Elcom International reports record earnings and revenues for second quarter.

NORWOOD, Mass.--(BUSINESS WIRE)--Aug. 12, 1996--Elcom International Inc. (NASDAQ: ELCO), a leading electronic commerce company, today reported its third consecutive quarter of record earnings and revenues. The Company also announced it is evaluating a possible public offering of shares of Elcom Systems Inc., its technology subsidiary which developed and licenses the Company's electronic commerce software system.

Quarterly Highlights:

Net Sales totaled $146.3 million, up from $62.4 million in the second quarter of 1995, a 134 percent growth rate.

Third consecutive quarterly profit since IPO--net income of $1,152,000, or $.04 per share vs. a net loss of $(.03) per share in the second quarter of 1995.

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                      Financial Summary Table
                          (Unaudited)
             (in thousands, except per share amounts)

                 Quarter Ended June 30,    Six Months Ended June 30,
                    1996         1995           1996          1995

Net Sales       $146,305      $62,436       $287,721      $105,365
Gross Profit     $17,040       $8,027        $33,385       $13,758
Gross Profit
 Percentage         11.6%        12.9%          11.6%         13.1%
Operating
 Profit (Loss)    $2,514        $(108)        $4,754         $(413)
Net Income (Loss) $1,152        $(591)        $2,276       $(1,171)
Net Income (Loss)
 Per Share          $.04        $(.03)          $.08         $(.07)
Weighted Average
 Shares           30,079       17,423         29,604        16,602

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Additional and more detailed information regarding the Company's financial results and other activities during the quarter is contained in the Company's 1O-Q which is expected to be filed with the Securities and Exchange Commission ("SEC") within the next few days when it will become available on EDGAR, the SEC's electronic reporting system.

For the quarter ended June 30, 1996, net sales totaled $146.3 million, up 134 percent from the $62.4 million recorded in the second quarter of 1995. Net income increased to $1,152,000 compared to a $(591,000) loss in the comparable 1995 quarter. Earnings per share for the second quarter of 1996 amounted to $.04 compared with a loss of $(.03) per share in the second quarter of 1995.

Net sales for the first six months of 1996 totaled $287.7 million, up 173 percent from sales of $105.4 million in the first six months of 1995. Net income totaled $2,276,000 in the first half of 1996, versus a $(1,171,000) loss in the comparable 1995 period. For the first six months of 1996, net income per share amounted to $.08, compared to a $(.07) loss per share in the first half of 1995.

Robert J. Crowell, Elcom International's chairman and CEO stated, "Our second quarter results reflect the continued acceptance of our PECOS (Personal Electronic Catalog and Ordering System) technology in Catalink Direct, our wholly-owned PC remarketer operating unit which uses our proprietary PECOS technology to market and sell PC products. The second quarter results are also indicative of the continued growth of the U.K. Group as they begin to utilize our PECOS technology. Elcom Systems, our wholly-owned technology subsidiary which licenses our PECOS technology to other companies, is also expanding quite well." Crowell also noted that "The Company has now reported three consecutive quarters of results which are generally in line with analysts' expectations; however, because analysts have projected additional acquisitions in the second half of 1996, which may not occur, the Company anticipates that analysts will revise their forecasts." The Company is conducting a variety of discussions with prospective candidates and intends to continue to pursue possible acquisitions; however, there is no pending agreement or understanding with respect to any acquisition, nor can there be any assurance the Company will complete additional acquisitions.

Although the Company may generate overall revenues in line with analysts' current expectations, much of the revenue growth may be generated from large corporations which produce higher than average levels of revenues at lower than average gross profit margins, rather than from acquisitions, resulting in an overall lower "blended" gross profit margin percentage. In order to support one potentially large customer, the Company has begun purchasing directly from Compaq Computer Corp. for that particular customer and will therefore expect its average inventories, at any particular time, to increase. In part because of this, the Company is further analyzing whether there is a (net) financial benefit, given its current purchasing levels, to purchasing other major manufacturers' products directly.

The reported results for all periods include the Company's acquisition of AMA (U.K.) Limited which was completed on Feb. 29, 1996, and is being accounted for as a pooling of interests. Results for the 1995 periods also reflect the operations of Computerware in the United States for the months following its February, 1995 acquisition by the Company, while the 1996 results include both Computerware and LANTEC Information Services Ltd., a PC remarketer in the United Kingdom which was acquired in late June, 1995. Exclusive of AMA (U.K.) Limited and these other acquisitions, the Company's net sales for the second quarter of 1996 amounted to over $70 million, a 180 percent increase over the $25 million recorded in the comparable quarter last year, reflecting the success of the Company's enlarged sales force and the acceptance of Elcom International's proprietary PECOS technology, which forms the backbone of the Company's electronic commerce capabilities.

In addition, Crowell stated that "Elcom Systems is in negotiations regarding several potential license agreements as we continue to build a solid, credible, base of customers licensing our PECOS technology. We are also evaluating a possible public offering of common stock of Elcom Systems Inc., our wholly-owned technology subsidiary which developed and licenses its PECOS electronic commerce enabling software technology." In order to support such a possible offering, the Company would likely continue to invest higher than anticipated amounts in additional sales, technical and support staffing of Elcom Systems. The offering would only be made pursuant to a prospectus included in a registration statement which would be filed with the Securities and Exchange Commission. There can be no assurances as to the likelihood, the success, the valuation, the timing or the size of any such possible offering.

The Company develops and licenses proprietary client/server transaction-based software systems which enable the conduct of PC-based interactive electronic commerce on private and/or Internet Protocol networks and, through its Catalink Direct subsidiary, uses its PECOS technology to market PC products electronically. Catalink Direct operates 17 field sales and support offices in the United States and five offices in the United Kingdom. The Company's proprietary PECOS technology is licensed by Elcom Systems Inc., its wholly-owned technology subsidiary, to companies in various industries which allows them to create interactive electronic catalog and ordering systems which facilitate the conduct of electronic commerce with their customers.

Statement Under the Private Securities Litigation Reform Act

With the exception of the historical information contained in this release, the matters described herein contain forward-looking statements that involve risk and uncertainties that may individually or mutually impact the matters herein described, including but not limited to product acceptance, economic, competitive, governmental, results of litigation, technological and/or other factors, which are outside the control of the Company.

CONTACT: Elcom International

Eric Polcy, 617/440-3333 x4156

invrelgelcom.coni

www.elcom.com