UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Form 10-K

For the Fiscal Year Ended September 30, 2004

or

For the Transition Period From                      to                     

IPC ACQUISITION CORP.

Registrant’s telephone number, including area code: (212) 825-9060

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

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 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. ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act) Yes ¨ No x

The common stock of the registrant is not publicly traded. Therefore, the aggregate market value of the common stock is not readily determinable.

As of November 30, 2004, 14,718,592 shares of common stock, par value $0.01 per share, were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
Certain exhibits are incorporated by reference in Item 15 of this report.

IPC ACQUISITION CORP.
FORM 10-K
For the Fiscal Year Ended September 30, 2004
INDEX

PART I

Item 1. Business

Overview

     Unless otherwise indicated, all references to years refer to our fiscal year which ends on September 30.

     Our business is to provide mission-critical voice communications solutions to enterprises globally, primarily in the financial services industry. Since 1973, we have designed, manufactured, installed and serviced specialized telephony systems, also referred to as “turrets”, which are utilized on trading floors across the world. We are a leader within the financial trading community based on the number of turret “positions” and related equipment installed worldwide. We built additional lines of business upon that core offering, expanding our product and service portfolio to address other communications needs of the financial services industry. Additionally, we recently increased our efforts to address the needs of customers involved in command and control operations within select industries. We believe that command and control operations represent a large and growing market opportunity for us. The industries we target are public safety; government and military; power, energy, and utility companies, or PE&U; and transportation.

     The solutions we provide are composed of both products and services. Products include the design, manufacture, and installation of turret systems and associated hardware, voice recording equipment, intercoms and microphones. Within our product offerings we also provide software applications. Some of these software applications reside on equipment designed by us and others reside on the customers’ network infrastructure. Services include equipment maintenance, network voice and data services, management of relocations and day-to-day moves, as well as enhanced services like remote monitoring and proactively servicing elements of a customer’s communications infrastructure.

     Our business serves a broad range of the financial trading community. We have offices worldwide serving customers in 40 countries in all major trading centers globally as well as in developing markets. The financial trading community is composed of various types of firms, including investment banks, institutional investors, hedge funds, interdealer brokers and exchanges. Some of our major customers include Bank of America, Barclay’s Capital, Citigroup, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Lehman Brothers, Morgan Stanley, Tullet and Tokyo, and Wachovia. As illustrated by our average 16 year relationship with the above customers, we believe a strategy that focuses on long-term customer relationship allows us to better understand and meet our customers’ needs. Our belief is that our customers consider us a mission-critical provider of their information technology infrastructure. Our communications solutions are essential to their trading operations, highly specialized, and centrally located on a trader’s desktop. We are a leader both in terms of our overall market presence as well as our technology innovations, particularly in the area of Voice-over Internet Protocol, or VoIP, communications solutions. We intend to grow our business primarily by building upon our leadership position, capitalizing on industry demand trends, and expanding into new markets like the command and control operations of selected industries.

     We manage our business through two major operating segments called Financial Services and Command and Control. The Financial Services segment is our core business and represents our sales of products and services to the financial trading community. The Command and Control segment was formed in October 2004 to focus on a new and growing opportunity apart from our traditional customer base. In 2004, our Financial Services segment accounted for approximately 99% of our revenues and approximately 98% of our segment profit. Our Command and Control segment accounted for approximately 1% of our revenues and approximately 2% of our segment profit in 2004. For information regarding our business segment and domestic and international operations, please see Note 16 in the notes to our financial statements.

     Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, registration statements and amendments to those filings are filed with the Securities and Exchange Commission and are available free of charge on our website at www.ipc.com under the “Media” caption as soon as reasonably practicable after we electronically file these materials with or furnish it to the Securities and Exchange Commission. Our filings are also available to the public at the website maintained by the Securities and Exchange Commission at www.sec.gov.

History

     Our business was established in 1973 as Interconnect Planning Corporation. In 1983 our predecessor completed an initial public offering and was subsequently acquired in 1986 by Contel Corporation taking the name Contel IPC. Shortly thereafter, Contel IPC opened our current manufacturing facility in the United States and commenced operations in the United Kingdom. In 1990, Contel was acquired by GTE, and in October 1991, GTE sold the business to Richard and Peter Kleinknecht and others who renamed the business IPC Information Systems, Inc. or, “IPC”. In October 1994, IPC completed an initial public offering, and was again acquired in April 1998, this time by Citicorp Venture Capital Ltd. In December 1998, our predecessor expanded its franchise through the purchase of the assets of Reuters Voice Systems, a business unit of Reuters Group PLC. In June 1999, we acquired V-Band Corporation.

     In June 2000, Global Crossing Ltd. acquired IPC. In December 2001, Global Crossing and its affiliates sold IPC to a group of investors led by GS Capital Partners 2000, L.P. through a wholly owned corporation IPC Acquisition Corp. In March 2002, we purchased the customer base and related assets outside of Japan of the turret business of Hitachi, Ltd. In April 2003, we entered the network services business through the acquisition of Gains International (US) Inc., or Gains US, and Gains International (Europe)

1

Limited, or Gains UK. In August 2003, we invested in and gained voting control of Purple Voice, one of our software application products, and subsequently acquired 99% of this entity in September 2004. In January 2004, we purchased Gains International Asia Holdings Limited from GSCP 2000 and other private equity funds affiliated with Goldman, Sachs & Co. Most recently, in November 2004, we acquired Orbacom Systems, Inc., or Orbacom, which provides specialized radio consoles and computer aided dispatch software for use in command and control operations.

Industry Background

     Financial Services

     Financial Services broadly refers to the various types of firms including those who participate in trading activities in stocks, bonds, commodities and similar instruments. These firms include financial institutions that represent the sell-side of the business, buy-side firms like investment management and insurance companies, interdealer brokers, commodity trading firms and exchanges. Players in the trading community utilize unique and highly specialized communications solutions called turret systems, other associated equipment, voice network services, voice recording and playback and dedicated private networks that allow multiple users to access a continuously open line for 24x7 conferencing, commonly referred to as hoot and holler networks. Hoot and holler networks are a dedicated private network that allows multiple users to access a continuously open line for 24x7 conferencing. Our customers have specific requirements including a host of functions that allow the users to operate in a community mode. Products that support those community requirements include intercoms, open microphones, and dynamic conferencing. Our customers also require exceptionally high levels of reliability, 24x7 support and immediate field response times. Additionally, we believe customers value highly the ability to provide a standardized global technology platform with a product evolution roadmap to address both their current and anticipated future needs. We believe our leadership position is based on our success in meeting those customer requirements, our global capabilities and service excellence as well as our ability to offer a vision and roadmap of a solution which meets current and future needs.

     The financial services industry experienced a market downturn in recent years, resulting in reductions in capital expenditures for trading floor communications equipment purchases. Our shipments of turret positions reached what we believe are cyclical lows with shipments of 13,882 positions in 2002, 10,275 in 2003, and 12,641 in 2004 compared to 17,007 positions shipped in 2001. In 2004, we observed in our customer base a renewed interest in investing in infrastructure for their trading business. Based on our sales momentum, bookings, backlog, and technology planning with customers, we expect a substantial increase in capital purchases of trading systems over the next several years. We believe there are a number of industry trends which are driving the return of stronger demand for our solutions, including:

	•		Aging of Technology and Installed Systems: In recent years a substantial part of our installed equipment base has aged as customers deferred capital expenditures during the financial markets downturn. Approximately 50% of our installed equipment base is currently operating on technology that is over 10 years old. In addition, technology end-of-life considerations for certain voice recording products are resulting in upgrade demand for our trading floor equipment and services.
	•		Demand for Disaster Recovery and Security Solutions: Business risk is one of the highest priority issues with both internal corporate mandates and regulatory pressure leading to accelerated investment in solutions which address these needs.
	•		Focus on Compliance Solutions: Heightened awareness of financial liability risks have caused firms to focus on and invest in compliance solutions. On the trading floor, this focus on compliance is reflected in the need for solutions that address voice recording, retrieval, analysis and storage.
	•		VoIP on the Trading Floor: We introduced VoIP to the trading floor in 2001. This technology is bringing new benefits to our customer base as enterprise-wide deployment allows for more advanced solutions like the ability for the trader to work from trading floor locations other than the trader’s desk. The availability of this new technology and its associated benefits may cause customers to reexamine their current trading floor solutions.
	•		Robust Global Trading Markets: Many trends like the globalization of financial markets, development of new financial instruments and growth of hedge funds are influencing the demand for trading infrastructure worldwide.

     Command and Control

     Command and control operations generally share the need for instantaneous, real-time communications with expansive functionality and resilience. Our Command and Control segment addresses the needs of control rooms and operation centers, from which vital activities are planned and coordinated. We address the control rooms and operation centers in four primary sectors:

•

Public safety: Includes the dispatch of police, fire, and medical apparatus and personnel. This sector can be separated into municipal, county, and state police and other groups responsible for protecting individuals and property, like colleges and universities.

2

	•		Government: Includes domestic and foreign governments and their various military and civilian departments and agencies which in the United States include the five branches of the military, the national guard and homeland security organizations.
	•		Power, energy and utilities: Includes companies which manage and control the flow of electricity, water, gas and other natural resources.
	•		Transportation: Includes organizations and companies involved in transportation management and control like airports and airlines, railways, and trucking.

     Despite the fact that we have not specifically targeted these industries in the past, we generated sales based on unsolicited customer demand for our products and services. We believe that we can utilize our current infrastructure and product lines to effectively meet the needs of this market space.

     There are a number of industry trends which are driving demand for increasingly-sophisticated communications solutions:

	•		Heightened infrastructure and public security concerns: Recent global and national events like September 11 and the extensive blackout in the US during the summer of 2003, have re-prioritized the need to upgrade command and control systems and have resulted in significant increases in public and private sector spending to accomplish these upgrades.
	•		Interoperability: The requirement to upgrade command and control solutions is driven not just at the single site level but across associated organizations due to the need for coordination among organizations, and therefore interoperable technology platforms that integrate various radio and telephony standards.
	•		Standardization on VoIP platforms: The availability of IP solutions with real benefits of shared resources and resilient disaster recovery and business continuity planning solutions is increasing the need and desire for new command and control solutions based on IP technology.

