Performance Technologies Reports Strongest First Quarter Results Since IPO; 1Q Earnings Per Share Increases 17%.

ROCHESTER, N.Y.--(BUSINESS WIRE)--April 26, 1999--

Performance Technologies, Incorporated (Nasdaq NM:PTIX) today announced financial results for the first quarter 1999.

Diluted earnings per share for the first quarter 1999 increased 17%, to $.21 per share, from $.18 per share in the first quarter 1998. Net income for the first quarter 1999 grew to $1.6 million, from $1.4 million in the first quarter 1998. Revenue was $8.1 million for the first quarter 1999, compared to $7.4 million for the same period in 1998.

"The Company's financial performance in the first quarter continued to be strong," said Donald Turrell, President and Chief Executive Officer. "We are pleased that we met internal revenue and profitability targets for the first three months of 1999 and are enthusiastic about the prospects for the rest of the year based on identified opportunities and a strong backlog."

Since the last Performance Technologies' earnings release, a number of significant events have occurred. Most recently, the Company received an $8.3 million order to supply Fault Tolerant FDDI Local Area Network products to a government funded program. The order includes a firm commitment to purchase $4.6 million of products scheduled to be delivered within the next twelve months, as well as a contingent order to purchase an additional $3.7 million of products to be confirmed by the end of June 1999.

The Nebula 8000 Fault Tolerant Ethernet Switch has entered the full beta testing stage at multiple sites in Rochester, New York and Toronto, Canada. A live demonstration of this unique fault tolerant networking product will be presented at the Networld+Interop Networking Conference in Las Vegas on May 11-13. The banking and brokerage financial communities and those commercial, industrial and government operations that must have their networks available on a 7 days-a-week, 24 hours-a-day basis are the targeted markets for this new product.

Late in the first quarter, two of the Company's PCIbus Wide Area Network communications products were selected by Cisco Systems to be integrated into their new SC2200 Network Controllers which are expected to be sold to the telecommunications industry.

In March, the Company became an active partner in Motorola Computer Group's (MCG) Embedded Connections Partner Program, a development effort designed to create industry leading telecom and datacom product solutions through strategic partnering. The partnership capitalizes on PTI's leadership position as a provider of Wide Area Networking hardware and software solutions, and MCG's extensive experience as a supplier of multi-platform embedded systems and single board computer products. Also in March, the Company added ikon GmbH's Primary Rate EuroISDN software support to its Wide Area Network communications products which will be sold by ikon in Europe.

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain forward-looking statements. This press release contains forward-looking statements which reflect the Company's current views with respect to future events and financial performance, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934 and is subject to the safe harbor provisions of those Sections.

These forward-looking statements are subject to certain risks and uncertainties and the Company's actual results could differ materially from those discussed in the forward-looking statements. These statements should be read in conjunction with the audited Consolidated Financial Statements, the Notes thereto, and Management's Discussion and Analysis of Financial Condition and Results of Operations of the Company as of December 31, 1998, as reported in its Annual Report on Form 10-K as filed with the Securities and Exchange Commission.

Performance Technologies, Inc., headquartered in Rochester, New York, designs, manufactures and markets high performance, high availability and high reliability network switching and data communications solutions. The Company's products are targeted towards mission critical networking and communications applications typically used by the telecommunications, financial services, information processing and defense industries. For current financial and Company information, visit our home page at http://www.pt.com. -0-

        PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED BALANCE SHEETS

                                ASSETS

                                 March 31,             December 31,
                                   1999                     1998
                               (unaudited)
Current assets:
 Cash and cash equivalents    $ 11,617,000             $ 25,627,000
 Marketable securities          15,008,000
 Accounts receivable, net        5,844,000                4,799,000
 Inventories, net                5,322,000                4,425,000
 Prepaid expenses and other        462,000                  679,000
 Deferred taxes                    549,000                  549,000
  Total current assets          38,802,000               36,079,000
Equipment and improvements,
 net                               838,000                  934,000
Software development, net          816,000                  822,000
  Total assets                $ 40,456,000             $ 37,835,000

                 LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
 Current portion of
  long term debt              $     12,000             $     12,000
 Accounts payable                1,657,000                1,932,000
 Income taxes payable            1,233,000                  507,000
 Accrued expenses                2,377,000                1,838,000
  Total current liabilities      5,279,000                4,289,000
Long term debt, less
 current portion                     3,000                    6,000
Deferred taxes                     288,000                  288,000
  Total liabilities              5,570,000                4,583,000
Stockholders' equity
 Preferred stock
 Common stock                       75,000                   75,000
 Additional paid-in capital     13,284,000               13,250,000
 Retained earnings              22,444,000               20,844,000
 Treasury stock                   (917,000)                (917,000)
  Total stockholders' equity    34,886,000               33,252,000
  Total liabilities and
   stockholders' equity       $ 40,456,000             $ 37,835,000


        PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF INCOME
                              (Unaudited)

                                        Three Months Ended
                                  March 31,            March 31,
                                    1999                 1998


Sales                         $   8,113,000         $   7,411,000
Cost of goods sold                3,135,000             2,863,000
Gross profit                      4,978,000             4,548,000
Operating expenses:
 Selling and marketing            1,060,000               893,000
 Research and development         1,225,000             1,063,000

 General and administrative         557,000               686,000
  Total operating expenses        2,842,000             2,642,000
Income from operations            2,136,000             1,906,000
Other income, net                   325,000               311,000
Income before income taxes        2,461,000             2,217,000
Provision for income taxes          861,000               798,000
 Net income                    $  1,600,000         $   1,419,000
Basic earnings per share       $        .22         $         .20
Weighted average common shares    7,243,000             7,273,000
Diluted earnings per share     $        .21         $         .18
Weighted average common and
 common equivalent shares         7,486,000             7,674,000