ePlus Reports Better Than Expected Second Quarter Earnings Per Share of $0.22

Business Wire, Nov 14, 2001

Business Editors/Hi-Tech Writers

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

EPS Increase 22%; ePlusSuite Revenues Increase 35%

And Shareholder Equity Surpasses $100 Million

Company Expands Government Financing Unit

ePlus inc. (Nasdaq:PLUS), a leading provider of business solutions and services, announced financial results for its second quarter ending September 30, 2001. Fully diluted earnings per share for the quarter was $0.22, exceeding consensus analyst estimates of $0.18 by 22%.

For the three months ended September 30, 2001, ePlus earned $2.2 million, a 9% increase over the $2.0 earned the same period the prior fiscal year, and fully diluted earnings per share increased 11% to $0.22 from $0.19. At quarter's end, the company had total stockholders equity of $100.1 million and cash of $33.3 million.

"ePlus continues to put profitability first" commented Phillip G. Norton, chairman, president and CEO of ePlus. "By focusing on the bottom line in each of our business units, we are better positioned for growth today than at any point in time since the company's inception. We have a compelling outsourced business process solution that continues to grow and capture customers. There is less competition in most of our business segments, making it easier to hire top-notch salesman and expand into new vertical and geographic markets."

The Company also announced that it is expanding its federal, state, and local governmental financing unit headed by Bruce M. Bowen, president of ePlus Government, Inc. Mr. Bowen stated, "As a result of the September tragedy, governments at every level have an urgent need to acquire critical public safety, information technology, and other equipment. We view this change in the market as a significant opportunity for ePlus. With government budgets strained by shrinking tax revenues and rapidly increasing capital expenditures, our financing programs allow them to meet critical needs immediately and not defer purchases."

Highlights for the Quarter

-- Opened regional sales offices in two new markets, Florida and New York, and
hired an additional 8 new salesmen.

-- Announced a Stock Repurchase Program to purchase up to 750,000 shares of
common stock during the next 12 months.

-- Established a new vertical financing unit in the healthcare equipment market
that originated over $15 million of new financing transactions during the
quarter.

-- ePlus Solutions was awarded several new wins and upgrades for customers such
as Santa Clara, Michigan State University, Fresno County, Hibernia Bank, City
of San Diego; the first release of the UNIX version of Procure  v 6.5 to Emory
University.

-- Affordable Care is using ePlus MarketBuilder technology to create a
customized vertical market for dental supplies and equipment to enable more
than 70 offices nationwide to purchase, approve and requisition orders.

-- Acquired SourceOne Computer Corporation on October 4, a technology sales and
services company located in Silicon Valley, the company's first west coast
acquisition, and began marketing e-commerce solutions and products to Source
One's customer base.

-- Awarded several new Content  customers, including the replacement of a
competitor at a customer who is creating a new vertical marketplace for the
HVAC industry

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 recurring lease revenues. As a result, in the quarter ending September 30, 2001, sales of leased equipment decreased 100% to $0 from $6.3 million, and lease revenues increased 21% to $12.0 million from $9.9 million the same period the prior fiscal year. The Company's total leased assets were $190 million as of September 30, 2001, as compared to $231 million as of September 30, 2000.

Technology Business Unit

As a result of general economic conditions, especially during the weeks after September 11, 2001, customers have delayed or reduced purchases and the Company's sales of equipment decreased 48% to $30.7 million, as compared to $58.5 million the same period the prior fiscal year. The cost of equipment sales decreased 49% to $25.9 million from $50.7 million. The gross margin of equipment sold increased substantially to 15.7% from 13.3% the same period the prior fiscal year.

Total revenues for the quarter declined 39% to $47.1 million from $77.8 million the same period the prior fiscal year, due to continued de-emphasis on sales of leased equipment and lower sales of equipment due to reductions in customer spending.

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, ePlusSuite revenues increased 35% to $2.1 million for the quarter as compared to $1.6 million for the same quarter in the prior fiscal year. Net e-commerce revenues in the e-commerce segment decreased 18% from $3.1 million to $2.5 million, reflecting a decrease in sales of equipment in the segment.