Our Products and Services

     Our solutions are comprised of products and services. Products and services can be purchased individually to address specific needs of a single location or packaged together as part of an integrated and enterprise wide solution. The following is an example of the products and services that go into a typical installation:

	•		Desktop turrets, either VoIP or time-division multiplexing, or TDM, telephony based systems that sit on the desktop in front of the user and are their primary device for voice telecommunications;
	•		adjacent to and interconnected with the desktop turret, we also sell the applications module and the related software that enables live streaming video, dynamic and visual call management tools as well as other standard and custom-developed applications;
	•		intercoms, speakers and microphones are sold as part of the desktop turret configuration;
	•		the desktop turrets are linked to our backroom switching platform, which provides the advanced functionality to direct calls to internal and external destinations via both VoIP and TDM networks;
	•		a voice recording platform, manufactured by a third party partner, integrated with our backroom switch which provides recording and retrieval capability of all calls on the turrets;
	•		network services through multiple dedicated and secure circuits that connect our customers’ desktop turrets to other parties worldwide; and
	•		contracts to monitor, maintain and support the infrastructure, network and other services, either remotely and/or via on-site resources.

Products:

Some of our products include:

•		Alliance Backroom Switching Platform. Our most advanced backroom switching platform is the Alliance. Introduced in 1997, the Alliance is a fully digital proprietary system, fault tolerant switch and is not vulnerable to isolated component failure. The Alliance switch supports both our VoIP and TDM desktop turrets.
•		Desktop Turrets. Our turrets, both the VoIP turret, named IQmx, and the TDM turret, named Slimline, provide advanced voice communication functionality in an easy to use and fully tested user interface. Our turrets simplify and expand a user’s ability to access and integrate information from all sources on one platform.
•		Applications Module. The applications module is a touch screen device that sits adjacent to and interconnected with our turret and is used as an input and display unit for either basic or custom applications developed and sold by us. Generally these applications enhance the effectiveness of the user and the call itself by offering visual call management and productivity tools. Examples include streaming video, a custom directory of trading partners as well as specific caller information such as prior trading history.

3

•		Alliance Integrated Recorder. An integral part of our complete solution is call recording. By incorporating the recording function into the Alliance system, we offer increased recording capacity, plus advanced features like user-initiated recording, call marking for quick retrieval, selective recording and user-controlled playback with quick access.
•		Enterprise Hoot & Intercom, or EHI. EHI provides non-turret users with seamless access to audio broadcasts, intercom calls, group calls and hoot and holler broadcasts regardless of the user’s location. EHI software operates on standard personal computers over existing corporate data networks and integrates with our turret systems via the Alliance switch.

Services:

     Our service offerings include network services focused on the physical telecommunications connection between counterparties and enhanced services that provide for a variety of client support, maintenance and other needs. The major network services include:

	•		Manual or Automatic Ring Down Circuits. These voice circuits, also referred to as “private lines,” provide an instantaneous, dedicated connection between two counter parties.
	•		Hoot and Holler Networks. These services provide a dedicated private network that allows multiple users to access a continuously open line which provides for 24x7 conferencing.
	•		High-Speed Connectivity. We provide digital high-speed connections, including T1/E1’s and DS3’s, to connect customer locations to each other or to other associated parties.

     The high performance demands our customers and the complex nature of the technology we deliver to them provides us with the opportunity to offer enhanced services to our customers. Some of the enhanced services we provide include:

	•		Turret System, Maintenance and Service. We provide contractual maintenance services as well as person-on-site to our customers on a 24x7x365 basis. We also provide ongoing support for moves, adds and changes, or MAC’s, which is critical in the dynamic business environment we serve.
	•		Advanced Fault Management. Proactive remote monitoring of customers’ communications infrastructure including the turret system and network services and voice recording equipment which we provide or are provided by third parties.
	•		Total Circuit Management. Consultation, audit administration and cost management of voice communications network infrastructure to assist our customers with implementation of best practices and achievement of operational efficiencies.

Orbacom Acquisition

     On November 30, 2004, we acquired Orbacom Systems, Inc. Orbacom is a leading manufacturer of radio consoles and computer-aided dispatch, or CAD, software. This acquisition enables us to expand our range of products and services available to address the mission-critical command and control operations in the public safety, government and military agencies, PE&U, and transportation industries.

Examples of some Orbacom products include:

	•		Radio Switching Platforms. Systems serving small to large locations that facilitate radio communications between parties.
	•		The Resource: Dispatch Operating Software. Software residing on the user’s personal computer that interfaces and works in conjunction with the radio switching platforms.
	•		Genisis: Computer Aided Dispatch (CAD) Console. The business applications software designed specifically for the various users. Examples include Airport CAD, Casino CAD, Gen911 (enhanced 911 application) and Gen Data (a mobile applications designed for use within police cars).

Our Business Strategy

     We believe that we are well positioned to take advantage of the growth opportunities available in our target markets. The key elements of our business strategy are:

•

Grow our market share and profitability by capitalizing on our strong position within the financial services industry and the favorable trends in that industry. In the last 30 years, we have grown to be one of the leading providers of turret systems and associated services. Through our extensive interaction and long-term relationships with customers we have developed a thorough

4

		understanding of their trading floor communications requirements. This understanding and continued interaction helps us to anticipate our customers needs and tailor our offerings accordingly. We expect an increase in customer spending as the business environment continues to improve and customers look to replace aging systems and upgrade their technology. As an industry leader, we believe we are advantaged in bidding for many projects from the incumbent position. Additionally, we expect to win new projects and expand into new geographic and developing financial markets.
•		Continue to drive additional revenue growth within the financial services industry by expanding the suite of product and services we offer our customers. We have expanded from our core equipment base into the services business by leveraging our understanding of our customers’ business environment, our reputation for high quality products, our long-term customer relationships and our well positioned sales and service resources. Our success in offering network and enhanced services to our customers grew out of this approach. In this same manner we intend to expand our solution set to include VoIP-based business continuity and compliance solutions, software applications and additional enhanced services to our customer base that don’t currently use these products and services.
•		Expand the addressable market by capitalizing on new trends and technologies. There are numerous trends in the market that will increase the number of opportunities for our solutions. The growing importance to the financial community of disaster recovery, or DR, and business continuity plans, or BCP, has increased interest in our approach to these issues. The migration of communications technology towards internet protocol, or IP, has allowed us to implement increased flexibility into our solutions that specifically address DR and BCP concerns. Additionally customers are focused on compliance as a corporate imperative and our voice recording and storage solutions help address our customers’ needs and concerns.
•		Extend our technology and service assets into growth markets with comparable demand profiles. We intend to capitalize on our expertise with complex mission-critical voice communication systems by expanding the offering to command and control operations in public safety organizations, government and military agencies, PE&U companies and transportation companies. We believe that there has been positive receptivity in these industries to the type of solutions we provide. Additionally we intend to use our relationships with the trading side of our customers’ businesses to assist us in selling certain applications like our EHI product to the retail side of their businesses.
•		Continue to grow and complement our business through acquisitions. As we have done in the recent past through our acquisitions of Gains, Purple Voice and Orbacom, it is our intent to continue to look for opportunities to acquire other companies to complement our portfolio solutions, obtain incremental growth and take advantage of significant synergies. We believe we have a proven history of successfully integrating and executing on acquisitions. Additionally we believe that acquisitions will be a way for us to expand our presence into the command and control operations of non-financial service industries.

Customers

     Our Financial Services segment serves customers in the financial industry, specifically the trading community. Our Command and Control segment serves the command and control operations in public safety organizations, government and military agencies, PE&U and transportation companies. Historically, the majority of our consolidated revenues have been derived from sales to customers in the financial trading community. Our Financial Services customers include Bank of America, Barclay’s, Citigroup, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Lehman Brothers, Morgan Stanley, Tullet and Tokyo, and Wachovia. These customers accounted for approximately 40% of our total consolidated revenues in 2004. There were no customers in 2004 that accounted for more than 10% of our total consolidated revenues.

Sales and Marketing

     Our sales efforts are organized on a global basis to promote relationships with, and to provide enhanced services to customers that have significant global operations. The sales organization is managed through three regions and is composed of approximately 111 sales and sales management personnel. The key regions and associated direct offices are:

	•		The Americas, with offices in Atlanta, Boston, Chicago, Cincinnati, Connecticut, Dallas, Houston, Los Angeles, New Jersey, New York, Philadelphia, San Francisco and Toronto;
	•		Europe, the Middle East and Africa, or EMEA, with offices in London, Frankfurt, Paris and Milan; and
	•		Asia Pacific, with offices in Hong Kong, Singapore, Sydney, Melbourne and Tokyo.

     Distributors are used in emerging markets, in territories where the installed base does not support a direct presence and where language and cultural differences require a local presence. Key areas covered by distributors include:

	•		EMEA, with distributors in Austria, Bahrain, Czech Republic, Denmark, Finland, Hungary, Ireland, Israel, Kuwait, Netherlands, Norway, Portugal, Russia, Saudi Arabia, South Africa, Spain, Sweden, Switzerland, Turkey and the United Arab Emirates;
	•		Asia, with distributors in China, India, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Taiwan and Thailand; and
	•		Latin and South America, with distributors in Argentina, Brazil, the Caribbean, Chile, Mexico and Venezuela.

5

     We have a select number of worldwide accounts which we classify as strategic accounts. They are assigned a global account director to manage and coordinate account activity on a global basis. This approach allows the sales management team to coordinate account strategies globally in order to provide a seamless support infrastructure for these global institutions.

Competition

     In the markets in which we operate, there are few companies that offer an end-to-end mission critical communications solution. Our principal competitor is an affiliate of British Telecom. While we and British Telecom are the two largest providers of turret equipment and service worldwide, there are smaller competitors that have historically achieved considerable market shares in their respective domestic markets. These competitors include Etrali S.A., an affiliate of France Telecom, within France, Siemens A.G. within Germany and Hitachi within Japan. In the future, there may be additional competition from other entities that may develop either equipment, software based products, service offerings or a combination of these. We believe we are able to compete effectively due to the high quality of our products, our experience and reputation for providing outstanding service, our ability to provide a standardized technology platform on a global scale and our investment in research and development that focuses on new products and technologies.

