSTEMS, INC.
                                
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS,Continued
                                
        (Dollars in Thousands, Except Per Share Amounts)
                                   



13. Quarterly Financial Information (unaudited)
		
The following tables set forth unaudited quarterly financial
information for the years ended September 30, 1996 and 1995:
		

<TABLE>
<CAPTION>

	                                  Quarter Ended	
	                   December 31  March 31  June 30  September 30
<S>                          <C>         <C>      <C>       <C>

Year Ended			
September 30, 1996:	
			
Net Revenues	         $59,750 	  $62,198 	$69,424   $58,136 
Gross Profit	          18,537 	   19,279 	 20,740    18,262 
Net earnings	           3,482 	    3,641 	  3,701     1,305 
Earnings per Share	     $0.33 	    $0.34 	  $0.35     $0.12 
		
		
Year Ended	
September 30, 1995:	
		
Net Revenues	         $47,716 	  $50,528 	$52,458   $55,552 
Gross Profit	          14,511 	   15,415 	 16,138    17,109 
Net earnings	           3,068 	    3,268 	  3,486     3,445 
Earnings per Share	     $0.29 	    $0.31 	  $0.33     $0.33 

</TABLE>

The quarterly earnings per share information is computed separately
for each period.  Therefore, the sum of such  quarterly  per  share
amounts may differ from the total for the year.
	
<PAGE>

			                                Schedule II

                   IPC INFORMATION SYSTEMS, INC.			
	
                 VALUATION AND QUALIFYING ACCOUNTS	
                      (Dollars in Thousands)

<TABLE>
<CAPTION>
						
COL. A            COL. B	     COL. C         COL. D     COL. E
					   Additions
		      Balance		   Charged to 
		         at	    Charged to costs and		 Balance 
		      Beginning costs and    Other		        at End
Description	      of Period Expenses   Accounts  Deductions of Period
						
<S>                    <C>      <C>       <C>        <C>       <C>

For the Year 
September 30, 1994		
 Provision for 
  Doubtful Accounts    $823     $786 	           $278(1) $1,331 
 Provision for Inventory				
      Obsolescense... $3,925  $2,062 		    $427(2)	 $5,560 
For the Year 
September 30, 1995				
 Provision for 
  Doubtful Accounts   $1,331    $861 		    $620(1)	 $1,572 
 Provision for Inventory					
      Obsolescense... $5,560   $3,052 		  $1,123(2)	 $7,489 
For the Year 
September 30, 1996	
 Provision for 
  Doubtful Accounts   $1,572    $240 		    $291(1)	 $1,521
 Provision for Inventory		
      Obsolescense... $7,489   $1,143 		  $2,267(2)	 $6,365 


<FN>
			
(1) Doubtful Accounts Written Off, Net of Cash Recovered
(2) Inventory Written Off
		
</TABLE>

<PAGE>