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PENWEST ANNOUNCES EARNINGS

 BELLEVUE, Wash., Oct. 19 /PRNewswire/ -- PENWEST (NASDAQ: PENW) today reported strong sales for its fiscal year ended Aug. 31, but said earnings were down, mostly because of flood-related disruptions to its operations in Cedar Rapids, Iowa.
 Tod R. Hamachek, president and chief executive officer, said demand for the company's specialty starch products grew throughout the year, but record storms and floods in the third and fourth quarters had a major effect on income from operations. The decline was offset, in part, by an income tax benefit.
 Net earnings for the year were $6.3 million, or 88 cents per share, on total revenue of $135.5 million. That compares with 1992 earnings of $7.5 million and $1.01 per share (before cumulative accounting changes). Revenue in the year-earlier period was $126 million.
 Higher net interest expense also had an effect on earnings, according to Hamachek.
 While revenue for the fourth quarter rose to $35.7 million from $33.4 million in the final period a year ago, earnings fell to $1.4 million, or 20 cents per share, from $1.9 million and 26 cents per share. Earnings for the quarter included 6 cents per share, or $410,000, from operations and 14 cents per share, or $1 million, from a tax benefit associated with a major plant expansion completed at Cedar Rapids.
 "Our own plants in the Midwest suffered only minimal direct damage from the floods," Hamachek said. "But the recurrent storms from April to August disrupted operations and transportation at our largest plant, in Cedar Rapids. Bridges were out for weeks at a time, highways washed away and barge traffic simply stopped. "We expect to achieve a much better balance between supply and demand in the first 1994 fiscal quarter which ends Nov. 30."
 Hamachek said the company's core business, Penford Products Co., was growing and profitable despite the fourth straight year of paper industry recession. The company's pharmaceutical excipients business, Mendell, had record sales and profits. PENWEST FOODS, a two-year-old ingredients business, continues to invest for future growth.
 PENWEST develops, manufactures and markets specialty carbohydrate and synthetic polymer chemicals for papermaking. The company also produces and markets specialty food ingredients, agricultural nutrition supplements and pharmaceutical excipient products, the non-active ingredients in tablets and capsules.
 PENWEST
 CONSOLIDATED STATEMENTS OF INCOME
 (Unaudited; Thousands of dollars)
 Year ended 4th qtr. ended
 Aug. 31, 1993 1992 1993 1992
 Sales $135,517 $125,952 $35,682 $33,427
 Cost of sales 99,785 92,147 27,392 24,900
 Gross margin 35,732 33,805 8,290 8,527
 Operating expenses 26,622 23,339 7,057 5,692
 Income from operations 9,110 10,466 1,233 2,835
 Investment income 1,016 1,915 202 342
 Interest expense (2,489) (2,252) (793) (499)
 Income from continuing
 operations before
 taxes and cumulative
 accounting changes 7,637 10,129 642 2,678
 Income taxes 1,322 2,624 (768) 770
 Cumulative accounting
 changes(A) -- (4,387) -- --
 Net income $ 6,315 $ 3,118 $ 1,410 $ 1,908
 Weighted average shares
 and equivalents 7,175,855 7,461,439 7,148,884 7,341,186
 Earnings per share:
 Continuing operations $ 0.88 $ 1.01 $ 0.20 $ 0.26
 Cumulative accounting
 changes(A) -- (0.59) -- --
 Total $ 0.88 $ 0.42 $ 0.20 $ 0.26
 Dividends declared $ 0.20 $ 0.15 $ 0.05 $ 0.05
 (A) Adoption of FAS 106 and 109.
 PENWEST
 BALANCE SHEET DATA
 (Unaudited; Thousands of dollars)
 Aug. 31, 1993 1992
 Investments $ 13,344 $ 18,173
 Long-term debt 46,998 30,877
 Shareholders' equity 62,987 61,582
 Current assets 43,365 44,117
 Current liabilities 21,902 15,282
 Total assets 158,025 130,641
 -0- 10/19/93
 /CONTACT: Jeffrey T. Cook of PENWEST, 206-462-6000; or Robley W. Sundmacher of Corporate Communications Inc., 206-728-1778, for PENWEST/
 (PENW)


CO: PENWEST ST: Washington IN: CHM SU: ERN

JH-IC -- SE010 -- 3798 10/19/93 09:25 EDT
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Date:Oct 19, 1993
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