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At Performance Technologies, we believe the communications industry is showing great renewed prospects as worldwide networks expand and improve using wireless, optical and IP-based technologies. While this is encouraging for the organizations supplying equipment to support new capabilities and revenue-generating services, the market is faster and more competitive than ever.

To meet these challenging market conditions, Performance Technologies has reinvested nearly 20 percent of our Company's revenue in new product development over the past five years - in most cases, above the industry norm. This ongoing investment has been directed at producing state-of-the-art integrated platforms, slot components and software for emerging communication applications.

Performance Technologies' systems, software and services are targeted at allowing our customers to effectively compete under these fast moving and competitive market conditions. Our OEM, fully-managed, integrated platforms and components are based on a contemporary, easy to use, packet-based architecture; include a Linux-based software environment for simplified applications development; and ultimately help improve time-to-market. Our signaling products are used by telecommunications operators and carriers worldwide to facilitate the transition from traditional telecom networks to IP-based networks with a specific focus on reducing operating costs while improving service revenue possibilities.

If you're already a customer of Performance Technologies, our thanks for your business, and we hope our Company has earned the privilege to continue our business relationship in 2005. If you are a manager or engineer currently evaluating our products and platforms for a new application, we are anxious to compete aggressively for your business.

Best wishes for the New Year,

Don Turrell
President and CEO