     Within the voice network services business there are numerous small, regional and global competitors. Some of the more well known providers include Westcom, Global Crossing Financial Markets (formerly known as IXnet) and Sector. We have recently seen some consolidation in the market with the purchase of RVS (Reuters Voice Services) by Westcom. Some of the largest providers like AT&T and MCI have reduced or eliminated services into this niche area as they do not see it as core to their business operations. We believe our success in this area is due to our global capabilities, our commitment to timely delivery and service excellence as well as our ability to offer an end-to-end solution in conjunction with our products.

     Command and control operations within the industries we target are public safety organizations, government and military agencies, PE&U, and transportation companies is served by several large radio manufacturers like Motorola and M/A-Com (a Tyco company), and major systems integrators, like Lockheed Martin and Northrop Grumman, as well as by many numerous small, regional technology vendors and resellers that are focused on certain geographies. Generally, our larger competitors focus on communications projects in major population centers. The small distributors and systems integrators are effective at capturing local opportunities that cannot be cost effectively addressed by the more significant companies. We believe we are well positioned to offer a full end-to-end solution on a worldwide basis.

Research and Development

     Our research and development efforts are driven by our sales and product management teams. Interoperability and integration of trading positions is a strategic focus. We utilize our core competencies in voice communications systems, application services and rich media delivery to provide solutions that meet the evolving needs of our customers. We work closely with our customers to understand their future requirements and invest in research and development to ensure that our products address customer needs.

     The research and development budget is determined annually through the evaluation of each product category and its expected impact on revenue over the succeeding 24 months. We incurred research and development expenses of $15.0 million for 2004, $11.7 million for 2003, $11.6 million for the period from November 15, 2001 (date of initial capitalization) to September 30, 2002 and $3.5 million for the period from October 1, 2001 to December 20, 2001. As of September 30, 2004, we employed approximately 76 people in the area of research, development and product engineering.

Backlog

     Our estimated consolidated order backlog increased by 91% to $70.8 million at September 30, 2004 from $37.0 million at September 30, 2003. Included in the backlog is one job for approximately $12 million which is being re-evaluated by the customer for changes to configuration and timing. This job may decrease in size and may not complete until fiscal year 2006.

Intellectual Property

     We rely on a combination of patents, trade secrets, trademarks, copyrights and other intellectual property rights, nondisclosure agreements and other protective measures to protect our proprietary rights. We currently have 15 United States patents, including design patents. We also rely on unpatented know-how and trade secrets and employ various methods, including confidentiality agreements with employees and consultants, to protect our trade secrets and know-how.

Environmental Matters

     We are 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 our manufacturing process. Although we believe that our 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 our facilities or operations.

6

Employees

     As of September 30, 2004, we had 765 full-time employees worldwide, of which 723 were full-time non-union employees. On a geographic basis there are 503 employees in North America, 187 in EMEA, and 75 in Asia. Of these, 133 were engaged in marketing and sales, 76 in research and development, 112 in manufacturing and 444 in branch operations, finance and corporate administration. As a result of the Orbacom acquisition in November 2004, an additional 85 employees joined us all of which are non-union. Prior to the Orbacom acquisition, substantially all of our employees were associated with the Financial Services segment.

     As of September 30, 2004, we also had 42 union employees in the United States who are represented by collective bargaining units and approximately 100 additional workers who are retained under labor pooling agreements that IPC Information Systems entered into with Kleinknecht Electric Company, a New York corporation, or KEC-NY, and Kleinknecht Electric Company, a New Jersey corporation, or KEC-NJ, each a former affiliate of ours and companies owned by one of our minority stockholders. Under these agreements, KEC-NY and KEC-NJ are signatories to collective bargaining agreements with the union locals that represent these employees. In addition, pursuant to these agreements, KEC-NY and KEC-NJ are responsible for paying our employees, remitting payroll taxes and making any required contributions to any union benefit plans covering the employees. We reimburse KEC-NJ and KEC-NY for these expenses, pay them a total fee of $20,000 per month and have agreed to indemnify them for liabilities related to our employees. IPC Information Systems, LLC, has a standby letter of credit in place in favor of KEC-NY and KEC-NJ in an amount of $1.5 million for labor compensation and benefits related to these employees. As a result of recent amendments to those agreements, we are no longer obligated to indemnify the shareholders of KEC-NY and KEC-NJ for losses relating to the union pension plans in which our employees covered by these agreements participate.

     Management believes that current relations with labor are good.

RISK FACTORS

Because the majority of our customers are concentrated in the financial services industry, our revenues may decline during periods of economic downturn that impact these sectors.

     Historically, almost all of our revenues have been derived from sales to customers in the financial services industry. When this industry suffers economic downturns, it is likely that we will experience a decline in revenues which could have a material adverse effect on our financial condition and results of operations. In times of economic downturn, including the recent period of economic downturn, our customers may defer purchasing and installing our products. Reductions in the number of our customers’ employees could reduce the demand for new or replacement turret systems.

New or enhanced products or services that we may develop or offer may not achieve market acceptance and we may not be able to develop new or enhanced products or services in anticipation of or in response to ongoing technological changes or customer needs.

     We undertake significant research and development expense prior to marketing any new product or service. If new products or services that we introduce do not gain acceptance, not only will we lose sales as a result of not having developed a product or service that the market accepts, but we will have used our resources ineffectively. In addition, the failure to develop or offer new and innovative products or services that meet or anticipate ongoing technological changes, including rapid and significant changes in the telecommunications industry, and customer needs on a timely and cost-competitive basis could have a material adverse effect on our financial condition and results of operations.

Our revenues and operating results may fluctuate significantly from period to period.

     Our revenues and operating results could fluctuate significantly from period to period. Given the relatively large sales price of our trading systems and our recognition of revenue principally upon completion of installations, a limited number of system installations may account for a substantial portion of revenues in any particular period. As a result of these and other factors, we could experience significant fluctuations in revenues and operating results in future periods.

Our business could be adversely affected by competition.

     The markets in which we operate are comprised of a number of global and regional competitors, including global and national alliances. In addition, the continuing trend toward business combinations and strategic alliances in the telecommunications industry may create significant new competitors for us. Some of our current and potential competitors have greater financial, engineering, manufacturing and other resources than we do. Competing with these companies will require continued investment by us in engineering, research and development, marketing and customer service and support. There can be no assurance that we will successfully make these investments. In addition, we face competition from dominant local providers that have long-standing relationships with our target customers. Due to some competitors’ relationships with our target customers, it may be difficult for us to significantly increase our penetration in some markets.

7

Because our intellectual property is critical to our success, our revenue and earnings growth would suffer if we were unable to adequately protect our intellectual property.

     Because our products rely on proprietary technology and will likely continue to rely on technological advancements for market acceptance, we believe that the protection of our intellectual property rights is important to the success of our business. To protect these rights, we rely on a combination of patent, copyright, trademark and trade secret laws. We also enter into confidentiality or license agreements with our employees, consultants and business partners, and control access to and distribution of our software documentation and other proprietary information.

     Despite our efforts to protect our proprietary rights, unauthorized parties may copy or otherwise obtain and use our products or technology. It is difficult for us to monitor unauthorized uses of our products. The steps we have taken may not prevent unauthorized use of technology, particularly in foreign countries where the laws may not protect our proprietary rights as fully as in the United States. If we are unable to protect our intellectual property from infringement, other companies may be able to use our intellectual property to offer competitive products at lower prices. We may not be able to effectively compete against these companies.

We rely on unpatented proprietary know-how and trade secrets.

     We rely on unpatented proprietary know-how and trade secrets, and employ various methods, including confidentiality agreements with employees and consultants, to protect our know-how and trade secrets. However, these methods may not afford complete protection and there can be no assurance that others will not independently develop the know-how and trade secrets. Furthermore, no assurance can be given that claims or litigation asserting infringement of intellectual property rights will not be initiated in the future seeking damages or an injunction against the sale of our products or that we would prevail in any litigation. This litigation could be protracted and costly and could have a material adverse effect on our business and results of operations regardless of its outcome.

Our business could be adversely affected by labor disputes.

     In the United States, as of September 30, 2004, 42 of our employees were represented by collective bargaining units. Also, we have approximately 100 workers as of September 30, 2004 who are retained under labor pooling agreements that we entered into with KEC-NY and KEC-NJ, each a former affiliate of ours and companies owned by one of our current minority stockholders. Although we consider our relations with our employees and workers to be generally good, we cannot assure you that we will not experience work stoppages, strikes or slowdowns in the future. A prolonged work stoppage, strike or slowdown could have a material adverse effect on our business, financial condition and results of operations. In addition, we cannot assure you that, upon expiration of any of our existing collective bargaining agreements, new agreements will be reached without union action or that any new agreement will be on terms satisfactory to us. Moreover, we cannot assure you that our non-union facilities will not become subject to labor union organizing efforts. If any of our current non-union facilities were to unionize, we would incur increased risk of work stoppages and possibly higher labor costs.

Loss of key executive officers could weaken our business expertise and other business plans.

     Our success depends to a significant degree upon the continued contributions of our senior management team and technical, marketing and sales personnel. Our employees may voluntarily terminate their employment with us at any time. There is competition for qualified employees and personnel and there is a limited number of persons with relevant knowledge and experience. The loss of any of our key executive officers in the future could significantly impede our ability to successfully implement our business strategy, financial plans, expansion of services, marketing and other objectives. We believe that the growth and future success of our business will depend in large part on our continued ability to attract, motivate and retain highly-skilled qualified personnel.

We rely on single source suppliers for some key components of our products. Any disruption in our relationship with these sources could increase our product costs and reduce our ability to supply our products on a timely basis.

