Exhibit 13

CORPORATE INFORMATION

CORPORATE OFFICERS

Michael Foster
Chairman and Chief Executive Officer

Dennis Deegan
President and Chief Operating Officer

John Allard
Senior Vice President, Business Development

John Powers
Vice President and Chief Financial Officer

Karen Hebert
Vice President, Human Resources

Timothy Jones
Vice President, Information Solutions Group

Richard Longo
Vice President, Industrial Technology Group

Michael Tule
Vice President, General Counsel and Secretary


INFORMATION SOLUTIONS GROUP

WPI DecisionKey, Inc.                   WPI Husky Computers, Inc.
Manchester, NH                          Clearwater, FL

WPI Husky Computers, Ltd.               WPI Husky Computers GmbH
Rungis Cedex, France                    Lohmar, Germany

WPI Husky Computers, Ltd.               WPI Husky Computers, Ltd.
Lidkoping, Sweden                       Coventry, U.K.

WPI Micro Processor Systems, Inc.       WPI Oyster Termiflex, Inc.
Sterling Heights, MI                    Manchester, NH

WPI Oyster Termiflex, Ltd.
Cwmbran, U.K.


INDUSTRIAL TECHNOLOGY GROUP

WPI Electronics, Inc.              WPI Instruments, Inc.
Warner, NH                         Manchester, NH

WPI Magnetec, Inc.                 WPI Power Systems, Inc.
Warner, NH                         Warner, NH

WPI Modutec (Barbados) Limited
Barbados, West Indies

                                - 137 - 

<PAGE>

BOARD OF DIRECTORS

Michael Foster
Chairman and Chief Executive Officer
WPI Group, Inc.

Dennis Deegan
President and Chief Operating Officer
WPI Group, Inc.

John Allard
Senior Vice President, Business Development
WPI Group, Inc.

Stephen Carlotti
Partner
Hinckley, Allen & Snyder

Peter Danforth
General Partner
Kearsarge Ventures, Ltd.

Paul Giovacchini
Senior Investment Manager
Seacoast Capital Corporation

Irving Gutin
Senior Vice President
Tyco International (U.S.), Inc.

Steven Shulman
Managing Director
Latona Associates, Inc.

Bernard Tenenbaum
President
Children's Leisure Products Group
The Jordan Company

AUDITORS

Arthur Andersen LLP
225 Franklin Street
Boston,  MA 02110

                                - 138 -
  

<PAGE>


SHAREHOLDER INFORMATION


TRANSFER AGENT AND REGISTRAR

State Street Bank & Trust Company
c/o EquiServe
PO Box 8200
Boston, MA 02266-8200
Telephone: 1-800-426-5523

INVESTOR RELATIONS CONTACT

Michele M. Normandin
Investor Relations
WPI Group, Inc.
1155 Elm Street
Manchester, NH 03101
Telephone: (603) 627-3500


FORM 10-K

A  copy  of  the  Company's annual report to the  Securities  and
Exchange Commission on  Form 10-K, exclusive of Exhibits, is
available without charge upon written  request  to Michele Normandin,
Investor  Relations,  WPI Group, Inc.,1155 Elm Street, Manchester, NH 03101,
Telephone (603) 627-3500   FAX  (603) 627-3150

ANNUAL MEETING

The 1999 Annual Meeting of Shareholders is scheduled for February 9, 1999, 
10:00 a.m. at the WPI Group, Inc. Corporate Headquarters, 1155
Elm Street, Manchester, NH 03101.

                                - 139 -

<PAGE>
<TABLE>
STOCK PROFILE AND ACTIVITY

The Company's common stock is traded on the NASDAQ National
Market System under the symbol WPIC. Set forth below for each
quarter of its last 2 fiscal years indicated are the high and
low sale prices for WPI Group, Inc.common stock.

<CAPTION>

                                   1998                 1997
Fiscal Quarter                 High      Low       High       Low
--------------                 ----      ---       ----       ---              
<S>                            <C> <C>   <C> <C>  <C> <C>    <C><C>

First                          $15 1/8   $ 6 7/8   $ 8 1/4    $6 1/8
Second                         $10 1/4   $ 7 1/8   $10 1/2    $6 5/8
Third                          $10 1/2   $ 6 3/4   $ 9        $6 1/8
Fourth                         $ 9 1/4   $ 4 3/4   $12 5/8    $8 1/8
                              
</TABLE>

The  number  of shareholders of record on December 7,  1998,  was
approximately 3,500.  No dividends have been paid on the common stock
to date, and the Company  does not expect to pay cash dividends in the
foreseeable future.

                            - 140 -

<PAGE>
      
               WPI GROUP, INC. AND SUBSIDIARIES
                                
             MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                
This  review  should  be read in conjunction with  the  consolidated
financial   statements   and  related  notes   beginning   on   page
21 of  this Annual Report. In addition to historical information, this
Annual Report contains forward-looking statements that involve risks
and   uncertainties  that  could  cause  actual  results  to  differ
materially.   Factors  that  might  cause  or  contribute  to   such
differences include, but are not limited to, those discussed in  the
section  entitled "Management's Discussion and Analysis of Financial
Condition  and  Results  of Operations."  Readers  should  carefully
review the risks described in other documents the Company files from
time  to time with the Securities and Exchange Commission, including
the  Quarterly  Reports on Form 10-Q to be filed by the  Company  in
1999.   Readers  are cautioned not to place undue  reliance  on  the
forward-looking statements, which speak only as of the date of  this
Annual  Report.   The Company undertakes no obligation  to  publicly
release  any revisions to the forward-looking statements or  reflect
events or circumstances after the date of this document.

RESULTS OF OPERATIONS

FISCAL 1998 COMPARED TO FISCAL 1997

Net  sales  increased 52% to $94.9 million in  1998  from $62.5
million in 1997.  The increase was due primarily  to a  full
year  of  sales  from WPI Husky Computers, Ltd. in 1998 and the
addition of WPI Instruments, Inc. sales following the August 3,
1998 acquisition.

Gross  profit  in 1998 increased 58% to $39.4 million  from
$24.9  million in 1997.  As a percentage of sales,  gross  profit
grew to 42% from 40% in 1997.  The increase was due primarily  to
the change in product mix.

Research and new product development expenses increased 28%  to
$5.1 million  in  1998 from $4.0 million in  1997.  As  a
percentage   of  sales,  research  and  new  product  development
expenses decreased to 5% in 1998 from 6% in 1997.

Selling, general and administration expenses increased 51%  to
$25.5 million in 1998 compared to $16.9 million in 1997. As
a  percentage  of  sales,  selling,  general  and  administration
expenses were 27% in 1998 and 1997.

The Company recognized a $1.3 million impairment loss related to
the write-off of capitalized sotware development costs in 1998.

Operating  income increased $7.4 million from $3.3 million in 1997.
The increase in operating income was primarily the  result of higher
net sales and higher gross profit margins, and reduced operating
expense as a percentage of net sales.

Other  income (expense) increased to ($3.7 million)  in  1998
from  ($1.4 million) in 1997.  The increase was due primarily  to
an   increase  in  interest  expense  on  debt  related  to   the
acquisition of Husky Computers in 1997 and ANG Instruments in
1998.

Income  before  provision  for  income  taxes  increased to $3.7
million  in 1998 compared to $2.0 million in 1997.  The  increase
was primarily due to the inclusion of a full year of Husky Computers
in 1998.

The Company's consolidated income tax rates, as a percentage of
pre-tax income, were 33% and 43% for 1998 and 1997, respectively.
The decrease in 1998 was a result of the tax treatment of foreign
income and foreign tax credits, recognized thereon.


FISCAL 1997 COMPARED TO FISCAL 1996

Net  sales  increased 32% to $62.5 million  in  1997  from  $47.5
million in 1996.  The increase was due primarily to the inclusion
of  a  full  year of sales from WPI Oyster Terminals,  Ltd.,  the
addition of Husky Computers, Ltd.'s sales following the June  20,
1997 acquisition and internal growth.

Gross  profit in 1997 increased 39% to $24.9 million  from  $17.9
million in 1996.  As a percentage of sales, gross profit grew  to
40%  from  38%  in 1996.  The increase was due primarily  to  the
change in product mix.

