PROGRAMMER'S PARADISE INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA The unaudited pro forma condensed consolidated statements of income data is presented as if the Software Developers Company business was acquired on January 1, 1995 and 1996, respectively. The unaudited pro forma condensed consolidated financial data should be read in conjunction with the Company's consolidated financial statements and the notes thereto. The pro forma information is not necessarily indicative of the results that would have been reported had such events actually occurred on the dates specified, nor is it indicative of the Company's future results. Programmer's Paradise, Inc. Unaudited Pro Forma Condensed Statement of Income Year ended December 31, 1995 Acquisition Actual Acquisition(1) Adjustment Pro Forma Net sales $93,286 $49,556 $142,842 Cost of sales 78,718 40,076 118,794 Gross profit 14,568 9,480 24,048 Selling, general and administrative expenses 12,342 9,006 (5,096) (2) 16,252 Income from operations 2,226 474 7,796 Interest and other expenses (income), net (250) 185 (2) (3) (67) Income before income taxes and minority interest 2,476 289 7,863 Income tax (benefit) provision (1,727) 110 1,935 (4) 318 Income from continuing operations $ 4,203 $ 179 $ 7,545 Income from continuing operations per common share $ 1.03 $ 1.84 Average shares outstanding 4,102 4,102 (1) Includes the historical results of operations of Software Developer's Company business related to The Programmer's Supershop catalog, inbound and outbound telemarketing, reseller operations, web site, and SDEV Germany, for the period from January 1, 1995 to December 31, 1995. (2) Reflects the anticipated reduction in operating expenses that would have resulted had the acquisition taken place on January 1, 1995, offset by the pro forma amortization of goodwill arising from the acquisition of the net assets of SDC at that date ($0.6 million). The savings realized in operating expenses is primarily the result of a reduced work force of approximately 60 employees ($4.2 million), as well as the consolidation of operating facilities to New Jersey ($1.5 million). (3) Reflects the loss of interest income on $11,000,000 acquisition payment at 4% for five months ($183,000), offset by the elimination of interest expense recorded on the books of SDC ($185,000). (4) Reflects additional tax provision, at an effective tax rate of 38%, on earnings realized from the acquisition adjustments. Programmer's Paradise, Inc. Unaudited Pro Forma Condensed Statement of Income Six Months ended June 30, 1996 Acquisition Actual Acquisition(1) Adjustment Pro Forma Net sales $51,142 $24,355 $75,497 Cost of sales 42,720 20,059 62,779 Gross profit 8,422 4,296 12,718 Selling, general and administrative expenses 7,790 6,051 (4,074) (2) 9,767 Income from operations 632 (1,755) 2,951 Interest and other expenses (income), net (287) 71 149 (3) (67) Income before income taxes and minority interest 919 (1,826) 3,018 Income tax (benefit) provision 383 (694) 1,492 (4) 1,181 Income from continuing operations before minority operations 536 (1,132) 1,837 Minority interest (233) (233) Income from continuing operations $ 769 $(1,132) $ 2,070 Income from continuing operations per common share $ .15 $ .40 Average shares outstanding 5,173 5,173 (1) Includes the historical results of operations of Software Developer's Company business related to The Programmer's Supershop catalog, inbound and outbound telemarketing, reseller operations, web site, and SDEV Germany, for the period from January 1, 1996 to June 30, 1996. (2) Reflects the anticipated reduction in operating expenses that would have resulted had the acquisition taken place on January 1, 1996, offset by the pro forma amortization of goodwill arising from the acquisition of the net assets of SDC at that date ($0.3 million). The savings realized in operating expenses is primarily the result of a reduced work force of approximately 60 employees ($2.2 million), the consolidation of operating facilities to New Jersey ($.9 million), and the elimination of expenses recorded by SDC related to the sale and closing of their business ($1.3 million). (3) Reflects the loss of interest income on $11,000,000 acquisition payment at 4% for six months ($220,000), offset by the elimination of interest expense recorded on the books of SDC ($71,000). (4) Reflects additional tax provision, at an effective tax rate of 38%, on earnings realized from the acquisition adjustments.