     We currently rely on single source suppliers of selected hardware, software and network connectivity components used by us to provide our products and services. We have from time to time experienced delays in the receipt of these components. Our remedies against suppliers who fail to deliver products on a timely basis are limited by contractual liability limitations contained in supply agreements and purchase orders and, more importantly, by practical considerations. A failure by a supplier to deliver quality products or network connectivity on a timely basis, or the inability to develop alternative sources if and as required, could result in delays or cause us to incur unanticipated expenses, which could materially adversely affect our business and results of operations.

8

     In addition, we purchase selected custom product components for our manufacturing operation primarily from single source suppliers. The disruption of the current flow of supplies could impair our ability to manufacture products or cause us to incur costs, including payment of engineering expenses to prospective vendors, associated with the development of alternative sources. A disruption also could result in delays in product shipments or cause us to incur unanticipated expenses, which could have a material adverse effect on our financial condition and results of operations.

Our plans to significantly expand our range of command and control communications products and services may not be successful.

     We may not be able to deploy our new Command and Control segment as planned. If we are unsuccessful in executing our strategy, our revenue and operating results may be adversely affected. There are a number of factors that could impact our ability to execute this strategy successfully, including:

	•		competition from other manufacturers with longer operating histories and customer relationships; greater financial, technical and marketing resources; larger customer bases; and greater brand or name recognition;
	•		our ability to successfully procure government contracts, including necessary government certifications; a reduction in the overall level of government spending; changes in government spending priorities; and changes in the timing of government approvals for appropriated funds;
	•		our ability to successfully integrate the operations, products and customers of business we may acquire, including Orbacom Systems, Inc., into our business;
	•		the extent to which our product and service offerings will achieve market acceptance;
	•		our lack of an operating history in particular segments of this business on which to evaluate this business and its prospects;
	•		our ability to achieve favorable operating results or profitability and to generate revenues sufficient to cover our capital and operating costs;
	•		diversion of management attention from running other segments of our business; and
	•		the risks, uncertainties, expenses, delays and difficulties associated with starting a new business.

     Moreover, even if we do successfully address these challenges, our operating results may still be adversely affected if the market opportunity for command and control communications products and services does not develop in the ways we anticipate.

Our business strategy includes acquiring other businesses, but we may not be able to identify and properly integrate acquisitions of other companies.

     As a part of our business strategy, we intend to acquire other businesses. We expect to face competition from acquisition candidates, which may limit the number of acquisition opportunities and may lead to higher acquisition prices. Also, we may not be able to identify, acquire or manage additional businesses profitably or to successfully integrate any acquired business with our existing business. Businesses that we acquire may have liabilities that we underestimate or do not discover during our pre-acquisition investigations. Certain liabilities, even if we do not expressly assume them, may be imposed on us as successor to the business. Further, each acquisition involves special risks that could cause the acquired business to fail to meet our expectations. In addition, we cannot predict the timing, size or success of any future acquisitions or the associated capital requirements and we may not be able to obtain acceptable acquisition financing when required. If we are unable to fund our acquisition plans, our growth could be limited.

In the event of a catastrophic loss of our manufacturing facility, our business would be adversely affected.

     Our sole manufacturing facility is in Westbrook, Connecticut. While we maintain insurance covering the facility, including business interruption insurance, a catastrophic loss of all or a portion of the facility could have a material adverse effect on us.

Our substantial indebtedness could affect our ability to meet our obligations under our notes and may otherwise restrict our activities.

     We have substantial indebtedness with significant debt service requirements. As of September 30, 2004, we had total indebtedness of approximately $199.5 million outstanding and $30.7 million available for future borrowings and letters of credit after taking into account $4.3 million of outstanding letters of credit under the revolving credit facility of our amended and restated senior secured credit facilities.

9

     Our substantial indebtedness could:

	•		make it more difficult for us to satisfy our obligations under the notes;
	•		require us to dedicate a substantial portion of our cash flow to payments on our indebtedness, which would reduce the amount of cash flow available to fund working capital, capital expenditures and other corporate requirements;
	•		increase our vulnerability to general adverse economic and industry conditions;
	•		limit our ability to respond to business opportunities;
	•		limit our ability to borrow additional funds, which may be necessary; and
	•		subject us to financial and other restrictive covenants, which, if we fail to comply with these covenants and our failure is not waived or cured, could result in an event of default.

Despite current indebtedness levels, we may still be able to incur substantially more debt. This could further exacerbate the risks associated with our substantial indebtedness.

     We may be able to incur substantial additional indebtedness in the future. The terms of this indenture under which our 11.5% senior subordinated notes were issued permits us to incur additional indebtedness if specified leverage ratios are not met or under specified circumstances. Our amended and restated senior secured credit facilities also permit additional borrowings and issuance of letters of credit of up to $35.0 million under a revolving credit facility, of which $30.7 million was available as of September 30, 2004, after taking into account $4.3 million of outstanding letters of credit. In addition, under our amended and restated senior secured credit facilities, we can increase the committed amount under those facilities by up to an additional $15.0 million so long as one or more lenders agrees to provide this incremental loan amount and other customary conditions are satisfied. If new debt is added to our current debt levels, the related risks that we now face could intensify.

The agreements governing our debt impose restrictions on our business.

     The indenture governing our 11.5% senior subordinated notes and the agreements governing our amended and restated senior secured credit facilities contain a number of covenants imposing significant restrictions on our business. These restrictions include covenants that restrict our ability to operate our business and may limit our ability to take advantage of potential business opportunities as they arise. In addition, these restrictions include covenants that limit our ability and the ability of our restricted subsidiaries to:

	•		incur indebtedness or issue preferred shares;
	•		pay dividends or make distributions in respect of our capital stock or to make certain other restricted payments;
	•		create liens;
	•		agree to payment restrictions affecting our restricted subsidiaries;
	•		consolidate, merge, sell or lease all or substantially all of our assets;
	•		enter into transactions with our affiliates; and
	•		designate our subsidiaries as unrestricted subsidiaries.

     Our amended and restated senior secured credit facilities also require us to satisfy a number of financial ratio tests.

     Our ability to comply with the agreements governing our indebtedness may be affected by events beyond our control, including prevailing economic, financial and industry conditions. The breach of any of these covenants or restrictions could result in a default under the indenture governing the 11.5% senior subordinated notes or our amended and restated senior secured credit facilities. An event of default under our debt agreements would permit some of our lenders to declare all amounts borrowed from them to be immediately due and payable. If we were unable to repay debt to our lenders, these lenders could proceed against the collateral securing that debt, if any. In addition, acceleration of our other indebtedness may cause us to be unable to make interest payments on the 11.5% senior subordinated notes and repay the principal amount of the 11.5% senior subordinated notes.

10

We are controlled by a group of stockholders, and there may be conflicts of interest between our stockholders and the holders of the notes that impair our ability to achieve our business plan.

     Private equity funds affiliated with Goldman, Sachs & Co., including GSCP 2000, own substantially all of our common stock. Goldman, Sachs & Co. may be deemed to be able to exercise control over some of our activities. These stockholders have other business activities in addition to their ownership position in us. It is possible that these stockholders may exercise their control in ways that serve their individual interests but do not serve the best interests of the other holders of our securities, including holders of our notes.

Changes in federal, state or international telecommunications regulations or delays in completing agreements with incumbent local exchange carriers could adversely affect a portion of our Services business.

     We provide certain telecommunications network services that are subject to extensive federal, state and international regulations. The interpretation and enforcement of laws and regulations by the regulatory authorities that administer them vary and could limit our ability to provide telecommunications network services. In addition, the Federal Communications Commission and relevant state public utility commissions exercise extensive authority to regulate ownership of transmission facilities, provision or connection of services, and the terms and conditions under which our telecommunications network services are provided. Delays in receiving required regulatory approvals, or the enactment of new and adverse regulations or regulatory requirements, as well as any future legislative, judicial and regulatory agency actions, may have a material adverse effect on our ability to perform our obligations under the contracts to which we are a party. We also rely on incumbent local exchange carriers to provide telecommunications network services. Delays in completing agreements with the incumbent local exchange carriers may have a material adverse effect on our ability to perform our obligations under the network service contracts to which we are a party.

Item 2. Properties

     We have two product development facilities that are located in Fairfield, Connecticut and Westbrook, Connecticut. Additionally, we lease our executive offices in New York City and our branch offices and sales offices in the United States, United Kingdom, Australia, Canada, France, Germany, Hong Kong, Italy, Japan, and Singapore. The 32,000 square foot Fairfield facility is leased and houses the engineering organization. The 85,000 square foot Westbrook facility owned by us is used for production, with 30,000 square feet designated for assembly and testing, 30,000 square feet designated for warehousing and 25,000 square feet designated for administrative purposes. The production facility is scaleable and has sufficient capacity to meet our anticipated needs. We also lease facilities in New York City and London which occupy our network operations centers, where the management of our network is performed.

     Our leased facilities in London include six floors at 67-73 Worship Street, London, England. In connection with the purchase agreement relating to our acquisition of IPC Information Systems, Global Crossing subleased from us five of the six floors at this location for its telecommunications and networking equipment and personnel. In August 2004, we renegotiated the Worship Street facility lease with the landlord. Simultaneously, we entered into an agreement with Global Crossing that released them of their sublease obligations. As consideration for permitting early termination of its sublease, Global Crossing consented to a distribution to us of approximately $1.5 million from an escrow account established pursuant to a prior settlement agreement. We anticipate consolidating our activities in London into our Worship street facility.

     As a result of the Orbacom acquisition, we lease space in Cinnaminson, New Jersey which contains offices and a manufacturing facility.

Item 3. Legal Proceedings

     Except for the four lawsuits described below, of which two that involves our former I.T.S. segment, we are not a party to any pending legal proceedings other than claims and lawsuits arising in the normal course of business. Under the terms of the sale agreement, we remain liable for all pre-closing liabilities relating to the I.T.S. segment, including the two lawsuits described below. Management believes the proceedings will not have a material adverse effect on our consolidated financial condition or results of operations.