Research  and new product development expenses increased  36%  to
$4.0  million in 1997 from $2.9 million in 1996. As a  percentage
of  sales, research and new product development expenses were  6%
in   both  years.   The  increase  was  due  primarily   to   the
acquisitions  discussed above and additions to engineering  staff
for the development of new products that support internal growth.
                              - 141 -

<PAGE>
Selling,  general  and administration expenses increased  57%  to
$16.9  million in 1997, compared to $10.8 million in  1996.  As  a
percentage of sales, selling, general and administration expenses
increased to 27% from 23% in 1996. The increase was primarily due
to  expenses incurred in connection with the acquisition of Husky
Computers, Ltd., expenses incurred in the realignment  of  WPI's
Information Solutions Group and certain other expenses, including
the  increase  in reserves related to litigation  concerning  the
collection of two outstanding receivables.

Operating income decreased 21% to $3.3 million from $4.2  million
in  1996. The decrease in operating income  was primarily due  to
an   increase  in  expenses  incurred  in  connection  with   the
acquisition  of Husky Computers, Ltd., expenses incurred  in  the
realignment  of  WPI's Information Solutions  Group  and  certain
other  expenses, including the increase in  reserves  related  to
litigation   concerning  the  collection   of   two   outstanding
receivables.

Other  income (expense) increased to ($1.4 million) in 1997, from
($.4  million)  in 1996.  The increase was due  primarily  to  an
increase  in interest expense on debt related to the acquisitions
discussed  above. Other income consists primarily of income  from
the  surrender  of a lease by the lessee related  to  a  building
acquired in 1997.

Income  before  provision  for income  taxes  decreased  to  $2.0
million  in 1997, compared to $3.7 million in 1996.  The  decrease
was  primarily due to the acquisition,  restructuring  and  other
expenses discussed above.

The  Company's consolidated income tax rates, as a percentage  of
pre-tax income, were 43% and 33% for 1997 and 1996, respectively.
The  increase in 1997 was a result of higher foreign  income  and
nondeductible goodwill.

LIQUIDITY AND CAPITAL RESOURCES

As  of September 27, 1998, the Company had working capital of
$21.3 million  versus  $17.0 million at September 28, 1997. Net
cash provided by operating activities totaled $5.6 million in 1998
and $7.4 million in 1997.

As of September 27, 1998, the Company had no material commitments
for capital expenditures.

The  Company  has  a  $75 million credit  facility  with  a  
syndication of banks, consisting  of  a  $20  million revolving line
of  credit which expires on September 30, 2003, and term notes totaling $55
million payable in varying quarterly installments commencing on
December 31, 1998, through September 30, 2004.  At September 27, 1998,
the Company's borrowing under the credit facility totaled $64.1 
million. The agreement contains certain restrictive  covenants, including
financial covenants, one of which the Company was not in compliance
with at September 27, 1998.  In December 1998, the Company reached
an agreement with the banks to waive the event of non-compliance under
the existing agreement as of September 27, 1998, and amend future
financial covenants. In addition, the amendment provides the Company's
revolving credit facility borrowings cannot exceed $15,000,000 and
interest on all borrowings is increased by 1% per annum during the
Company's fiscal quarter ending March 28, 1999. Based on current forecasts,
the Company believes it will be in compliance with the covenants as amended
throughout 1999.
 
The  Company believes that its existing sources of liquidity  and
anticipated cash flow from operations will satisfy the  Company's
working  capital  and  capital expenditure requirements  for  the
foreseeable future.

INFLATION

The Company does not believe that inflation has had a significant
impact on its results of operations in the last three years.

YEAR 2000

WPI has established its Year 2000 Project  in order  to  evaluate
the issue of computer software and embedded computer chips that
are not able to distinguish  between the  year  1900 and the year
2000.  WPI' s Year 2000  Project  is divided into three major
sections: (1) IT  systems (which examine operating systems and
business applications software); (2) External  agents (which
examine third party suppliers  and customers); and (3) Product
issues (which involve Year 2000 issues inherent  in products
sold by WPI).

The  IT  systems section evaluates hardware and systems software.
WPI  has  substantially  completed its  evaluation  of  its  main
internal operating systems and business application software.  As
a  result  of  this  evaluation, WPI has  begun  the  process  of
implementing  the  necessary changes and testing its internal
systems  to achieve  Year  2000  compliance in this area.   This
process  is currently on schedule.  WPI estimates that if this process
stays on schedule, IT systems are expected to be Year 2000 compliant by
mid 1999.                    
                              - 142 -

<PAGE>

The  external agents section includes the process of  identifying
and  prioritizing critical suppliers and customers at the  direct
interface  level, and communicating with them about  their  plans
and  progress  in  addressing the year 2000 problem.   Year  2000
compliance  issues  at critical suppliers create  risks  for  WPI,
since  their  inability to operate effectively could  impact  our
business.  Evaluations  of  the  most critical  third  parties  have
been  initiated  and  should   be completed  by mid 1999.   These
evaluations will be  followed  by corrective actions and the
development of contingency  plans,  if considered necessary.

The  product  issues section includes the process of  identifying
any  product  sold  by WPI which may not be Year  2000  compliant,
determining  a  corrective  course of  action  and  disseminating
information about Year 2000 compliance  to customers.  Although
most  of  WPI's products  that   have   integrated   software
or embedded microprocessors  are  Year  2000  compliant,
there  can  be   no assurances  that  all of  WPI's products
are  currently  Year  2000 compliant.   Detailed evaluations
of certain products  have  been initiated,  and  completion
of this phase of the  Company's  Year 2000  Project should
occur by mid 1999.  These evaluations will  be  followed by
corrective actions and the  development  of contingency plans,
if considered necessary.

Total costs associated with required IT systems modifications  to
become  Year 2000 compliant and product issues are not expected to
have  a  material effect  on the consolidated results of operations,
cash flows  or financial position of WPI.

The  failure to correct a material Year 2000 problem could result
in  an  interruption in, or a failure of, certain normal business
activities  or  operations. Due to the general uncertainty inherent
in the Year 2000 problem, resulting in part from the uncertainty of
the  Year  2000 readiness of third party suppliers and customers,
WPI  is unable to determine at this, time whether the consequences
of Year 2000 failure will have a material impact on WPI's results
of   operations,  liquidity  or  financial  condition.   However,
management   believes   that  WPI's  Year   2000   Project   will
significantly reduce WPI's level of risk regarding the Year  2000
problem.   

                              - 143 -
<PAGE>


            
             
            WPI GROUP, INC. AND SUBSIDIARIES


            REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS




TO WPI GROUP, INC.:

We  have audited the accompanying consolidated balance sheets  of
WPI Group, Inc. (a New Hampshire corporation) and subsidiaries as
of  September  27, 1998 and September 28, 1997, and  the  related
consolidated statements of income, stockholders' equity and  cash
flows  for  each of the three years in the period ended September
27,  1998.   These  consolidated  financial  statements  are  the
responsibility  of the Company's management.  Our  responsibility
is  to express an opinion on these financial statements based  on
our audits.

We  conducted  our audits  in accordance with generally  accepted
auditing  standards.  Those standards require that  we  plan  and
perform  the  audit to obtain reasonable assurance about  whether
the  financial statements are free of material misstatement.   An
audit  includes  examining, on a test basis, evidence  supporting
the  amounts  and  disclosures in the financial  statements.   An
audit also includes assessing the accounting principles used  and
significant  estimates made by management, as well as  evaluating
the  overall  financial statement presentation.  We believe  that
our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to
above  present fairly, in all material respects, the consolidated
financial  position  of WPI Group, Inc. and  subsidiaries  as  of
September  27,  1998 and September 28, 1997, and the  results  of
their operations and their cash flows for each of the three years
in  the  period  ended  September 27, 1998,  in  conformity  with
generally accepted accounting principles.





Arthur Andersen LLP


Boston, Massachusetts
December 10, 1998

(except with respect to the
matter discussed in Note 3, as to
which the date is December 27, 1998).

