Axiohm Transaction Solutions Reports First Quarter Results.

BLUE BELL, PA--(BUSINESS WIRE)--May 4, 1999--

Axiohm Transaction Solutions, Inc. (Nasdaq: AXHM) today announced results for the first quarter ended April 3, 1999.

Sales in the first quarter rose 6% to $60,477,000, compared to $57,069,000 in the first quarter of 1998. Net loss for the quarter was $9,321,000, or $1.43 per diluted share, compared to a net loss of $6,736,000, or $1.03 per diluted share, in the same period last year. The gross margin was 31.2% for the 1999 first quarter, compared with 35.2% for the first quarter of 1998 and 31.9% in the fourth quarter of 1998. Excluding acquisition related non-cash amortization and plant closing expenses, net income would have been $321,000, or $0.05 per diluted share, for the first quarter of 1999, compared to net income, before acquisition related non-cash amortization, of $1,726,000, or $0.26 per diluted share, in the year ago period. Income from operations before acquisition related non-cash amortization and plant-closing expenses of $4.8 million increased from the fourth quarter of 1998 by approximately $0.3 million but was $2.4 million or 33% lower than the first quarter of 1998.

"We are excited about reaching $60 million in sales for the first time in our history," said Nicolas Dourassoff, Chief Executive Officer. He added, "Our sales growth for the first quarter exceeded our internal targets and we were very pleased with higher growth rates in Europe and Asia. Sales of transaction and bar code products accounted for the increase in sales as a result of larger than expected orders from several customers, while sales of card readers declined from the first quarter of 1998 because of lower sales to customers in emerging markets."

Research and development spending increased in line with sales growth and remained at 7.1% of net sales when compared with the first quarter of 1998.

After payment of the $5.85 million in semi-annual subordinated debt interest, at the end of the fiscal quarter, total debt, net of cash, increased by $3,618,000 during the first quarter in comparison to the end of the fourth quarter of 1998. This was primarily because of an increase in working capital to support sales growth in the first quarter.

"We are cautious about sales going into the second quarter because of signs that customers orders may be shifting from the second quarter to the second half of this year. However, for the full year, we expect that sales growth will accelerate from the growth achieved in the first quarter of 1999. We also anticipate that, for the full year, gross margins will show a slight improvement from the level achieved in the first quarter of 1999," added Mr. Dourassoff.

Axiohm Transaction Solutions is one of the two largest non-captive designers, manufacturers and marketers of transaction printers in the world and is the only transaction printer manufacturer currently manufacturing its own thermal and impact printheads. Axiohm's transaction printer products are used in retail, financial and commercial transactions to provide transaction records such as receipts, tickets, register journals, checks and other documents. Axiohm also has an increasing sales presence in the markets for magnetic stripe and computer chip card readers and bar code printers and related consumable supplies.

With the exception of the reported actual results, the information presented herein contains predictions, estimates and other forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, without limitation, the sentences beginning "We are cautious," "However, for the full year," "We also anticipate that," and "Axiohm also has an increasing." Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to differ materially from those expressed or implied by such forward-looking statements. Although the Company believes that its plans, intentions and expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that such plans, intentions, expectations, objectives or goals will be achieved. Important factors that could cause actual results to differ materially from those included in the forward-looking statements include: the timing of customer orders and product mix; pricing pressure from customers; the level of backlog; market acceptance of new and enhanced versions of the Company's products; the revenue, timing and cost impact of closing one of the Company's manufacturing facilities; the inability of the Company to realize anticipated cost reductions because of the substantial amount of management time involved and the impact of substantial leverage and debt service on the Company. Additional important factors are also set forth in the Company's most recent 10-K as filed with the Securities and Exchange Commission.

AXIOHM TRANSACTION SOLUTIONS, INC. AND SUBSIDIARIES
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Condensed Consolidated Statements of Operations (Unaudited)
(In Thousands, except per share amounts)

                                        Three Months Ended
                                     Apr. 3,            Apr. 4,
                                     1999               1998

Net sales                          $ 60,477           $ 57,069
Cost of net sales                    41,623             36,995
Gross margin                         18,854             20,074
Operating expenses:
 Selling, general and
 administrative                       9,766              8,804
Research and development              4,307              4,090
Plant closing expenses                  934                  -
   Acquisition related amortization   9,082              8,462
Total operating expenses             24,089             21,356
Loss from operations                 (5,235)            (1,282)
Net interest expense
 and other income                     4,259              4,279
Income (loss) before
 income taxes (benefit)              (9,494)            (5,561)
Income taxes (benefit)                 (173)             1,175
Net income (loss)                  $ (9,321)          $ (6,736)
Basic and Diluted:
  Net income (loss) per share       $ (1.43)           $ (1.03)
Shares used in
 per share calculation                6,519              6,517

Consolidated Balance Sheets
(In thousands)
                                       Apr. 3,            Jan. 2,
                                        1999               1999
                                    (Unaudited)
Assets
Current assets:
  Cash and cash equivalents             $ -              $ 902
 Accounts receivable,net               35,257           33,361
  Inventories                          33,356           33,210
Prepaids and other current assets      11,230           11,476
  Total  current assets                79,843           78,949
  Fixed assets, net                    19,455           20,556
 Intangible assets, net                54,200           63,411
    Other assets                        9,203            8,810
 Total assets                        $162,701         $171,726
Liabilities and Shareholders'
 Equity
Current liabilities:
 Accounts payable                     22,116             20,712
 Current portion of long-term debt     7,854              9,898
 Accrued expenses and
  other current liabilities           14,380             17,243
  Total current liabilities           44,350             47,853
Long-term debt                       173,168            168,408
Deferred tax liability                     -                167
Other long-term liabilities            3,362              3,296
Shareholders' equity                 (58,179)           (47,998)
 Total liabilities and
 shareholders' equity               $162,701           $171,726