     On June 27, 2000, an action was brought against several defendants, including our subsidiary, IPC Communications, Inc., in the United States District Court for the Southern District of New York by two telecommunications cabling contractors alleging that IPC Communications, Inc. violated federal antitrust and New York state law by conspiring with the International Brotherhood of Electrical Workers Local Union Number 3, AFL-CIO, and five electrical contractors to exclude plaintiffs from telecommunications wiring and systems installation jobs in the New York City metropolitan area. Subsequently, the complaint was amended to add an additional plaintiff and an additional defendant contractor. We believe the suit is without merit. However, there can be no assurance that the resolution of this lawsuit will ultimately be favorable. Plaintiffs are seeking injunctive relief and damages from the defendants, jointly and severally, in excess of an aggregate of $75.0 million.

11

     On September 8, 2003, an action was brought against several defendants, including our subsidiary, IPC Information Systems, Inc. and its President, in the United States District Court for the Eastern District of New York by Advance Relocation & Storage Co., Inc., a moving company. The complaint alleges that IPC Information Systems, Inc. and 23 other defendants violated the Racketeer Influenced and Corrupt Organizations Act and engaged in tortious interference with prospective business advantage by preventing the plaintiff from obtaining work as a mover in jobs performed in large commercial buildings in New York City. We believe the suit is without merit and intends to vigorously defend against all claims alleged against it in the complaint. Plaintiffs are seeking injunctive relief and damages from the defendants, jointly and severally, in an aggregate amount of approximately $7.0 million.

     On December 15, 2004, IPC Information Systems, LLC commenced two lawsuits arising out of the unauthorized copying of our proprietary software. The first action was filed in the Southern District of New York against The Odyssey Group, Inc. doing business as The O&R Group, Inc. The complaint alleges that the Odyssey Group infringed our copyrights by soliciting and obtaining an unauthorized copy of our proprietary software from Advanced Business Communications Ltd. a Canadian company which we refer to as ABC. Our complaint seeks recovery of the software, injunctive relief and unspecified damages from the defendants. The second action was filed in the Alberta Court of Queen’s Bench against ABC and its two principals. The statement of claim against ABC alleges misappropriation of our software, breach of contract, breach of fiduciary and common law duties and conversion and seeks injunctive relief and monetary damages.

Item 4. Submission of Matters to a Vote of Security Holders

     No matters were submitted to a vote of security holders during the fourth quarter of 2004.

12

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

     There is no public trading market for our common stock. As of September 30, 2004, there were 26 shareholders of record of our common stock. In December 2003, we made a special cash dividend payment of $1.22 per share, or approximately $18.0 million.

Item 6. Selected Financial Data (dollars in millions)

13

(1)		In April 2003, we acquired Gains International US and Gains International UK. In August 2003, we acquired Purple Voice and in January 2004, we acquired Gains International Asia. These acquisitions may affect the comparability of periods. For more information about these acquisitions, see Note 3 to the financial statements in Item 8.
(2)		Predecessors refers to the company as it operated (a) on a stand-alone basis through June 14, 2000 as IPC Information Systems, Inc. and (b) through December 20, 2001 following the acquisition of IPC Information Systems, Inc. by Global Crossing. Accordingly, the financial statements from June 15, 2000 through December 20, 2001 reflect the changes and adjustments for purchase accounting as well as changes as a result of ownership under Global Crossing. Accordingly, the financial statement periods are presented in the following manner:
		(a)		2000 — for the period from October 1, 1999 to June 14, 2000, IPC Information Systems, Inc. operated as an independent company. On June 15, 2000, IPC Information Systems, Inc. was acquired by Global Crossing. The period from June 15, 2000 to September 30, 2000 is shown as a separate column as a result of the change in ownership.
		(b)		2001 — for the period from October 1, 2000 through September 30, 2001, IPC Information Systems, Inc. operated under Global Crossing’s ownership.
		(c)		2002 — for the period from October 1, 2001 to December 20, 2001, IPC Information Systems, Inc. operated under Global Crossing’s ownership. IPC Acquisition Corp. was formed and initially capitalized on November 15, 2001 and had no assets or operations until it acquired IPC Information Systems on December 20, 2001. The period from October 1, 2001 through December 20, 2001 and the period from November 15, 2001 (date of initial capitalization) through September 30, 2002 are shown as separate columns as a result of the change in ownership.
		(d)		For 2003 and 2004, we operated as an independent company.
(3)		For the period from June 15, 2000 through September 30, 2000, cost of goods sold reflects fair value inventory adjustments of $22.3 million associated with the purchase accounting treatment of the acquisition of IPC Information Systems, Inc. by Global Crossing in June 2000. 2001 cost of goods sold reflects fair value inventory adjustments of $9.7 million associated with the purchase accounting treatment of the acquisition of IPC Information Systems, Inc. by Global Crossing in June 2000. We had no operations prior to our acquisition of IPC Information Systems from Global Crossing on December 20, 2001. For the period from November 15, 2001 (date of initial capitalization) through September 30, 2002, costs of goods sold reflects fair value inventory adjustments of $33.0 million associated with the purchase accounting treatment of the acquisition of IPC Information Systems in December 2001.
(4)		The depreciation and amortization expense in our cost of goods sold refers to depreciation and amortization expense on property, plant and equipment at our manufacturing facility in Westbrook, Connecticut.
(5)		In accordance with Statement of Financial Accounting Standards No. 145, “Rescission of FASB Statements No. 4, 44 and 64, Amendment to FASB Statement No. 13, and Technical Corrections”, effective for years beginning after May 15, 2002, any gain or loss on extinguishment of debt that was classified as an extraordinary loss in prior periods shall be reclassified. Accordingly, the $10.6 million extraordinary loss on retirement of debt in the period June 15, 2000 to September 30, 2000 has been reclassified to “Other income (expense), net” (approximately $17.8 million expense) and “Provision (benefit) for income taxes” (tax benefit of approximately $7.3 million).
(6)		EBITDA represents earnings before interest, taxes, depreciation and amortization. We believe that EBITDA helps investors more meaningfully evaluate and compare the results of our operations from period to period. We believe that our investors, as debt investors and not equity investors, are primarily focused on EBITDA rather than net income, as it is a useful indicator of operating performance and cash generated from operations exclusive of working capital changes.
		Our management uses EBITDA as a measurement of operating performance because it assists us in comparing performance on a consistent basis as it removes the impact of our recent changes in ownership, including different capital structures and asset bases, from our operating results. Management also uses EBITDA as one of its core measures for planning and forecasting overall consolidated company and individual business division expectations and for evaluating actual results against such expectations. We have consistently included EBITDA in presentations to our board of directors and investors to enable them to have the same consistent measurement basis of operating performance used by management. We also use EBITDA as a valuation methodology in assessing the fair value of our reporting divisions for required impairment testing. Further, we use EBITDA measurements for our compensation plans and overall strategy. The most significant component of the financial targets of our management incentive plan are measured and bonuses are paid based on achievement of such EBITDA targets and our overall strategy is directed towards pursuing development opportunities intended to increase EBITDA and/or the valuation multiple of EBITDA our businesses would command on a fair value basis.
		However, EBITDA is not a measurement prepared in accordance with generally accepted accounting principles. In addition, other companies in our industry may calculate EBITDA differently than we do. Significant factors not captured by EBITDA include trends in our period over period revenue, profitability measured by gross margin and effective tax rate. The following table sets forth a reconciliation of EBITDA to net income for the periods indicated (in millions):

(7)		The ratio of earnings to fixed charges is computed by dividing earnings by fixed charges. For this purpose, “earnings” include net income (loss) before taxes and fixed charges (adjusted for interest capitalized during the period). “Fixed charges” include interest, whether expensed or capitalized, amortization of deferred financing fees and the portion of rental expense that is representative of the interest factor in these rentals. For the period from June 15, 2000 to September 30, 2000, earnings were insufficient to cover fixed charges by $29.9 million because of the inclusion of the inventory fair value step-up in cost of sales of $22.3 million and the amortization of the goodwill of $6.2 million from the acquisition of IPC Information Systems, Inc. by Global Crossing in June 2000. For the year ended September 30, 2001, earnings were insufficient to cover fixed charges by $12.4 million because of the inclusion of the inventory fair value step-up in cost of sales of $9.7 million and the amortization of goodwill of $21.1 million from the acquisition of IPC Information Systems, Inc. by Global Crossing in June 2000. For the period from October 1, 2001 to December 20, 2001, earnings were insufficient to cover fixed charges by $12.4 million because of the year end intercompany charge of $6.9 million, the

14

inclusion of $2.5 million of other bonus amounts and goodwill amortization of $4.7 million resulting from the ownership of IPC Information Systems by Global Crossing. For the period from November 15, 2001 (date of initial capitalization) to September 30, 2002, earnings were insufficient to cover fixed charges by $11.4 million because of the inclusion of the fair value step-up of inventory in cost of sales of $33.0 million resulting from the acquisition of IPC Information Systems in December 2001.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     You should read the following discussion of our financial condition and results of operations with our consolidated financial statements and related notes included elsewhere in this filing.

     Some of the matters discussed in this filing include forward-looking statements. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include words like “expects”, “anticipates”, “intends”, “plans”, “believes”, “estimates”, “thinks”, and similar expressions are forward-looking statements. These statements involve known and unknown risks, uncertainties and other risk factors, including but not limited to:

	•		risks associated with substantial indebtedness, leverage and debt service;
	•		performance of our business and future operating results;
	•		risks of competition in our existing and future markets;
	•		loss or retirement of any key executives;
	•		general business and economic conditions;
	•		market acceptance issues, including the failure of products or services to generate anticipated sales levels; and
	•		risks described “Risk Factors” beginning on page 7 of this document.

     Our actual results and performance may be materially different from any future results or performance expressed or implied by these forward-looking statements.

     Although we believe that these statements are based upon reasonable assumptions, we can give no assurance that our goals will be achieved. Given these uncertainties, prospective investors are cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements are made as of the date of this filing. We assume no obligation to update or revise them or provide reasons why actual results may differ.

Business Overview

     Our business is to provide mission-critical voice communications solutions to enterprises globally, primarily in the financial services industry. Since 1973, we designed, manufactured, installed and serviced specialized telephony systems, also referred to as “turrets”, which are utilized on trading floors across the world. We are a leader within the financial trading community based on the number of turret “positions” and related equipment installed worldwide. We built additional lines of business from that core offering, expanding our product and service portfolio to address other communications needs of the financial services industry. Additionally, we recently increased our efforts to address the needs of customers involved in the command and control operations of the following industries: public safety organizations, government and military agencies, PE&U companies, and transportation companies.