                              - 144 -
<PAGE>


                WPI GROUP, INC. AND SUBSIDIARIES
                                
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       September 27, 1998
                                
1.   Business and Summary of Significant Accounting Policies
     -------------------------------------------------------
Business  - WPI Group, Inc. (the "Company") designs, manufactures
and  markets  high, valued-added information and  industrial
technology products  used  for  a wide range of applications.
The  Company operates  through  two business units: The Information
Solutions Group  and   the  Industrial Technology Group.   The
Information Solutions Group consists of WPI Termiflex/Micro Palm,
WPI  Oyster Terminals,  WPI  Micro Processor Systems (MPSI), WPI
DecisionKey and  WPI  Husky  Computers - providers of  computers,
terminals, software   and   information-related  services.  The
Industrial Technology  Group  consists of WPI Electronics, WPI
Instruments, WPI  Magnetec and WPI Power Systems - all providers of
highly engineered electrical and electronic equipment, electromechanical
devices and precision electromechanical instruments.

Basis  of  Consolidation - The consolidated financial  statements
include  the  accounts  of  the  Company  and  its  wholly  owned
subsidiaries.    All   significant  intercompany   balances   and
transactions have been eliminated.

Fiscal  Year-end  - The Company operates on a  52-  to  53-  week
fiscal year ending on the last Sunday in September.

Revenue  Recognition  -  Sales are  recorded  when  products  are
shipped or when services are performed.  The Company provides for
estimated warranty costs at the time of shipment. Arrangements to
deliver  software  or software systems which require  significant
production, modification or customization are accounted for on  a
percentage   of  completion.   Revenue  is  recognized   in   the
proportion that the cost of milestones achieved bear to the total
estimated  costs of the project at completion.  Losses,  if  any,
are provided for in the period in which the loss is determined.

Management Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management  to  make estimates and assumptions  that  affect  the
reported  amounts  of assets and liabilities  and  disclosure  of
contingent  assets and liabilities at the date of  the  financial
statements  and  the  reported amounts of revenues  and  expenses
during  the  reporting period.  Actual results could differ  from
those estimates.

Cash  and Cash Equivalents - For the purposes of the consolidated
statements of cash flows, the Company considers all highly liquid
investments purchased with a maturity of three months or less  to
be cash equivalents.

Fair  Value  of  Financial Instruments  -  The  carrying  amounts
reported  on  the consolidated balance sheet for cash, receivables,
payables, accrued expenses and debt approximate fair value.

Concentration  of  Credit  Risk  -  The  Company's  exposure   to
concentrations of credit risk relates primarily to trade accounts
receivable.  Such exposure is limited due to the large number  of
customers  and  their  industry and geographic  dispersion.   The
Company  controls  credit  risk  by  performing  ongoing   credit
evaluations  of  its  customers'  financial  condition.    
Management  is  not  aware  of  any  specific concentrations  that
could  cause  a  severe   impact   to   its operations.


Inventories  -  Inventories  are stated  at  the  lower  of  cost
(principally  first-in, first-out method) or market  and  include
materials, labor and manufacturing overhead.
<TABLE>
     Inventories consist of:
<CAPTION>
                                  1998        1997
                                  ----        ----                       
          <S>                    <C>          <C>
          
          Raw materials          $ 7,684,405  $6,229,097
          Work in process          4,758,535   2,192,096
          Finished goods           1,745,346   1,474,659
                                 -----------  ----------      
                                 $14,188,286  $9,895,852
                                 ===========  ==========
</TABLE>
                              - 145 -
<PAGE>
Property, Plant and Equipment - Property, plant and equipment are
recorded  at  cost.   Expenditures for maintenance,  repairs  and
renewals  are  charged  to  expense  as  incurred, whereas  major
betterments are capitalized as additions to property,  plant  and
equipment.   The provision for depreciation and amortization  has
been  calculated using the straight-line method over  the  assets
estimated useful lives.
<TABLE>
The  components  of  property,  plant  and  equipment  and  their
estimated useful lives are as follows:
<CAPTION>
                                       Useful Life     1998          1997
                                       -----------     ----          ----
      <S>                              <C>            <C>           <C> <C>    <S>
                                                              
      Construction in progress         -               $    383,381  $   106,578
      Land and land improvements       15                   372,160      575,702
      Buildings and improvements       39                 6,526,335    6,245,060
      Machinery and equipment          7                  6,804,733    5,760,280
      Tooling and dies                 3 - 7              2,171,373    2,002,894
      Office equipment                 5 - 7              4,260,030    3,023,844
      Equipment under capital leases   5                    645,420      643,176
                                                       ------------  -----------
                                                         21,163,432   18,357,534
      Less: accumulated depreciation                     (5,649,141)  (2,606,683)
                                                       ------------  -----------
                                                       $ 15,514,291  $15,750,851
                                                       ============  ===========
</TABLE>
Goodwill and Other Intangibles  - The excess of the purchase price
over the fair  value of  net  assets acquired in an acquisition is
included in  other assets in the accompanying consolidated balance
sheets and  is  being  amortized over 5 to 25 years on  a composite
straight-line basis.   The  Company  periodically evaluates  the
existence  of goodwill impairment on the basis of whether the goodwill
is fully recoverable  from projected undiscounted net cash  flows  of  the
related  business unit. Goodwill and other intangibles (net  of  accumulated
amortization)  was approximately $48,799,000 and $30,914,000 at the end of
1998  and 1997,   respectively.   Amortization amounted to approximately
$1,521,000, $971,000 and $526,000 for 1998, 1997 and 1996,  respectively.

Deferred Product Enhancement Costs - Deferred product enhancement
costs  represent incremental direct costs specifically identified
with  the  adaptation  and  enhancement  of  existing  commercial
products  to meet the needs of specifically identified customers
or markets. Such  costs  are  amortized  on a straight-line  basis
over  the estimated  economic  useful lives of the related  products
which presently  do  not exceed five years. Periodically,  the  Company
evaluates each product on a number of factors, including but not
limited to: customer and/or market projections  of ongoing business;
projected units for the  following  year, when available; our  customers'
evaluation of the state of the technology; and estimated stage  of
the  life cycle of the product.  The Company also reviews   sales
during  the  previous year and the future gross  margin  analysis
projections of the product.  The amortization of these costs  are
included  in  cost  of  sales  and amounted  to  approximately
$976,000, $640,000  and $394,000 for 1998, 1997 and 1996,
respectively. The  table  set  forth  below details the costs  and
accumulated amortization for deferred product enhancement costs:
<TABLE>
<CAPTION>
                    
                                            1998          1997
                                            ----          ----
  <S>                                       <C>           <C>
  
  Deferred product enhancement costs        $ 5,848,962   $ 4,066,491
  Less: accumulated amortization             (1,918,818)   (1,174,601)
                                            -----------   ------------
                                            $ 3,930,144   $ 2,891,890
                                            ===========   ============ 
</TABLE>
                    
Software Development Costs - In accordance with Statement of Financial
Accounting Standards (SFAS) No. 86, "Accounting for the Costs of
Computer Software to Be Sold, Leased or Otherwise Marketed," the
Company capitalizes certain software development costs.  Capitalization
of software development costs begins upon the establishment of
technological feasibility and ceases when the product is ready for
release.  Research and development costs incurred prior to the
establishment of technological feasibility are charged to research
and new product development expense.  Amortization of
capitalized software development costs begins when the product is
available for release to customers.  Amortization is provided on a
product-by-product basis, using the greater of the anticipated
future revenue stream or straight-line method over the economic life
of the product, initially estimated at two years.  

During the fourth quarter of 1998, the Company performed a review of
these costs and recorded a charge of approximately $1,312,000 to
write-off all previously capitalized software development costs.

                              - 146 -
<PAGE>

Long-Lived Assets  -  In accordance with SFAS No. 121, "Accounting
for the Impairment of Long-Lived Assets and Long-Lived Assets to be
Disposed of," the Company evaluates the recoverability of its carrying
value of the Company's long-lived assets and certain intangible assets
based on estimated undiscounted cash flows to be generated from each of
such assets compared to the original estimates used in measuring the
assets.  To the extent impairment is identified, the Company reduces
the carrying value of such impaired assets.  To date, the Company
has not had any such impairments.

