1 A Delaware Valley Success Story, With A Global Presence

2 Founded in 1942 by K.A. Swanstrom I.P.O. in 1966 Kenneth A. Swanstrom elected Chairman and CEO in Overview

3 Fasteners (56.0% of projected 2000 sales) Motors (17.5% of projected 2000 sales) Distribution (26.5% of projected 2000 sales) Overview Three operations:

4 Founded in 1942 Operations:Full-time employees: –Danboro, PA748 –Winston Salem, NC298 –Suffolk, VA128 –Willimantic, CT 25 –Tallmadge, OH 38 Fastener Division

5 Acquired in 1970 Operations:Full-time employees: –Harleysville, PA207 –Carson City, NV 10 Motor Division

6 Formed Arconix Group in January Operations:Full-time employees: –Oxnard, CA (1999) 49 –Doncaster, UK (1970) 45 –Singapore (1996) 21 Distribution Division

7 Winston-Salem Oxnard, CA

8 Penn Engineering has a long term Penn Engineering has a long term track record of growth and profitability...

9 Sales history since IPO CAGR: 12.3% ($000’s)

10 Net income since IPO CAGR: 8.9% ($000’s)

11 5-Year CAGR = 10.3% Sales Growth ($millions)

12 5-Year CAGR = 10.3% Net Income Growth ($millions)

13 5-Year CAGR = 13.3% Cash Flow Net Income + depreciation ($ millions)

14 Penn Engineering’s year 2000 is off to a great start…

15 Interim Results - Comparison to 1Q99 (000’s) Three Months Ended 3/31/00 3/31/99 Sales$ 65,137$ 46,000 Gross Profit$ 21,077$ 14,488 Gross Margin 32.4% 31.5% Operating Profit$ 8,811$ 5,785 Operating Margin 13.5% 12.6% Net Income$ 5,645$ 4,056 Net Margin 8.7% 8.9% EPS$ 0.66 $ 0.47 ROE (annualized) 14.4% 12.2%

16 Interim Results - Comparison to 4Q99 (000’s) Three Months Ended 3/31/00 12/31/99 Sales$ 65,137$ 56,659 Gross Profit$ 21,077$ 17,540 Gross Margin 32.4% 31.0% Operating Profit$ 8,811$ 6,312 Operating Margin 13.5% 11.1% Net Income$ 5,645$ 4,300 Net Margin 8.7% 7.6% EPS$ 0.66 $ 0.50 ROE (annualized) 14.4% 11.9%

17 Review of interim results: Sales, net income, and earnings per share increased 42%, 39%, and 40%, respectively, over Excellent growth from major markets including computers and telecommunications (fastener and distribution operation), and data storage and semiconductor equipment manufacturers (motor operation) Increases in unit sales volume contributed to plant utilization gains and consequently, higher margins.

18 Penn Engineering sells to some of the fastest- growing high-tech customers worldwide….

19 Top five customers - Fastener operation CiscoTelecomm CompaqComputers LucentTelecomm MotorolaTelecomm NortelTelecomm CustomerIndustry

20 Top five customers - Motor operation AGFAComputer photo-setting ExabyteData Storage/Tape Libraries IBMData Storage/Tape Libraries StorageTekData Storage/Tape Libraries Sunrise MedicalMedical CustomerIndustry

21 Top five customers - Distribution operation CiscoTelecomm Hewlett PackardComputers IBMComputers Power OneComputer Peripherals Sun MicroTelecomm CustomerIndustry

22 Penn Engineering has always served the high tech industry…. high tech industry….

23 The 1940’s RCA Western Electric General Dynamics The 1950’s Grumman Xerox Addressograph/ Multigraph The 1960’s Digital Equipment Data General Tektronix The 1970’s Alcatel Fluke General Instrument The 1980’s Hewlett Packard IBM Motorola The 1990’s Compaq Hewlett Packard IBM The 2000’s Lucent Ericsson Compaq …although the definition of “high tech” has changed throughout the years. changed throughout the years.

24 1. “Solutioneering”: Develop new applications and new customers. - Continually call on design engineers at customer and prospect locations to find out what new projects are underway. - Continually “create the market” for our products. 2. Develop new products - Goal: 5% of each year’s sales from products introduced in the past three years. 3. Expand internationally by adding new representatives and distributors (presently 45 distributors in 36 countries). Internal Growth Strategies

25 Penn Engineering is growing through acquisitions...

26 Acquisitions completed in CompanyDate AcquiredPurchase Price StickScrewJune 1999$1.7 million (new fastener product line) Carson TechnologiesJuly 1999$ 350,000 (new motor product line) R.C. Dudek & Co.October 1999$36 million (expansion into direct distribution) Atlas EngineeringApril 2000$3.0 million (new fastener product line)

27 Summary Penn Engineering & Manufacturing Corp. has been financially successful over an extended time period, and across all business cycles. Penn Engineering has grown and prospered by providing innovative products, unparalleled engineering support, and uncompromising quality to customers in the fastest-growing markets. The Company has the ability - from a management as well as a financial standpoint - to grow internally as well as through acquisitions. The Company is entering a high-growth phase in which ongoing new business development efforts are resulting in significant new opportunities.

28 A Delaware Valley Success Story, With A Global Presence, Expanding into the Future