     We manage our business through two major operating segments called Financial Services and Command and Control. In October 2004 we formed the Command and Control segment in connection with a substantial increase in our efforts to address what we identified as growth opportunities in that market. We plan to expand the offerings and operations of our Command and Control segment both through internal investments in our product offerings and professional staff, as well as through acquisitions that we believe will supplement our portfolio of offerings and our distribution channels. In November 2004, we completed our first such acquisition in the Command and Control segment with the acquisition of Orbacom Systems, Inc.

     Revenue from product sales and installations is recognized upon completion of the installation or, for contracts that are completed in stages and include contract specified milestones, upon achieving such contract milestones, and delivery and customer acceptance of a fully functional system. Revenue from sales to distributors is recognized upon shipment. Revenue from MACs to turret systems is recognized upon completion, which generally occurs in the same month or the month following the order for services. Revenue from network services is generally billed in the beginning of the month and recognized in the same month.

     Large installation projects are not numerous; however, their occurrence causes fluctuations when comparing periods, as revenue is not recognized until completion of the installation or achievement of contract milestones. We believe the demand for new turret systems is primarily event driven, the result of physical facility moves of trading positions, the addition of new trading positions due to customer growth and the need to upgrade older technology. Large facility moves and mergers can also result in large installation projects, which cause uneven revenue streams period over period.

Operating Focus since December 2001

     In December 2001, Global Crossing and its affiliates sold IPC Information Systems to a group of investors led by GS Capital Partners 2000, L.P. Since that time, we operated as an independent company and focused our efforts on five key initiatives to improve our operating performance. These initiatives included:

•

Upgrade our portfolio of businesses and quality of financial results. We made changes to our portfolio of business in order to focus on businesses we believe have the most attractive operating margins and growth profiles, to add complementary products or distribution channels, and to increase the percentage of recurring services revenues relative to the more cyclical equipment sales revenues. In March 2002, in order to expand our geographic presence in the Asia Pacific region, we purchased the customer base and related assets outside of Japan of the turret business of Hitachi, Ltd. In April 2003, in order to supplement our equipment business with complementary offerings of specialized network services, we purchased Gains International (US) Inc, and Gains International (Europe) Limited. In August 2003, in order to expand

15

		our product offering to include a software-based VoIP hoot and intercom product, we invested in and gained control of Purple Voice, and subsequently completed the acquisition in September 2004. In January 2004, we purchased Gains International Asia Holdings to extend our network services presence in the Asia Pacific region. In July 2004, we divested the operations and assets of our I.T.S. segment in order to exit a construction-related cabling business we viewed as highly cyclical and moderately profitable. In November 2004, to expand the product offerings and distribution channels of our newly formed Command and Control segment, we acquired Orbacom Systems Inc. Since 2001 our recurring services revenues have increased from $85.7 million in 2002 to $148.7 million in 2004, representing 36% of total revenues in 2002, and 56% of total revenues in 2004. We believe our recurring services businesses are less subject to industry capital spending cycles than our equipment sales businesses.
•		Increase our geographic reach and penetration in selected countries. Since 2001 we opened direct offices in Japan, Germany, Italy, and France. We also acquired operations and offices in the Asia Pacific and EMEA regions through our acquisitions of Hitachi’s turret business and the three Gains International entities. Our penetration in the EMEA and Asia Pacific regions has increased as a result of these activities, as measured by number of turrets installed and circuits of network services.
•		Expand our portfolio of product and service offerings. Since 2001 we expanded our offerings through investment in internal research and development as well as through acquisitions of products, services and technologies. Through the acquisitions of the three Gains International entities, we acquired a base of customers, a global network, operations centers, personnel and expertise to enable us to offer specialized network services to the same client base served by our communications equipment business. Since that acquisition we increased the revenues and operating profits of the acquired entities by adding those services to the portfolio of offerings sold by our account representatives. We also added other related services, including offerings to audit and groom our customers’ networks, and continuity services designed to monitor both equipment and network resources and proactively address potential disruptions to service. Leveraging the potential of VoIP technology, we internally developed technologies that enhance the capabilities of our equipment offerings with new solutions for business continuity, compliance, user productivity, converged voice, video and data, and system administration on an enterprise level. Additionally, through the acquisition of Purple Voice, we added to our portfolio a set of software-based, VoIP offerings that extend core trading room functionality to off-floor individuals and offices, including retail brokerage. With the acquisition of Orbacom, and through internal development efforts, we added proprietary radio integration, computer aided dispatch, and console offerings, as well as integrated third-party offerings for records management and other functions required in command and control applications.
•		Establish technical leadership and market penetration of our VoIP platform. In 2001, we introduced the first VoIP trading floor communications systems to the market. We succeeded in building market adoption of our technologies and have added to the platforms capabilities through continuous research and development efforts. As of September 30, 2004, we had shipped approximately 20,000 positions of our VoIP platform, and have gradually increased the percentage of positions shipped that are VoIP to 70% of shipments in the fourth quarter of 2004. In 2005 we expect more than 75% of our positions shipped will be VoIP solutions.
•		Extend our offerings into new markets with similar demand characteristics. We believe that the market for command and control communications solutions shares many common demand characteristics with those of the financial services industry. Our experience has shown us that they share similar communications needs, including intercom, broadcast intercom, private lines, integration of various communications sources and media in common consoles. We also observed that the mission-critical nature of communications in each setting drive other business similarities, resulting in what we concluded are favorable industry dynamics that are well suited to our product offerings, expertise, and corporate resources.

Current market environment

     The financial services industry experienced a market downturn in recent years, resulting in substantial reductions in capital expenditures for trading floor communications equipment purchases. Our shipments of turret positions reached what we believe are cyclical lows with shipments of 13,882 positions in 2002, 10,275 in 2003, and 12,641 in 2004 compared to 17,007 positions shipped in 2001. Based on our experience and historical data, we believe that the normalized level of turret shipments, adjusted to exclude the effects of the cycle, would have been approximately 15,000 positions per year during an average replacement cycle of our installed base of turrets. We believe that as a result of the recent lag in purchasing our installed base of equipment has aged beyond cyclical norms and that this lag is one of several factors that we expect will impact the volume of equipment purchased in the next several years. We believe our 2004 bookings and the year-over-year increase in our backlog of equipment orders is consistent with our expectation. Our bookings for the first two quarters of 2004 was $40 million, compared to $110 million for the second two quarters of 2004. Our backlog at September 30, 2004 was $70.8 million, a 91% increase over our backlog of $37.0 million at September 30, 2003. Included in the backlog is one job for approximately $12 million which is being re-evaluated by the customer for changes to configuration and timing. This job may decrease in size and may not complete until fiscal year 2006.

16

Recent Events

     On November 30, 2004, IPC Information Systems Holdings, Inc, a subsidiary of ours, acquired Orbacom Systems, Inc. for $18 million in cash, including up to $7 million in earnout commitments. Orbacom provides specialized radio consoles and computer aided dispatch software for use in command and control communications and serves the mission-critical communications needs of government agencies and corporations responsible for public safety dispatch, management of natural gas and energy infrastructures, air, freight and rail transportation, government command applications including homeland security, and critical industrial communications. We will consolidate our existing command and control operations with those of Orbacom.

     In conjunction with the closing of this acquisition, we also amended our senior secured credit facility. Under this amendment, we obtained consent for the Orbacom acquisition and reset our ability to make acquisitions for up to $25 million, without taking into account the Orbacom acquisition.

Summary of Critical Accounting Policies

     The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we periodically evaluate our estimates. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

     We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

     Revenue Recognition

     Revenue from product sales and installations is recognized upon completion of the installation or, for contracts that are completed in stages and include contract specified milestones, upon achieving such contract milestones, and delivery and customer acceptance of a fully functional system. Revenue from sales to distributors is recognized upon shipment. Customers are generally progress-billed prior to the completion of the installations. The revenue related to these advance payments is deferred until the system installations are completed or specified milestones are attained. Costs incurred on uncompleted contracts and stages are accumulated and recorded as inventory awaiting installation. The cost of providing a one year warranty are estimated and accrued at the time the equipment is sold. In addition, contracts for annual recurring services are generally billed in advance, and are recorded as revenue ratably (on a monthly basis) over the contractual periods. Revenue from MACs to turret systems is recognized upon completion, which generally occurs in the same month or the month following the order for services. Revenue from network services is generally billed in the beginning of the month and recognized in the same month.

     Revenue from software licenses is recognized in accordance with SOP No. 97-2, “Software Revenue Recognition,” as amended by SOP 98-9, “Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain Transactions.” Software revenue is recognized when a customer enters into a non-cancelable contract or license agreement, the software product has been delivered, there are no uncertainties surrounding product acceptance, there are no significant future performance obligations, the contract or license fees are fixed or determinable and collection is considered probable. Amounts received in advance of meeting these criteria are deferred. Revenue from support and maintenance contracts is recognized ratably over the contract period.

     Allowance for Doubtful Accounts

     We evaluate the collectibility of our accounts receivable based on a combination of factors. Where we are aware of circumstances that may impair a specific customer’s ability to meet its financial obligations to us, we record a specific allowance against amounts due to us and thereby reduce the net receivable to the amount we reasonably believe is likely to be collected. For all other customers, we recognize allowances for doubtful accounts based on the length of time the receivables are outstanding, industry and geographic concentrations, the current business environment and our historical experience. If the financial condition of our customers deteriorates or if economic conditions worsen, additional allowances may be required.

17

Inventories

     Inventories are stated at the lower of FIFO (first in, first out) cost or market but not in excess of net realizable value. Inventory costs include all direct manufacturing costs and applied overhead. Allowances are established based on management’s estimate of inventory on hand that is potentially obsolete or for which its market value is below cost.

Impairment of Long-Lived Assets

     We review long-lived assets, including property, plant and equipment and definite lived intangible assets, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of the assets and its eventual disposition is less than its carrying amount. Impairment, if any, is assessed using discounted cash flows. No impairments have occurred to date.