Income  Taxes - In accordance with SFAS No. 109, "Accounting  for
Income  Taxes,"   the  Company recognizes deferred  income  taxes
based  on  the  expected future tax consequences  of  differences
between the financial statement basis and tax basis of assets and
liabilities calculated using enacted tax rates in effect for  the
year in which the differences are expected to reverse.

Earnings  Per Share - The Company has adopted SFAS No.   128,
"Earnings  Per  Share."   This  statement   modifies disclosure
requirements for companies required to report earnings per  share
(EPS)  to include presentations of Basic  EPS  (which includes  no
dilution  of  common  stock  equivalents)  and,  if applicable,
Diluted EPS (which reflects the potential dilution of common  stock
equivalents). All earnings per share amounts for all periods have
been presented and, where appropriate, restated to conform to the
SFAS No. 128 requirements. Options to purchase approximately
144,000, 18,000 and 21,000 shares of common stock were outstanding
during 1998, 1997 and 1996, respectively, but were not included
in the computation of diluted earnings per share because the
exercise price was greater than the average market price of the
common shares and, therefore, the effect would be antidilutive.

Foreign  Currency  Translation - Assets and  liabilities  of  the
Company's foreign operations are translated at year-end  exchange
rates.   Net  sales and expenses are translated  at  the  average
rates prevailing during the year. Balance sheet translation gains
and losses are reflected as a separate component of stockholders'
equity.   Foreign   currency  gains  and  losses   arising   from
transactions are reflected in net income.

During the year ended September 27, 1998, the Company recognized net
foreign exhange losses of approximately $247,000, primarily resulting
from intercompany transactions with foreign subsidiaries. The foreign
exchange loss has been recorded in the consolidated statements of income.
As of September 27, 1998, the Company has not entered into any foreign
currency contracts to hedge this exposure.

Recent Accounting Pronouncements - In 1997, the Financial Accounting
Standards Board issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information."  SFAS No. 131 establishes
standards for the way public business enterprises report
information in annual statements and interim financial reports regarding
operating segments, products and services, geographic areas, and
major customers.  SFAS No. 131 is effective for the Company's fiscal year
ending September 1999 financial statements and interim financial
statements thereafter.  The Company is currently evaluating the impact
of SFAS No. 131 on its financial statement disclosures.

In 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities."  The
statement establishes accounting and reporting standards for derivative
instruments and hedging activities.  SFAS No. 133 requires the Company
to recognize all derivatives on the balance sheet at fair value.
Derivatives that are not hedges must be adjusted to fair value through
income.  If a derivative is a hedge, the accounting treatment of changes
in fair value is based on the nature of the hedge.  SFAS No. 133 is
effective for the Company's fiscal year ending September 2000.  The
Company is currently evaluating the impact of SFAS No. 133 on its
financial statements and related disclosures.

Reclassifications - Certain prior year amounts have been
reclassified to conform with current year presentation.

<TABLE>
2.  Other Assets

   Other assets consist of:
  
<CAPTION>
                                             1998          1997
                                             ----          ----     
       <S>                                  <C>          <C>
       
       Goodwill and other intangibles        $52,325,255  $33,084,163
       Deferred product enhancement costs      5,848,962    4,066,491
       Debt issuance cost                      1,196,500        -
       Software development costs                 -           923,772
                                             -----------  ------------
                                              59,370,717   38,074,426
       Less: accumulated amortization         (5,238,300)  (3,270,540)
                                             -----------  ------------
                                              
                                             $54,132,417  $34,803,886
                                             ===========  ============
</TABLE>
3.  Long-Term Debt

    The Company has a $75,000,000 secured credit facility with a syndication
    of banks. The credit agreement consists of three components.
    The first is a $20,000,000 revolving credit facility which expires on
    September 30, 2003, at which time all revolving credit facility
    borrowings are due and payable. Under terms of the credit agreement,
    availability on the revolving credit facility is limited to 75% and 25%
    of eligible accounts receivable and inventories, respectively. Borrowing
    on the revolving credit facility aggregated $9,089,843 at September 27, 
    1998.  The second component is a $30,000,000 term loan which
    expires on September 30, 2003 and is payable in quarterly installments
    ranging from $750,000 to $2,250,000. The third component is a
    $25,000,000 term loan which expires on September 30, 2004, and is
    payable in equal quarterly installments ranging from $62,500 for the
    first five years to $5,937,000 during the sixth year. As of September 27,
    1998, aggregate borrowings under the bank credit agreement total
    $64,089,843.
                              - 147 -
<PAGE>

    Interest on the revolving credit facility and $30,000,000 term loan
    borrowing is payable monthly at LIBOR (5.625% at September 27, 1998)
    plus 2.5% or prime rate (8.25% at September 27, 1998) plus 1.25%
    through March 31, 1999. Interest on the $25,000,000 term loan borrowing
    is payable monthly at LIBOR plus 3% or prime rate plus 1.75% through
    March 31, 1999.  After March 31, 1999 interest rates are subject to
    modification based on a ratio of total debt to earnings before interest,
    taxes, depreciation and amortization (EBITDA). In the event of default,
    the interest rates on all borrowings are increased by 2% per annum.
    The Company is required to pay an annual commitment fee equal to 0.5%
    on the unused revolving credit facility and an annual agency fee.

    The agreement contains certain restrictive covenants, including
    the Company's ability to incur additional indebtedness and pay dividends. 
    In addition, the agreement specifies financial covenants related to 
    maximum annual capital expenditures, minimum quarterly interest and 
    principal coverage ratio, minimum levels of net worth and maximum total 
    debt to EBITDA ratio.  As of September 27, 1998, the Company was not in
    compliance with the total debt to EBITDA ratio required under the terms 
    of the agreement.  In December 1998, the Company reached an agreement
    with the banks to waive the event of non-compliance under the existing
    agreement as of September 27, 1998, and amend future financial covenants.
    In addition, the amendment provides the Company's revolving credit
    facility borrowings cannot exceed $15,000,000 and interest on all
    borrowings is increased by 1% per annum during the Company's fiscal
    quarter ending March 28, 1999. Based on current forecasts, the Company
    believes it will be in compliance with the covenants as amended
    throughout 1999.

    On August 3, 1998, the company issued $2,750,000 in promissory notes in
    connection with the acquisition of certain assets and technology of ANG
    Instruments. The notes were recorded at a 8.25% discount rate which
    represents a net present value of $2,335,533. Principal and interest
    payments totaling $51,563 are payable monthly over the four years
    commencing September 1, 1998.  At September 27, 1998, the outstanding
    balance was $2,064,869.

    On August 6, 1998, the Company issued a $200,000 promissory note in
    connection with the acqusition of the Lucas sensor product line. The note
    bears interest at a rate of 9% per annum. The note and related interest
    are due and payable on July 31, 2000.

    The scheduled maturities of notes payable outstanding as of September 27,
    1998, are as follows: 1999-$3,715,748; 2000-$5,455,659; 2001-$6,798,990;
    2002-$8,294,472; 2003-$18,339,843 and 2004-$23,750,000.




