BELLEVUE, Wash. -- October 16, 2001

Penford Corporation Reports Fourth Quarter, Year-End Results

Fourth Quarter Results reflect Strong Food Ingredients Performance

Penford Corporation (Nasdaq: PENX) today reported results for its fourth quarter and year ended August 31, 2001.

For the fourth quarter, Penford Corporation reported net income of $0.4 million, or $0.05 per share, compared to net income of $2.2 million, or $0.29 per share in the fourth quarter of 2000. Total sales for the quarter were $54.0 million versus $39.5 million for the same period last year.

The fourth quarter earnings compared to operating losses of $0.08 per share and $0.11 per share reported for the third quarter and second quarter respectively.

For fiscal 2001, Penford reported income before extraordinary item of $0.1 million or $0.02 per share, versus net income of $10.4 million, or $1.33 per share in fiscal 2000. Including the extraordinary loss on early extinguishment of debt in September 2000, Penford reported a net loss of $0.8 million or $0.10 per share. Total sales for the year were $205.1 million versus $158.1 million for the same period last year. The increases in sales for the year are largely attributed to the acquisition of Penford Australia and higher sales volumes of the Company's specialty starch systems for the food industry.

"2001 has been difficult for many companies including Penford," said Jeffrey T. Cook, president and CEO of Penford. "High energy costs and a slowdown in the North American paper industry have been particularly challenging for Penford's profitability. We have seen modest improvements in operating results in the fourth quarter, virtually all due to new customer and market initiatives in our food ingredients business in North America and the Pacific Rim. However, customer demand for the value-added products we provide to the North American paper industry remains weak," he said.

"As we look into fiscal 2002, we continue to see natural gas prices moderate. This should favorably impact fiscal 2002 results as we move through the year. We also feel very good about new customer and market initiatives in both our food and industrial ingredients businesses. We do remain concerned about the depressed market conditions in the North American paper industry. However, we expect that the improvement in natural gas costs, new product offerings and relatively tight inventory levels across the industry will position our industrial ingredients to contribute to sequential improvements in our quarterly operating results," Cook said.

Penford Corporation will host a conference call to discuss fourth quarter financial and operational results today, October 16, at 8:00 a.m. P.S.T. The live Web-cast and replay of the call will be available on this website under the section titled 'Investor Relations,' or www.redchip.com.

About Penford Corporation

Penford Corporation develops, manufactures and markets specialty natural-based ingredient systems for various applications, including papermaking, textiles and food products.

For automated shareholder information, please call 1-888-317-2013.

- Tables Follow -

This press release contains forward-looking statements concerning future performance of the Company's specialty ingredient systems and the prospects for the continuation of current performance trends in fiscal 2002. There are a variety of factors which could cause actual events to differ materially from those projected in the forward-looking statements such as decreases or delays in customer demand or orders, increased competition, decreases in market share, unfavorable changes in product mix, disappointments in product development efforts, interest rate and energy cost volatility, foreign exchange rate fluctuations and those listed in the Company's SEC reports, including the reports on Form 10-K for the year ended August 31, 2000.

Penford Corporation Financial Highlights
(Millions of Dollars, except share and per share data)
	Fourth Quarter Ended August 31		Fiscal Year Ended August 31
	2001	2000	2001	2000
Sales	$ 54.0	$ 39.5	$ 205.1	$ 158.1
Income before extraordinary item	$ 0.4	$ 2.2	$ 0.1	$ 10.4
Net income (loss)	$ 0.4	$ 2.2	$ (0.8)	$ 10.4
Weighted avg. common shares and equivalents outstanding, diluted	7,650,508	7,784,975	7,637,564	7,765,044
Earnings per common share before extraordinary item, diluted	$ 0.05	$ 0.29	$ 0.02	$ 1.33
Earnings (loss) per common share, diluted	$ 0.05	$ 0.29	$ (0.10)	$ 1.33

Penford Corporation Condensed Consolidated Statements of Operations
(Thousands of Dollars, except per share data)
	Fourth Quarter Ended August 31		Fiscal Year Ended August 31
	2001	2000	2001	2000
Sales	$54,033	$39,521	$205,080	$158,150
Cost of sales	43,226	29,625	164,777	114,873
Gross margin	10,807	9,896	40,303	43,277
Operating expenses	6,083	3,889	22,911	17,202
Research and development expenses	1,448	1,328	6,325	5,359
Restructure costs	191	--	486	--
Income from operations	3,085	4,679	10,581	20,716
Interest expense, net	2,199	1,242	10,051	4,774
Income before taxes and extraordinary item	886	3,437	530	15,942
Income tax expense	470	1,203	419	5,580
Income before extraordinary item	416	2,234	111	10,362
Extraordinary loss on early extinguishment of debt, net of tax	--	--	888	--
Net income (loss)	$ 416	$ 2,234	$ (777)	$ 10,362
Earnings per common share before extraordinary item, diluted	$ 0.05	$ 0.29	$ 0.02	$ 1.33
Loss per common share, extraordinary item - diluted	--	--	$ (0.12)	--
Earnings (loss) per common share, diluted	$ 0.05	$ 0.29	$ (0.10)	$ 1.33
Dividends declared	$ 0.06	$ 0.06	$ 0.24	$ 0.22