Goodwill and Other Intangible Assets

     Goodwill represents the excess of the cost over the net of the fair value of the identifiable tangible and intangible assets acquired and the fair value of liabilities assumed in acquisitions. For the period from October 1, 2001 to December 20, 2001, the costs allocated to goodwill were amortized on a straight-line basis over the periods benefited, principally 10 years, and resulted in amortization of $4.7 million.

     We adopted SFAS No. 142 effective upon the acquisition of IPC Information Systems and, in accordance with SFAS No. 142, there is no amortization of goodwill and intangible assets that have indefinite useful lives for the period from November 15, 2001 (date of initial capitalization) to September 30, 2002 and 2003 and 2004. However, such assets are tested for impairment annually using the two-step process specifically provided in SFAS No. 142. Other intangible assets are carried at cost. Technology assets are amortized over estimated useful lives of between 3 to 7 years, customer relationships are amortized over estimated useful lives of 8 to 20 years, and proprietary software is amortized over its estimated useful life of 7 years. Trade name has been deemed to have an indefinite life and will not be subject to amortization, but instead will be subject to annual impairment tests in accordance with the provisions of SFAS No. 142. In determining that the trade name has an indefinite life, we considered the following factors: the ongoing active use of our trade name, which is directly associated with our market leading position in the turret business, the lack of any legal, regulatory or contractual provisions that may limit the useful life of the trade name, the lack of any substantial costs to maintain the asset, the positive impact on our trade name generated by our other ongoing business activities (including marketing and development of new technology and new products) and our commitment to products branded with our trade name over our 30 year history.

     We completed the required annual fair value test as of July 1, 2004 (the first day of the fourth quarter of 2004), and concluded that there was no impairment to our recorded goodwill or trade name. We believe the recorded values of goodwill of $82.6 million and trade name of $16.3 million at September 30, 2004 are fully recoverable. In June 2004, we wrote off $3.1 million of goodwill and other intangible assets related to the sale of our I.T.S. segment which was recorded as a discontinued operation in the consolidated financial statements. The write-off was the result of the disposition of the segment and was not a result of any impairment.

Stock-Based Compensation

     As permitted by SFAS 123, we elected to follow APB Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations in accounting for our employee option plans. Under APB 25, no compensation expense is recognized at the time of an option grant if the exercise price of the employee stock option is fixed and equals or exceeds the fair market value of the underlying common stock on the date of the grant and the number of shares to be issued pursuant to the exercise of such options are fixed on the date of the grant.

     Due to the fact that our common stock is not publicly traded, determining the fair value of our common stock involves significant estimates and judgments. In considering the fair value of the underlying stock when we grant options, we consider several factors like third party valuations, the fair value of the common stock of other companies comparable to ours, and fair values established by market transactions.

Income Taxes

     In accordance with SFAS No. 109, “Accounting for Income Taxes”, or SFAS 109, we recognize 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. The provision for income taxes is the tax payable for the period and the change during the period in deferred tax assets and liabilities. Although realization is not assured, management believes it is more likely than not that the recorded deferred tax assets will be realized. Additionally, deferred tax liabilities are regularly reviewed to confirm that the amounts recorded are appropriately stated. All such evaluations require significant management judgments.

18

     In determining whether it is more likely than not that we will realize the benefits of the net deferred tax assets from US operations, we consider all available evidence, both positive and negative, including that:

	•		US result of operations for subsequent fiscal years are expected to generate sufficient taxable income to fully utilize tax loss carryforwards; and
	•		our conclusion that the net US deferred tax assets were generated by an event (our purchase of the Company), rather than a continuing condition.

     For periods prior to our acquisition of IPC Information Systems, our predecessor had filed a consolidated federal tax return and separate and combined state tax returns with its parent. For purposes of the accompanying combined financial statements for the period October 1, 2001 to December 20, 2001, income taxes have been prepared in accordance with SFAS 109 and SEC Staff Accounting Bulletin Topic 1B, “Allocation of Expenses and Related Disclosure in Financial Statements of Subsidiaries”, utilizing the separate return method. Resulting payables for taxes have been recorded as adjustments to the intercompany accounts. We are now required to file separate tax returns.

Business Combinations

     Estimates and judgments related to the fair value of assets acquired and liabilities assumed are required in connection with our acquisitions. Some of the liabilities are subjective in nature. These liabilities are reflected in purchase accounting based upon the most recent information available, and principally related to federal, foreign, state and local taxes based on income and other measures as well as estimates of costs to restructure the operations of acquired companies. The ultimate settlement of such liabilities may be for amounts that are different from the amounts presently recorded.

Recent Accounting Pronouncements

     On December 16, 2004, the Financial Accounting Standards Board (FASB) issued Statement No. 123 (revised 2004), Share-Based payment, which is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation. Statement 123(R) supercedes APB Opinion No. 25, Accounting for Stock Issued to Employees. Generally, the approach to accounting for share-based payments in Statement 123(R) is similar to the approach described in Statement 123. However, Statement 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized as compensation expense in the financial statements based on their fair values (i.e., pro forma disclosure is no longer an alternative to financial statement recognition). Statement 123(R) is effective for us in the quarter that begins July 1, 2005. The adoption of Statement 123(R) could materially impact our consolidated financial statements.

Comparison of the Year Ended September 30, 2004 to the Year Ended September 30, 2003 and the Year Ended September 30, 2003 to the Year Ended September 30, 2002.

     The following table sets forth, as a percentage of consolidated revenue, our consolidated statements of operations for the periods indicated. The following table also presents, as a percentage of segment revenue, our statements of operations for our two operating segments for the periods indicated. The amounts presented for 2002 represent the sum of the amounts separately reported for the pre-IPC Information Systems acquisition period from October 1, 2001 to December 20, 2001 and the post-IPC Information Systems acquisition period from December 21, 2001 to September 30, 2002. All expenses below the gross profit line have been recorded to our Financial Services segment through September 30, 2004. See footnote 16 of the notes to the consolidated financial statements for a discussion of our business segments and the change we made to our segment reporting.

19

Comparison of 2004 to 2003

     We omitted a discussion of revenues and cost of goods sold on a consolidated basis because the discussion would be substantially the same as and duplicative of the discussion of these items for the Financial Services segment. All expenses below the gross profit line have been recorded to our Financial Services segment. We believe our customers are beginning to plan and implement changes, expansions, and re-configurations to their current trading floors. We expect this activity to continue during 2005; however, there can be no certainty as to the degree or duration that this will continue.

Revenue.

     The following table sets forth our revenue as reported for our two operating segments.

20

     For 2004, no single customer accounted for 10% or more of our consolidated revenues. For 2003, one customer accounted for approximately 13% of our consolidated revenues. There were no other customers in 2003 that accounted for more than 10% of consolidated revenues.

Financial Services

     Product sales and installations. Year over year, our product sales and installation revenue increased by $2.2 million, primarily related to an increase in small projects. We believe that the increase in small projects may indicate an overall expansion of our customer trading operations which appear initially in small projects due to their short installation periods. The increase in product sales and installation revenue of $2.2 million in 2004 was primarily due to a higher volume of small installation projects offset by a lower volume of large and medium installation projects in 2004 compared to 2003. The number of installations and related value changed is shown in the table below. We installed the same number of large projects; however, the difference in the total revenues for these large projects is primarily due to one large installation project completed in 2003 and we did not have a comparable project of that size completed in 2004. Medium size installation project shortfall occurred primarily in the last half of 2004. Large and medium projects are primarily configuration based on the number of positions and telephone lines per position and sales can occur resulting from real estate planning, merger and acquisition activity in our customer base, changes in our customers’ headcount or their technology needs. We believe the decrease in large and medium size projects in 2004 was a continuation of the economic softness in 2003 and effect on 2004 planning. Conversely, we saw a significant increase in small installation projects in the second half of our 2004 which we believe coincided with the improvement in the global economic outlook. We believe that this increase was enabled by the short lead times necessary to negotiate and execute the size of these installation projects as well as expansion in the area of trading. In contrast, the increase in smaller installation projects in 2004 compared to 2003 was primarily in our EMEA and Asia Pacific regions. Typically, these regions expand and upgrade faster than their North American counterparts.

* Due to the variance in deal size of small installations this number is not a useful statistic.

     Service. The increase in service revenue of $49.7 million in 2004 from 2003 was primarily due to the increase of $35.8 million from reporting the full year in 2004 of network services in North America and Europe compared to reporting only five months in 2003 and the inclusion of nine months of network services in Asia in 2004 due to the acquisition of Gains Asia in January 2004. In addition, we also experienced growth in the customer base and recurring circuit business. Also, there was a higher volume of contract maintenance revenue totaling $8.6 million and non-contract MAC revenue totaling $5.3 million in 2004. The increase in contract maintenance revenue in 2004 was primarily due to the expiration of warranties for product sales and installation contracts performed in 2002 and for a portion of 2003. The increase in non-contract MAC revenue was primarily due to increased demand for trading floor re-configurations and additional trading positions globally.

Command and Control

     Product sales and installations. The decrease in product sales and installation revenue of $0.7 million in 2004 from 2003 was primarily due to a lower volume of small installation projects in 2004 compared to 2003. The decrease is due to higher product sales and demand for our product in the electric utility market in 2003 when compared to 2004. We believe that the decrease is associated with the need for radio technology in our product offering as well as an absence of dedicated sales and marketing professionals. The revenue recognized for product sales and installation is primarily associated with electric utility operations and does not relate to opportunities in the transportation, government and public safety industries. To date, command and control installations have been small in dollar value.

* Due to the variance in deal size of small installations this number is not a useful statistic.

     Service. The increase in service revenue of $0.1 million in 2004 from 2003 was primarily due to a higher volume of contract maintenance revenue totaling $0.1 million in 2004. The increase in contract maintenance revenue in 2004 was primarily due to the expiration of warranties for installation contracts.

21

Cost of Goods Sold.