4.  Accrued Expenses
<TABLE>
  
  Accrued expenses consist of:
<CAPTION>
                                           1998          1997
                                           ----          ----       
       <S>                                <C>           <C> <C>
                                        
       Payroll and related amounts         $1,760,902  $   906,075
       Warranty                             1,477,538    1,032,066
       Acquisition related                    872,085      286,226
       Deferred revenue                       471,760      326,896
       Leases                                 359,657      576,499
       Interest                               395,193      359,801
       Other                                  648,169      551,414
                                           ----------  -----------        
                                           $5,985,304  $ 4,038,977
                                           ==========  ===========
</TABLE>
                              - 148 -
<PAGE>
5. Income Taxes
<TABLE>
     
The components of federal and state income taxes are as follows:
<CAPTION>
                                  1998          1997        1996
                                  ----          ----        ----                  
     <S><S>                      <C>           <C>         <C>
       
      Current                                      
        Federal                   $  457,000    $  -        $  900,000
        State                        137,000       -           156,000
        Foreign                    1,871,000      22,000       124,000
                                 -----------    --------    ----------
                                   2,465,000      22,000     1,180,000
                                 ===========    ========    ==========      
       <S>                       <C>          <C>           <C>
       
       Deferred
        Federal                   (1,153,000)   263,000       41,000
        State                        (87,000)    36,000        6,000
        Foreign                         -       534,000         -
                                 -----------  ---------   ----------
                                  (1,240,000)   833,000       47,000
                                 -----------  ---------   ----------      
                                  $1,225,000  $ 855,000   $1,227,000
                                 ===========  =========   ==========                                                    
</TABLE>
                              - 149 -
<PAGE>

<TABLE>
A reconciliation of income taxes at the federal statutory rate of
34%  to  income taxes at the Company's effective tax rate  is  as
follows:
<CAPTION>
                                   1998          1997          1996
                                   ----          ----          ----                   
     <S>                           <C>           <C> <C>       <C>
      
     Income tax at 34% of income                          
     before provision for               
     income taxes                  $ 1,262,000   $   670,000   $ 1,274,000     
     State income tax provision
      (benefit)
      (net of effect of             
       federal tax)                   (112,000)       61,000       173,000
     Goodwill amortization             464,000       247,000        88,000
     Impact of foreign income
       transcactions and
       rate differentials             (214,000)      170,000          -
     Net foreign tax credit           (206,000)         -             -
     Other                              31,000      (293,000)     (308,000)  
                                   -----------   -----------  ------------    
              
                                   $ 1,225,000   $   855,000   $ 1,227,000
                                   ===========   ===========   ============    
</TABLE>
                                 

<TABLE>
                                                    
The  approximate  income  tax  effect  of  temporary  differences
comprising  the  deferred  tax  assets  and  liabilities  are  as
follows:
<CAPTION>
                                       1998        1997
                                       ----        ----
      <S>                             <C>         <C> <C>

      Prepaid                                
        Software development costs     $  453,000  $      -
        Inventory related                 353,000      248,000
        Bad debt reserve                  424,000      436,000
        Warranty reserve                  200,000      203,000
        Payroll related                   115,000      172,000
        Foreign net operating
        loss carryforwards                805,000      805,000
        Other                             202,000      134,000
                                       ----------   ----------
                                       $2,552,000   $1,998,000
                                       ==========   ==========
     <S>                               <C>         <C>                     
      Deferred                               
        Fixed asset differences        $1,402,000   $1,618,000
        DISC deferral                   1,116,000      731,000
        Goodwill                          490,000      480,000
        Deferred enhancement costs        164,000      548,000
        Deferred software                    
        development                          -         255,000
        Other                             (80,000)      77,000
                                       ----------    ----------
                                       $3,092,000    $3,709,000
                                       ==========    ==========
</TABLE>

The Company has recognized deferred tax assets associated with
approximately $2,150,000 of foreign net operating losses which
are subject to adjustement.

The  Company's  subsidiary,  WPI  Micro  Palm,  Inc.,  which  was
acquired   on  September  23,  1994,  had   net  operating   loss
carryforwards  of  approximately $2,874,000, the  utilization  of
which  is limited to approximately $126,000 annually as a  result
of  the  acquisition.  The Company has not recorded any  deferred
tax  assets  for  these net operating loss carryforwards  because
their  future utilization is uncertain. The realization of  these
net operating loss carryforwards are accounted for as a reduction
of goodwill.
                              - 150 -
<PAGE>

6.   Common Stock

A) Stock Option Plans

The  Company  has stock option plans for selected  officers,  key
employees  and  directors.  Under these  plans,  options  may  be
granted at a price equal to at least the fair market value at the
date   of  the  grant.  Options  granted  under  the  plans   are
exercisable  at  various  dates as specified  in  the  underlying
option   agreement.   The  options  automatically   expire   upon
termination of employment with the Company.
<TABLE>
A summary of stock option activity for each of the three years in
the period ended September 27, 1998, is as follows:
<CAPTION>
                                     Shares Under      Weighted-Average
                                     Option            Exercise Price
                                     ------------      ----------------     
    <S>                             <C>               <C>
    
    Outstanding, September 24,1995   365,400           $ 2.68
         Exercised                  (218,017)            1.99
         Terminated                  (22,167)            2.84
         Granted                     189,730             4.18
                                     -------------     -----------------
    <S>                             <C>                <C>

    Outstanding, September 29,1996   314,946             4.02
         Exercised                   (41,750)            2.87
         Terminated                  (19,500)            7.07
         Granted                     276,000             6.66
                                     ------------      -----------------        
    <S>                             <C>                <C>
    
    Outstanding, September 28,1997   529,696             5.38
         Exercised                   (20,750)            3.83   
         Terminated                  (38,000)            7.36               
         Granted                     296,000             9.60               
                                     ------------      -----------------         
    Outstanding, September 27,1998   766,946           $ 6.95
                                     ============      =================               
                                                    
                                                    
</TABLE>
                                                    
                                                   
<TABLE>
The following is a summary of options outstanding and exercisable
at September 27, 1998:
<CAPTION>
<C>   <S><C>        <C>          <C> <S>           <C>                 <C>               <C>      <S>     <S>             
                        Options Outstanding                                   Options Exercisable
                        -------------------                                    -------------------
                    Number       Weighted Average                       Number
Range of            Outstanding  Remaining         Weighted Average     Exercisable       Weighted Average  
Exercise Prices     at 9/27/98   Contractual Life  Exercise Price       at 9/27/98        Exercise Price
---------------     ----------   ----------------  ---------------      -----------       ----------------           
                                                    
$2.00 to $ 4.50     146,166      6.5 years         $ 2.87               146,166           $ 2.87                          
$4.51 to $ 6.50     288,780      7.8                 6.24               173,291             6.18
$6.51 to $ 9.00     194,500      9.3                 8.13                25,500             7.84
$9.01 to $11.13     137,500      9.1                11.13                   -                -
                    -------                                             ------- 
                    766,946      8.1                 6.95               344,957             4.90
                    =======                                             =======
</TABLE>
<TABLE>
In 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation,"  which sets forth
a fair value based method of recognizing stock- based
compensation expense.  As permitted by SFAS No. 123, the Company
has elected to continue to apply APB No. 25 to account for its
stock- based compensation plans. Had compensation for the stock
option plans been determined using the fair value at the grant
dates for awards under those plans, consistent with the
guidelines of SFAS No. 123, the Company's net income and earnings
per share would have been reduced to the pro forma amounts listed
below:
<CAPTION>
                                     1998        1997          1996
                                     ----        -----         ----                
<S>                                 <C>         <C>           <C> 
Pro forma net income                 $1,962,085   $ 874,224     $ 2,469,803
                                               
Pro forma diluted earnings per share       0.32        0.14            0.41


</TABLE>
                              - 151 -
<PAGE>

Consistent with SFAS No. 123, pro forma net income and earnings per
share have not been calculated for options granted prior to
September 24, 1995.  Pro forma compensation cost may not be
representative of that to be expected in future years.

The weighted average fair value of options granted was $4.68, $3.39 and
$1.43 for for options granted during 1998, 1997 and 1996, respectively.
The values were estimated on the date of grant using the
Black-Sholes option pricing model with the following weighted
average assumptions used for grants in 1998,1997 and 1996
respectively; risk-free interest rates ranging from 5.38% to
6.64%, expected dividend yield of 0% for the periods, expected
options lives of 5 years and expected volatilities ranging from
43.1% to 49.5%.

B) WPI Employee Stock Purchase Plan

The  Company's Employee Stock Purchase Plan (the "Purchase Plan")
was adopted by the Board of Directors on June 1, 1997.The Purchase
Plan is a qualified stock purchase plan under  the  Internal Revenue
Code covering all employees  of  the Company, except employees who
are owners of 5% of  the  Company's  stock. Eligible  employees can
purchase shares on a quarterly  basis  on December  15,  March 15,
June 15 and September  15.  The  minimum purchase  amount  is 10 shares
per quarter to a  maximum  of  400 shares per year.  The purchase price
of the shares is 93% of  the average  of  the  closing prices of the
common stock  during  the period  of  5  trading  days  ending on
the  purchase  date.  An aggregate  of 30,000 shares were reserved
for issuance under  the Purchase Plan. Shares purchased under
the Company's Purchase Plan were 7,582, 2,865 and 4,085 in 1998, 1997
and 1996, respectively.


