ePlus Reports Better Than Expected First Quarter Earnings Per Share of $0.21; Focus On Earnings, Cash Flow, and e-Commerce Strategy Continues

Business Wire, August 14, 2001

Business Editors/Hi-Tech Writers

HERNDON, Va.--(BUSINESS WIRE)--August 14, 2001

ePlus inc. (Nasdaq NM:PLUS - news), a leading provider of outsourced e-Business solutions and services, announced financial results for its first quarter ending June 30, 2001.

Fully diluted earnings per share for the quarter was $0.21, which is $0.03 or 17% better than analyst's estimates of $0.18 per share.

Phillip G. Norton, chairman, president and CEO stated "ePlus has increased profitability ahead of expectations during an economic downturn. The total procurement volume of the company increased 26% to $86.3 million, as compared to the March quarter, and lease origination volume increased 58%. We generated $10.1 million in positive cash flow during the quarter and are in a very strong financial position with $34 million in cash and no borrowings under our line of credit."

"Our e-commerce business has been significantly enhanced by our ProcureNet asset acquisition, and we are already winning new customers based on the technology" concluded Mr. Norton.

Highlights

-- ePlus completed the purchase of certain commercial software assets and
customers from ProcureNet, Inc., which considerably improved its software and
content services offerings, customer support, and application development
capabilities.

-- Released Procure 6.5, an upgraded version of Procure  based on the
technology assets purchased from ProcureNet. It incorporates ePlus' branded
look and feel, enhanced functionality, and was delivered ahead of plan.

-- Introduced Business Process Outsourcing Services (BPO), including outsourced
accounts payable processing and electronic invoicing, as a component of
ePlusSuite.

-- Announced an agreement with Deltek Systems to private label Procure . The
integration has been completed and Deltek is marketing the product to its 7,500
customers.

-- ePlus announced its first Deltek customer, Michael Baker Corporation, a
leading engineering, management and operations services provider to the
construction industry.

-- ePlus implemented its first operating marketplace based on MarketBuilder
(software assets purchased from ProcureNet) for Reynolds and Reynolds, the
leading applications provider for automotive retailers.

-- Contracted with a Fortune 100 company to provide an automated business
process for the procurement and financing of up to $100MM of assets over 3
years, including automated order entry, on-line asset management and reporting,
and electronic invoicing.

-- Increased the number of hosted ePlusSuite customers to 180.

-- Was awarded a state government contract for financing and asset management
for up to $15 million per year for three years including web-based asset
management.

-- Entered into subscription agreements for ePlusSuite having a total
annualized base run rate of approximately $800,000.

E-commerce Business Unit

The e-commerce business now includes all revenues and costs attributable to ePlus Systems, Inc. and ePlus Content Services, inc. plus ePlusSuite revenues and associated expenses as in prior quarters.

In the company's e-commerce segment, e-commerce revenues increased 8% to $1.2 million for the quarter as compared to $1.1 million for the June 30th quarter in the prior fiscal year. Net e-commerce revenues in the e-commerce segment increased 5% from $2.4 million to $2.5 million, reflecting a decrease in sales of technology equipment in the segment. The company had 180 remotely hosted e-commerce customers on June 30, 2001.

"As we continue to convert our customer base from a transaction fee revenue model to monthly subscriptions, we anticipate that upfront revenue generation will be reduced in favor of a recurring and predictable revenue stream" stated Mr. Norton. "Our e-commerce segment is making progress on many fronts, including winning new customers in a very competitive environment. Our solution is compelling for customers who want to reduce costs, optimize supplier relationships, automate processes, and become more efficient. As compared to many of our competitors, we are able to invest and improve our e-commerce solutions, enabling us to win customers, gain market share, and position ePlus to capture growth when the economy turns."

Financing Business Unit

In the financing business unit, the Company continued to de-emphasize sales of leased equipment revenues in favor of retaining leases on its balance sheet and outsourcing the financial risk of each transaction with non-recourse debt. By doing so, upfront revenues are reduced and converted into long-term, recurring, and predictable lease revenues.

As a result, in the quarter ending June 30, 2001, sales of leased equipment decreased 97% to $452,108 from $16.4 million, and lease revenues increased 26% to $10.8 million from $8.6 million.

Technology Business Unit

The Company has eliminated customers or lowered credit limits to customers in the telecom and technology sector, and combined with general economic conditions which has caused many customers to reduce capital spending, the Company's sales of equipment decreased 35% to $36.5 million from $55.7 million. The cost of equipment sales decreased 34% to $31.4 million and the gross margin remained at 14%.