     The following table sets forth our cost of goods sold as reported for our two operating segments. Cost of goods sold for our Financial Services segment includes the costs of equipment sold, the costs of parts used for service of the equipment, labor to install the equipment sold, labor to provide service, warehouse and project management costs, the costs to lease local and long distance circuits, the cost of our network provisioning and operations organizations and depreciation of our network equipment as well as equipment in our manufacturing and assembly facility. Cost of goods sold for our Command and Control segment includes the costs of equipment sold, the costs of parts used for service of the equipment, labor to install the equipment sold and labor to provide service,

Financial Services

     Product sales and installations. The decrease in product sales and installations cost of goods sold of 1% as a percentage of product sales and installation revenues in 2004 from 2003 was primarily due to lower cost of sales realized on small sales and installation projects offset by an increase in cost of sales for a higher volume of third party products sold. Third party manufactured products have a higher cost of goods sold than our manufactured products and large and medium sales and installation projects completed in 2004 as compared to 2003. Small product sale and installation projects generally result in lower costs of sales primarily due to lower discounting and a less competitive buying process than on large and medium product sales and installation projects.

     Service. The increase in service cost of goods sold of 2% as a percentage of service revenue in 2004 from 2003 represents an increase in headcount and discretionary spending to support the full network services integration, the build-out and expansion of services and the creation of three global solutions operating centers in New York, London and Sydney. These increases to support the growth of the business were offset by the decrease in the cost of bandwidth expenses as a percentage of revenue from better management and utilization and an increase in contract maintenance service revenue.

Command and Control

     Product sales and installations. The decrease in product sales and installations cost of goods sold of 10% as a percentage of product sales and installation revenues in 2004 from 2003 was primarily due to a higher volume of our manufactured products sold and higher margins achieved in 2004 when compared to 2003. Products that we manufacture generally have a lower cost of goods sold than products manufactured by third party manufacturers.

     Service. Service cost of goods sold remained consistent in 2004 to 2003. We incurred no network services cost of goods sold in the Command and Control segment for 2004 and 2003.

Research and Development Expense.

     Research and development efforts for Financial Services are focused on the next generation of Financial Services turret products, applications software, and enhancements to our current product lines. Command and Control research and developments efforts are focused on the next generation of radio technology, radio telephony integration, and computer aided dispatch software.

22

     Research and development expenses increased by $3.3 million in 2004 from 2003 primarily due to additional resources added to our product development group and development and integration of the Purple Voice product line.

Selling, General and Administrative Expense.

     Selling, general and administrative expenses increased by $13.8 million in 2004 from 2003 primarily due to the inclusion of network services for the full year compared to 5 months in 2003 from the acquisition of Gains US and Gains UK in April 2003, additional headcount in strategic areas and incentive compensation.

Depreciation and Amortization.

     The increase in depreciation and amortization of $2.3 million in 2004 from 2003 was primarily due to increased capital expenditures as well as the addition of depreciable fixed assets and intangible assets due to the acquisition of Gains US, Gains UK and Gains Asia.

Interest Expense, net.

     Interest expense, net decreased by $2.7 million in 2004 as compared to 2003 due to the reduction of principal on our outstanding senior secured credit facilities and a reduction in the interest rate from 7.5% to 5.1% when our senior secured credit facilities were amended and restated in September 2003.

Other Income (Expense), net

     Other income increased by $1.9 million in 2004 from 2003 primarily due to the collection of an early termination fee of $1.0 million for the cancellation of a sublease agreement by Global Crossing, a $0.3 million increase associated with the amortization of a liability for lease guarantees by us for Global Crossing and other miscellaneous income of $0.6 million for grants, refunds, and foreign currency fluctuations.

Provision for Income Taxes.

     Our effective tax rate on income from continuing operations was 47.5% for 2004 and 67.2% for 2003. The comparability of these periods is significantly impacted by our foreign, federal and state taxes, the non-deductibility of foreign losses for federal tax purposes and the non-deductibility of certain expenses for 2004. For 2003, taxable income at several of our foreign subsidiaries, which, combined with the lower amount of pre-tax income for the 2003 period as compared to the 2004 period, generates a more significant impact on our effective tax rate.

     We recognized deferred tax assets of $6.8 million at September 30, 2004 and $10.4 million at September 30, 2003 related to our US federal and state net operating loss carryforwards. In determining whether it is more likely than not that we will realize the benefits of the net deferred tax assets from US operations, we considered all available evidence, both positive and negative. The principal factors that led us to recognize these benefits were: (1) US results of operations for the period ended September 30, 2002, reported a loss before income taxes of $22.1 million, after reflecting charges of $34.3 million resulting from the fair-value inventory adjustments under the purchase price allocation (which, as a result of the Internal Revenue Code Section 338(h)(10) tax election, jointly made by us and Global Crossing, also generates deductions for income tax purposes); (2) US results of operations for 2005 and subsequent years are expected to generate sufficient taxable income to fully utilize these tax loss carryforwards; and (3) our conclusion that the net US deferred tax assets

23

were generated by an event (our purchase of IPC Information Systems in December 2001), rather than a continuing condition. As of September 30, 2004, no circumstances have arisen that would require us to change such conclusion.

Net Income (Loss)

     We had net income of $7.0 million in 2004 when compared to $4.0 million in 2003. The $2.9 million increase was primarily due to a $23.5 million increase in our gross profit, a $1.9 million increase in other income, and a reduction in interest expense of $2.7 million offset by increases in research and development expenses of $3.3 million, an increase in selling, general and administrative expenses of $13.8 million, an increase in depreciation and amortization of $2.3 million and an increase in income taxes of $1.9 million. Also, the sale of our I.T.S. segment contributed a loss of $3.5 million in 2004 compared to 2003 and was recorded as discontinued operations in our financial statements.

     Comparison of 2003 to 2002

     We omitted a detailed discussion of revenues and cost of goods sold on a consolidated basis because the discussion would be substantially the same as and duplicative of the discussion of these items for the financial services segment. All expenses below the gross profit line have been recorded to our Financial Services segment.

Revenue

     The following table sets forth our revenue as reported for our two operating segments.

Financial Services

     Product sales and installations. Year over year, our installation revenue decreased by $43.6 million which we believe was a direct result of the economic softness in the financial services industry. The decrease in product sales and installations revenue of $43.6 million in 2003 from 2002 was primarily due to a higher volume of small, medium, and large installation projects completed in 2002 compared to 2003. Recovery services in the first quarter of 2002 occurred due to the events of September 11, 2001 from the destruction of several trading floors located in the World Trade Center and the surrounding areas. In addition, we had three large projects occurring from real estate moves totaling $32.3 million. We did not have that concentration of large moves occur in 2003.

* Due to the variance in deal size of small installations this number is not a useful statistic.

     The change in our product sales and installations revenue in 2003 from 2002 was not significantly affected by a change in the price of our products; instead we believe it was affected by the number and size of turret systems purchased by our customers.

     Service. The increase in service revenue of $13.3 million in 2003 from 2002 was due to an increase in network service revenue of $10.4 million in 2003 from 2002. This was primarily due to the acquisition of Gains US and Gains UK in April 2003. Also, there was a higher volume of contract maintenance revenue totaling $7.9 million offset by a decrease in non-contract MAC revenue

24

totaling $5.0 million in 2003 when compared to 2002. The increase in contract maintenance revenue in 2003 was primarily due to the expiration of warranties for installation contracts. The decrease in non-contract MAC revenue was primarily due to lower requests for trading floor re-configurations and trading positions that we believe are due to economic conditions.

Command and Control

     Product sales and installations. The increase in product sales and installation revenue of $1.9 million in 2003 from 2002 was primarily due to a higher volume of small (less than $1.0 million) installation projects completed in 2003 compared to 2002. The number of installations and related value changed as shown in the table below.

* Due to the variance in deal size of small installations this number is not a useful statistic.

     Service.The decrease in service revenue of $0.1 million in 2003 from 2002 was primarily due to a lower volume of contract maintenance revenue totaling $0.1 million in 2003.

Cost of Goods Sold.

     The following table sets forth our cost of goods sold as reported for our two operating segments.

     Cost of goods sold for 2002 includes a charge resulting from the sale of inventory reflecting a step-up in carrying value of $33.0 million (relating to purchase accounting fair value adjustments from the acquisition of IPC Information Systems). This purchase accounting inventory fair value step-up is a GAAP adjustment that is recorded when a company is acquired as we were in December 2001. Since the adjustment has been fully recognized in income as of September 30, 2002, it will not impact any subsequent year.

Financial Services

     Product sales and installations. The decrease in product sales and installations cost of goods sold of 21% as a percentage of product sales and installation revenues in 2003 from 2002 was primarily due to the inclusion of $32.3 million of inventory fair value adjustment in 2002, while there was no inventory fair value adjustment in 2003. This overall decrease in product sales and installations cost of goods sold was partially offset by a higher percentage of third party products sold compared to products manufactured by us sold in 2003. Third party manufactured products have a higher cost of goods sold than products manufactured by us.

     Service. The decrease in service cost of goods sold of 4% as a percentage of service revenue in 2003 from 2002 was primarily due to an increase in contract maintenance services in 2003, which have a lower cost of goods sold than non-contract MAC services, as well as the inclusion of $0.7 million of inventory fair value step-up in 2002. There was no inventory fair value adjustment in 2003. This was offset by us incurring additional costs of $5.7 million due to the inclusion of network services, which was a service we began offering in April 2003 as a result of our acquisition of Gains US and Gains UK.

25

Command and Control

     Product sales and installations. The increase in product sales and installations cost of goods sold of 18% as a percentage of product sales and installation revenues in 2003 from 2002 was primarily due to a higher volume of third party manufactured products sold in 2003 when compared to 2002. Third party manufactured products have a higher cost of goods sold than products manufactured by us.

     Service. The increase in service cost of goods sold of 3% as a percentage of service revenue in 2003 from 2002 was primarily due to an increase in labor costs associated with one maintenance contract. We incurred no network services cost of goods sold in the Command and Control segment for 2003 and 2002.

Research and Development Expense.

     Research and development expenses decreased by $3.4 million in 2003 from 2002 primarily due to planned reductions in headcount that occurred in 2002 as well as a reduction in discretionary spending in 2003.

Selling, General and Administrative Expense.