C) WPI Stock Bonus Award Plan

The  Company's Stock Bonus Award Plan (the "Bonus Plan")was adopted
by  the Board of Directors on June  1, 1997. All employees  of the Company,
except employees who are owners of 5% or more of the Company's stock,
are  eligible to participate in the Bonus Plan.  The  Bonus Plan  allows
for  the  award of shares of the  Company's  common stock.  Awards under
the Bonus Plan are made at the discretion of the  Chief  Executive Officer
to employees who have  demonstrated outstanding  performance and commitment
in their employment  with the  Company.  An  aggregate of 20,000 shares were
reserved  for issuance under the Bonus Plan. Shares awarded under the
Company's Bonus Plan were 3,135, 4,525 and 5,170 in 1998, 1997 and 1996,
respectively. The compensation expense related to these awards is not
significant.

7. Employee Benefits

A) Post Retirement Benefits

The Company has no obligation for post-retirement benefits.

B) WPI 401k Plan

In 1990, the Company established a Profit-Sharing 401(k) Plan for
the  benefit  of  eligible United States  employees,  whereby  the
Company matches a portion of the employees' contributions to  the
plan. During 1998, the  Company matched 50% of  the  first  4%  of
employees'  contributions.   The Company's  expense  relating  to
this  plan amounted to approximately $246,000, $213,000 and $150,000
in 1998, 1997 and 1996, respectively.

C) WPI Group UK Money Purchase Pension Plan

The Company has defined contribution pension schemes for the majority
of its full-time employees located in the United Kingdom.  The Company's
expense relating to the schemes amounted to approximately $358,000, $135,000,
 and $6,000 in 1998,1997 and 1996, respectively.

8. Significant Customers

The  Company  markets  its products to customers  in  diversified
industries  in the United States and Europe. For the  year  ended
September 27, 1998, no one customer accounted  for 10%  of
total Company sales.  For the year ended September 28, 1997,  one
customer  accounted for 11% of total Company sales. For the  year
ended September 29, 1996, two customers accounted for 11% and 10%
respectively, of total Company sales.
                              - 152 -
<PAGE>
9.   Acquisitions

In August, 1998, the Company acquired certain assets and technology
of ANG Instruments, a manufacturer of avionics components
and subsystems, inertial sensors and panel meters, as well as
a sensor product line from Lucas Control Systems.  The purchase price
consisted of approximately $23.5 million in cash, notes payable
of approximately $2.5 million plus assumed liabilities and expenses
totaling an additional $2.5 million.  The acquisition was accounted
for using the purchase method.  Accordingly, the purchase price was
allocated to tangible assets acquired based on their estimated fair
value of $9.1 million and goodwill and other intangibles of $19.4
million which is being amortized on a straight-line basis over a
composite life of 25 years.
 
The  Company's  balance  sheet  at September  27,  1998, includes
estimates  of the fair value of assets and liabilities  acquired,
based  upon  preliminary studies. Resolution of any contingencies
that  exist  at  acquisition date may result  in  adjustments  to
goodwill, if appropriate, and are not expected to be material.

In June 1997, a subsidiary of the Company acquired all the outstanding
capital stock of Husky Computers Ltd., a manufacturer of handheld
computers.  In July 1996, a subsidiary of the Company acquired all
the outstanding capital stock of Oyster Terminals, Ltd., a manufacturer
of handheld programmable terminals.  In November 1995, the Company
acquired all the outstanding capital stock of Micro Processor Systems,
Inc. (MPSI) a developer and marketer of electronic test and diagnostic
hardware and software for heavy- and light-duty vehicles.  Each of
the acquisitions were accounted for using the purchase method.
<TABLE>
The   following  summarized,  unaudited  pro  forma  results   of
operations for the years ended September 27, 1998, September  28,
1997  and  September 29, 1996, assume the acquisitions  of ANG
Instruments Group, Husky Computers,  Ltd., Oyster Terminals,  Ltd.,
and MPSI, occurred as of the beginning of  the  respective periods 
(dollars in thousands except per share amounts):
<CAPTION>
      Pro forma: (unaudited)         1998        1997        1996
                                     ----        ----        ----                      
        <S>                         <C>         <C>         <C>
         
        Net sales                    $109,320    $ 106,602   $  87,721
        Net income (loss)               1,466       (1,621)      1,414
        Earnings (loss) per share
           Basic                         0.24        (0.27)       0.24
           Diluted                       0.24        (0.26)       0.24
     
</TABLE>
The unaudited pro forma results are not necessarily indicative of
either actual results of operations that would have occurred had
the acquisitions been made at the beginning of the periods shown
or future results.

10. Commitments

The Company leases certain buildings, office space, machinery and
equipment,  and  vehicles under various  lease  agreements  which
expire at various dates over the next five years.
                              
<TABLE>
As  of  September  27, 1998, the aggregate future  minimum  lease
commitments under operating and capital leases obligations are as
follows:
<CAPTION>
                                       Operating     Capital
        Fiscal Year                    Leases        Leases
        -----------                    ---------     -------             
        <C>                            <C>           <C>
          
        1999                           $1,555,000    $  234,000 
        2000                            1,309,000       123,000  
        2001                            1,106,000         2,000  
        2002                            1,011,000          -  
        2003                              628,000          -
        
                                       ----------    ----------
        Total minimum lease payments   $5,609,000    $  359,000
                                       ==========
        Less amount representing                        
        interest                                        (10,000)
                                                     ----------
        Present value of total                   
        minimum lease payments                       $  349,000
                                                     ==========
</TABLE>
                              - 153 -
<PAGE>

Total rent expense charged to operations for 1998, 1997 and  1996
totaled   approximately   $1,733,000, $634,000  and   $110,000,
respectively.

11.  Restructuring Costs

In  the  fourth  quarter  of 1997, the Company  incurred  certain
restructuring costs totaling approximately $726,000 as  a  result
of  the realignment of certain handheld terminal product lines of
the  Information  Solutions Group.  The costs  were  incurred  in
connection  with  the consolidation of manufacturing  facilities,
reduction in the number of employees and merger of sales offices.
This  restructuring  of the operations was completed  within  the
quarter.

On January 30, 1998, the Company completed the sale of its production
and sales facility located  in  Merrimack, NH. Net proceeds from the
sale of the facility totaled approximately $1,463,000.

12.  Other, Net

During  1997,  the  Company recognized  income  of  approximately
$512,000  in  connection with the surrender of  a  lease  by  the
lessee related to a building acquired in 1997.

On  December 29, 1995, the Company had a fire at its  Warner,  NH
facility.  The  Company  has recorded  a  gain  of  approximately
$111,000 and $364,000 in 1997 and 1996, respectively, related  to
insurance recoveries, which is included in other income, net.  In
addition  to  the  insurance recoveries related to  the  property
damage  and  related  expenses, including those  associated  with
expedited  construction under winter conditions, the Company  was
reimbursed  in  1996  by  the  insurance  carrier  for   business
interruption  costs of approximately $1,200,000  that  have  been
offset in cost of sales.
                              - 154 -
<PAGE>
13. Business Segment and Geographical Information

The Company's business segments are:

     -     Information  Solutions: rugged, handheld  passive  and
           programmable  terminals and computers, vehicle  diagnostic
           information systems, and decision support software.

     -     Industrial Technology: power systems, electronics,
           solenoids, avionic components, inertial sensors and
           panel meters.
     
