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Perle Systems Reports Significant Sales and Earnings Growth.

TORONTO--(BUSINESS WIRE)--Sept. 23, 1998--

- First Quarter Sales Increase 28% -

Perle Systems Limited (NASDAQ:PERLF)(TSE:PL) today reported sales of CN$11,387,736 for the first quarter ended August 31, 1998 and net profit of CN$457,859. This compares to sales of CN$8,913,544 and net profit of CN$39,053 in the first quarter of fiscal 1998. Earnings per share were CN$0.06 for the quarter, compared to CN$0.01 per share for the comparable quarter last year.

Quarterly sales increased 28% over those in the comparable quarter of fiscal 1998. This increase is primarily attributed to the Company's new Perle 594e Thin Client network controller product line.

Gross margin was 73% for the first quarter of fiscal 1999, as compared to 67% in the comparable quarter of fiscal 1998.

President and Chief Executive officer Joe Perle remarked, "Following a record year for earnings in fiscal 1998 of CN$0.31 per share, I am extremely pleased that we have achieved this record first quarter. We set a target this year of 20% growth in sales and earnings on an annual basis. These outstanding first quarter results put us clearly ahead of this target. Beyond this internal growth expectation, we are progressing with our acquisition plans and are hopeful of completing a transaction during this fiscal year. With our addressable market now over CN$2 billion dollars, I am optimistic about the future."

Perle Systems Limited, founded in 1976, sells products to the remote access segment of the computer networking market. Users in this segment require access from a remote site (e.g. a branch or home office, or hotel, etc.) to a more powerful host/server computer or local area network. Sophisticated network communications software and hardware are required to permit and efficiently manage the transmission of data. Perle develops this software and integrates it into its hardware products. Perle develops, designs, manufactures and sells remote network controllers, workstation controllers, and LAN Remote Access Servers that are used to interconnect its customers' computing resources.

For more information on Perle and its products, access the Company's web site at

The Company's quarterly results vary depending on many factors including, but not limited to, fluctuations in sales levels. These quarterly results are not necessarily indicative of those in the future. Forward-looking statements in this release, including targeted sales and profits and acquisition plans, are made pursuant to the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties, including, without limitation, continued acceptance of the Company's products, increased levels of competition for the Company, new products and technological changes, the Company's dependence upon third party suppliers intellectual property rights and other risks detailed from time to time in the Company's periodic reports filed with the United States Securities and Exchange Commission. -0-

(Canadian dollars)
 As at August 31, 1998 May 31, 1998
ASSETS (Unaudited) (Audited)
 Cash and cash equivalents $6,354,974 $6,776,075
 Accounts receivable 9,421,165 9,453,271
 Inventories 2,295,584 2,022,257
 Prepaid expenses 1,523,479 1,303,276
 Income taxes recoverable 772,477 939,585
 Total current assets 20,367,679 20,494,464
 Capital assets, net 2,261,058 2,409,542
 Other assets 8,140,941 7,627,423
Total Assets $30,769,678 $30,531,429
 Accounts payable and accrued liabilities 5,797,495 5,919,439
 Deferred revenue 2,218,067 2,315,733
 Total current liabilities 8,015,562 8,235,172
 Shareholders' Equity:
Common share capital - authorized:
 unlimited (issued and
 outstanding: 7,172,508) 27,539,584 27,539,584
Deficit (4,785,468) (5,243,327)
Total Shareholders' Equity 22,754,116 22,296,257
Total Liabilities and Shareholders' Equity $30,769,678 $30,531,429
(Canadian dollars)
For the three months ended August 31 1998 1997
 (Unaudited) (Unaudited)
Sales $11,387,736 $8,913,544
 Cost of sales 3,108,623 2,923,841
 Selling, general and administration 4,442,867 3,618,480
 Advertising and marketing 1,377,073 1,022,202
 Research and development expenditures
 (net of ITCs) 1,735,881 1,108,709
 Amortization of capital assets 276,105 247,779
 Interest income (61,545) (46,520)
 10,879,004 8,874,491
Income before income taxes 508,732 39,053
Income tax expense 50,873 --
Net income for the period $457,859 $39,053
Earnings per common share
- basic $0.06 $0.01
- fully diluted $0.06 $0.01

(Canadian dollars)
For the three months ended August 31 1998 1997
 (Unaudited) (Unaudited)

Deficit, beginning of the period ($5,243,327) ($7,485,876)
Net income for the period 457,859 39,053
Deficit, end of the period ($4,785,468) ($7,446,823)

(Canadian dollars)
For the three months ended August 31 1998 1997
Cash provided by (used in): (Unaudited) (Unaudited)
 Operating activities
 Net income for the period $457,859 $39,053
 Add (deduct) items not affecting cash:
Investment tax credits recoverable (297,000) (230,000)
Amortization of capital assets 276,105 247,779
Deferred income taxes (32,789) (7,093)
 404,175 49,739
 Net change in non-cash working
capital balances related to operations (513,926) 1,732,497
Cash used in operating activities (109,751) 1,782,236
 Investing activities
 Loans to shareholders, officers
and directors (183,729) (2,790)
 Additions to capital assets (127,621) (278,387)
Cash used in investing activities (311,350) (281,177)
 Financing activities
 Issuance of Common Shares -- --
Cash provided by financing activities -- --
Net increase (decrease) in cash and cash
 equivalents during the period (421,101) 1,501,059
Cash and cash equivalents, beginning
 of the period $6,776,075 $4,863,935
Cash and cash equivalents, end of
 the period $6,354,974 $6,364,994
Components of net change in non-cash
 working capital balances related
 to operations:
 Accounts receivable $32,106 $4,503,370
 Inventory (273,327) (15,020)
 Prepaid expenses (220,203) 129,110
 Income taxes recoverable 167,108 12,216
 Accounts payable and accrued liabilities (121,944) (2,710,837)
 Deferred revenue (97,666) (186,342)
 ($513,926) $1,732,497

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Publication:Business Wire
Geographic Code:1CANA
Date:Sep 23, 1998
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