<TABLE>
     
Business Segment                 
Information
(in thousands)                  
<CAPTION>
<S>                                 <C>              <C>              <C>       <C>     
                                 
                                     September 27,    September 28,    September 29,
                                     1998             1997             1996
                                     -------------    -------------    -------------
                                 
Net Sales:                       
     Information Solutions           $69,536          $35,546          $20,427
     Industrial Technology            25,360           26,937           27,071
                                     -------------    -------------    --------------
                                      94,896           62,483           47,498
                                     -------------    -------------    --------------
</TABLE>
                               
<TABLE>
<CAPTION>
<S>                                  <C>             <C>              <C>

Operating Income:                
     Information Solutions            10,574            2,840            3,413
     Industrial Technology             2,878            3,839            4,160
     Corporate (a)                    (6,027)          (3,355)          (3,378)
                                     --------------   -------------    --------------
                                       7,425            3,324            4,195
                                     --------------   -------------    --------------
<S>                                  <C>             <C>              <C>

Identifiable Assets:             
     Information Solutions            33,126           30,593           15,966
     Industrial Technology            22,181           12,209           13,348
     Corporate (b)                    54,816           35,699           21,361
                                     --------------   -------------    --------------
                                     110,123           78,501           50,675
                                     --------------   -------------    --------------
<S>                                  <C>              <C>             <C>

Capital Expenditures:
     Information Solutions             1,432            3,054              399
     Industrial Technology               367              635            1,818
     Corporate                           135              224              115
                                     --------------   -------------    --------------
                                       1,934            3,913            2,332
                                     --------------   -------------    --------------
<S>                                  <C>              <C>             <C>

Depreciation and Amortization:
     Information Solutions             2,677            1,447              579
     Industrial Technology             1,099              871              859
     Corporate                         1,648            1,091              549
                                     --------------   -------------    --------------
                                     $ 5,424          $ 3,409          $ 1,987
                                     --------------   -------------    --------------
</TABLE>


<TABLE>
Geographical Segment Information (from point of manufacture)
(in thousands)                   
<CAPTION>
<S>                                  <C>            <C>               <C>      <C>
                                 
                                     September 27     September 28,    September 29,
                                     1998             1997             1996
                                     ------------     -------------    -------------


Net Sales:                           
     United States (c)                $ 58,682        $ 50,917         $ 46,042
     Europe                             36,214          11,566            1,456
                                     ------------     -------------    --------------
                                        94,896          62,483           47,498
                                     ------------     -------------    --------------
<S>                                  <C>             <C>              <C>

Operating Income:                
     United States                       5,660           4,521            6,990
     Europe                              7,792           2,158              583
     Corporate (a)                      (6,027)         (3,355)          (3,378)
                                     ------------     -------------    --------------
                                         7,425           3,324            4,195
                                     ------------     -------------    --------------

<S>                                   <C>            <C>              <C>
                                 
Identifiable Assets:             
     United States                      35,035          25,943           26,167
     Europe                             20,272          16,859            3,147
     Corporate (b)                      54,816          35,699           21,361
                                     ------------    -------------     --------------
                                     $ 110,123       $  78,501         $ 50,675
                                     ------------    -------------     --------------
</TABLE>
                              - 155 -
<PAGE>


(a) Includes corporate expenses and amortization of goodwill.
    
(b) Primarily cash, prepaid and refundable income taxes,
    corporate prepaid expenses, other assets, property and
    equipment at the Company's corporate offices.

(c) Includes export sales of $5,856,$6,510 and $7,449 in 1998, 1997,
    and 1996, respectively.
    
<TABLE>
14.   Selected Quarterly Financial Information (Unaudited)

Selected  quarterly  financial information for  the  years  ended
September 27, 1998 and September 28, 1997 is as follows:
(in thousands, except earnings per share)
<CAPTION>
                                                  
                       First        Second      Third       Fourth
                       Quarter      Quarter     Quarter     Quarter
<S>                    <C>          <C>         <C>         <C>
                     
1998                                              
Net sales              $21,844      $23,254     $24,397      $25,401
Gross profit             8,799        9,661      10,522       10,403          
Net income (loss)          912        1,052       1,368         (846)
Earnings (loss)
per share
  Basic                   0.15         0.18        0.23        (0.14)
  Diluted                 0.15         0.17        0.22        (0.14)

<S>                    <C>          <C>         <C>         <C>
                                                  
1997                                              
Net sales              $14,109      $14,222     $15,562     $18,590
Gross profit             5,580        5,703       6,168       7,481
Net income (loss)          776          862       1,007      (1,529)
Earnings (loss)                                   
per share
  Basic                   0.13         0.14        0.17       (0.26)
  Diluted                 0.13         0.14        0.16       (0.25)
</TABLE>
                                   - 156 -
<PAGE>
<TABLE>

                 WPI GROUP, INC AND SUBSIDIARIES
                   CONSOLIDATED BALANCE SHEETS
<CAPTION>
                                
September 27, 1998 and September 28, 1997           1998          1997
-----------------------------------------           ----          ----     
<S>                                                <C> <C>        <C> <C><S>    

ASSETS                                              
                                                    
Current Assets                                      
 Cash and cash equivalents                         $   159,518    $   678,799
 Accounts receivable - net of allowance             
    for doubtful accounts
    of $1,283,000 and $1,237,000 in               
    1998 and 1997, respectively                      21,123,792     12,173,012    
 Accounts receivable - other                            270,611        249,393
 Inventories                                         14,188,286      9,895,852
 Prepaid expenses and other current assets            1,562,048      1,134,125
 Prepaid income taxes                                 2,551,616      1,998,160
 Refundable income taxes                                620,578      1,816,897
                                                   ------------    -----------
    Total current assets                             40,476,449     27,946,238
                                                   ------------    -----------
Property, Plant and Equipment, at cost,            
 less accumulated depreciation                       15,514,291     15,750,851
Other Assets                                         54,132,417     34,803,886
                                                   ------------   ------------ 
                                                   $110,123,157    $78,500,975
                                                   ============   ============
LIABILITIES AND STOCKHOLDERS' EQUITY                
                                                    
Current Liabilities                                 
 Current portion of long-term debt                 $  3,715,748    $      -
 Accounts payable                                     7,776,470      6,336,756
 Accrued expenses                                     5,985,304      4,038,977
 Accrued income taxes                                 1,672,166        603,473
                                                   ------------    -----------
    Total current liabilities                        19,149,688     10,979,206
                                                   ------------    -----------
Long-Term Debt                                       62,638,964     42,000,000
                                                   ------------    -----------
Deferred Income Taxes                                 3,091,995      3,708,914
                                                   ------------    -----------
Commitments                                         
                                                    
Stockholders' Equity                                 
                                                    
 Common stock, $.01 par value;                      
 authorized  20,000,000                               
 shares; issued and                     
 outstanding 6,028,204 and
 5,996,737 shares in 1998 and
 1997, respectively                                      60,282         59,967
 Additional paid-in capital                          14,169,771     13,992,540
 Retained earnings                                   10,418,044      7,931,562
 Cumulative foreign currency translation          
 adjustments                                            594,413       (171,214)
                                                   ------------    ----------- 
       Total stockholders' equity                    25,242,510     21,812,855                                                    
                                                   ------------    ----------- 
                                                   $110,123,157    $78,500,975
                                                   ============    ===========

</TABLE>

See notes to  consolidated financial statements.
                                 - 157 -

<PAGE>
<TABLE>
                 WPI GROUP, INC AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF CASH FLOWS
                                
For the years ended September 27, 1998, September 28, 1997 and
September 29, 1996
<CAPTION>

                                                  1998         1997          1996

<S>                                             <C>            <C>           <C><C>   <C> <S>
Cash Flows From Operating Activities
 Net Income                                      $  2,486,482   $  1,115,761  $  2,521,190                
                                                 ------------   ------------  ------------
  Adjustments to reconcile net income                        
  to net cash provided by operating activities:
  Depreciation and amortization                     5,424,802     3,409,364     1,986,612
  Write-off of software development costs           1,312,283         -              -      
  Deferred income taxes                            (1,173,110)      860,307       514,498
  Non-cash compensation                                25,775       104,231        19,126
  Changes in current assets and                              
  liabilities, net of effects of
  acquisitions:
   Accounts receivable                             (6,008,180)    2,896,916    (3,888,310)
   Accounts receivable - other                         25,480     1,369,480    (1,464,498)
   Inventories                                        825,685     1,733,357       178,270
   Prepaid expenses and other current assets         (260,962)       52,521        32,267
   Refundable income taxes                          1,201,651    (1,269,147)     (446,657)
   Accounts payable                                    66,926      (500,407)    1,280,236
   Accrued expenses                                   632,823    (1,357,394)      850,561
   Accrued income taxes                             1,016,789    (1,018,724)      569,033
                                                 ------------   ------------  -----------
                                                             
     Total adjustments                              3,089,962     6,280,504      (368,862)
                                                 ------------   -----------   -----------

     Net cash provided by operating                 5,576,444     7,396,265     2,152,328          
     activities                                  ------------   -----------   -----------
                                                             
Cash Flows From Financing Activities                         
 Proceeds from long-term debt                      62,893,343    23,350,000    15,607,225
 Payments of long-term debt                       (42,270,664)      (20,000)   (3,190,000)
 Proceeds from exercise of stock                  
 options                                               79,469       117,676       498,976   
 Issuance of common stock                              50,302        23,517        25,457
 Tax benefit on exercise of non-                  
 statutory options                                     22,000        89,000       158,000
                                                 ------------   -----------   -----------
     Net cash provided by                             
     financing activities                          20,774,450    23,560,193    13,099,658
                                                 ------------   -----------   -----------
Cash Flows From Investing Activities                         
 Additions to property, plant and                 
 equipment                                         (1,934,052)   (3,912,522)   (2,332,051)
 Proceeds from sales of property,
 plant and equipment                                1,462,894         -             -
 Additions to other assets                         (2,611,857)   (2,911,010)     (671,025)
 Acquisitions, net of cash acquired               (23,495,000)  (22,039,007)  (10,994,215)
 Payments of accrued acquisition                  
 costs                                               (362,152)   (1,435,973)   (1,092,292)
                                                 ------------   -----------   -----------  
     Net cash used in investing                   (26,940,167)  (30,298,512)  (15,089,583)
     activities                                  ------------   ------------   -----------                                          
                                                                                                                             

Effect of Foreign Currency                        
Translation on Cash                                    69,992      (185,976)       14,762
                                                 ------------   ------------   -----------
Net Increase (Decrease) in Cash and
Cash Equivalents                                     (519,281)      471,970       177,165
Cash and Cash Equivalents,                                        
Beginning of Year                                     678,799       206,829        29,664
                                                 ------------   ------------   -----------

Cash and Cash Equivalents,
End of Year                                      $    159,518  $    678,799   $   206,829
                                                 ============  ============   ===========
Supplemental Disclosure of Cash Flow                         
Information
 Income taxes paid (refunded)                    $     68,839  $  2,644,700   $   439,081
 Interest paid                                      3,599,679     1,906,915       688,585
                                                 ------------  ------------   -----------

Supplemental Disclosure of Non-Cash
Investing Activities
                                                             
 Summary of entities acquired:                               
 Fair value of assets acquired                   $ 28,478,663 $ 27,754,666    $ 21,858,037
 Cash paid                                        (23,495,000) (21,811,753)    (11,475,317)
                                                 ------------ ------------    ------------
 Liabilities assumed                             $  4,983,663 $  5,942,913    $ 10,382,720
                                                 ============ ============    ============
                                                                                             
         See notes to consolidated financial statements.
</TABLE>
                               - 158 -
<PAGE>
<TABLE>

                WPI GROUP, INC. AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                
For the years ended September 27, 1998 September 28, 1997 and
September 29, 1996
<CAPTION>
                                                                    
                              
<S>       <C> <C>            <C>        <C>       <C>           <C>         <C>     <S>        <C>
                          
                              Common Stock        Additional                Foreign Currency
                              $.01 Par Value      Paid-in        Retained   Translation   
                              Shares     Amount   Capital        Earnings   Adjustment          Total
                              -----------------   -----------    ---------  ----------------    -----               
                                                                    
Balance                                                             
 September 24, 1995           5,687,850  $ 56,878  $12,959,646   $4,294,611  $    -               $ 17,311,135
                                                                  
Employee stock purchase plan      4,085        41       25,416        -           -                     25,457
Stock bonus plan                  5,170        52       19,074        -           -                     19,126
Exercise of stock
options and warrants            250,817     2,508      496,468        -           -                    498,976
Income tax benefit from
stock options exercised             -          -       158,000        -           -                    158,000
Foreign currency translation        -          -          -           -         14,762                  14,762
Net income                          -          -          -       2,521,190       -                  2,521,190
                              ---------    -------  ----------   ----------   --------            ------------                
                                                                    
Balance                                                             
 September 29, 1996           5,947,922  $ 59,479  $13,658,604   $ 6,815,801 $  14,762            $ 20,548,646
                                                                    
Employee stock purchase plan      2,865        29       23,488        -           -                     23,517
Stock bonus plan                  4,525        45       34,186        -           -                     34,231
Exercise of stock options        41,425       414      117,262        -           -                    117,676
Income tax benefit from
stock options exercised             -          -        89,000        -           -                     89,000
Non-employee compensation
stock options                       -          -        70,000        -           -                     70,000
Foreign currency translation        -          -          -           -       (185,976)               (185,976)
Net Income                          -          -          -        1,115,761      -               $  1,115,761
                              ---------  --------- -----------   -----------  ---------            ------------                     
          
Balance                                                             
 September 28, 1997           5,996,737  $ 59,967  $13,992,540   $ 7,931,562  $(171,214)          $ 21,812,855
                                                                    
Employee stock purchase plan      7,582        76       50,226        -           -                     50,302
Stock bonus plan                  3,135        31       25,744        -           -                     25,775
Exercise of stock options        20,750       208       79,261        -           -                     79,469              
Income tax benefit from                                             
stock options exercised             -          -        22,000        -           -                     22,000
Foreign currency translation        -          -          -           -         765,627                765,627
Net income                          -          -          -        2,486,482      -                  2,486,482
                              ---------  --------- -----------   -----------   ---------           ------------                 
Balance                                                             
 September 27, 1998           6,028,204  $ 60,282  $14,169,771   $10,418,044   $594,413           $ 25,242,510   
</TABLE>
                                                                    
See notes to consolidated financial statements.
                                      - 159 -
<PAGE>                                
                                
<TABLE>
                                
                                
                WPI GROUP, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF INCOME
                                
For the years ended September 27, 1998, September 28, 1997
and September 29, 1996
<CAPTION>
                                                  
                                     1998          1997          1996
                                     ----          ----          ----        
<S>                                 <C>           <C>           <C>

Net Sales                            $ 94,895,956  $ 62,483,388  $ 47,498,058
Cost of Sales                          55,511,062    37,551,545    29,580,058
                                     ------------  ------------  ------------                                                  
Gross Profit                           39,384,894    24,931,843    17,918,000
                                     ------------  ------------  ------------                                                  
Operating Expenses                                
 Research and new product
 development                            5,132,322     4,005,281     2,939,984
 Selling, general and                   
 administration                        25,515,716    16,877,096    10,783,030
 Write-off of software
 development costs                      1,312,283         -            -
 Restructuring costs                        -           725,540        -
                                     ------------  ------------  ------------
                                                  
  Total operating expenses             31,960,321    21,607,917    13,723,014
                                     ------------  ------------  ------------
                                                  
Operating Income                        7,424,573     3,323,926     4,194,986
                                      
Other Income (Expense)                            
 Interest expense                      (3,564,289)   (2,016,210)     (694,370)
 Foreign currency exchange loss          (246,941)      (60,560)       -   
 Other, net                                98,139       723,605       247,574
                                     ------------  -------------  ------------  
Income Before Provision for             
Income Taxes                            3,711,482     1,970,761     3,748,190
Provision for Income Taxes              1,225,000       855,000     1,227,000
                                     ------------  -------------   -----------
                                                  
 Net Income                          $  2,486,482  $  1,115,761  $  2,521,190

Earnings Per Share:
 Basic                               $       0.41  $       0.19  $       0.43
 Diluted                             $       0.40  $       0.18  $       0.42                                      
                                     ------------  ------------  ------------             
                          
Weighted Average Common Shares          6,015,192     5,972,310     5,805,515

 Effect of Dilutive Options               179,574       190,668       192,333 
                                     ------------  ------------  ------------
 Adjusted Weighted Average
 Common Shares                          6,194,766     6,162,978     5,997,848
                                     ============  ============  ============ 
                                
</TABLE>
                                
         See notes to consolidated financial statements.
                                
<PAGE>                                
                                   - 160 -