Penford Corporation enters 1998 with a renewed focus and a new sense of energy. Upon completion of the recently announced plan for the initial public offering and subsequent spin-off of Penwest Pharmaceuticals Co., Penford Corporation will be completely focused on applying its carbohydrate chemistry expertise for the benefit of its customers in the paper and food industries. Penford Corporation will consist of Penford Products Co. and Penford Food Ingredients Co. Penford Products' roots in the paper industry go back one hundred years with a reputation for developing, manufacturing and marketing value-added products to its customers. From the industry-standard Penford Gums product line to new, innovative starch copolymers and paper forming cationic starches, Penford Products' commitment to partnering with the paper industry is unmatched.

Penford Food Ingredients Co. (PFI) has become an integral part of our long-term growth strategy, selectively developing value-added applications of modified food starches for high growth segments of the food industry. Our most visible success has come in our coating technology for french fries. That success is being leveraged into other coating applications as well as new value-added products for the processed meats and baked goods segments of the food industry.

Penford Corporation is uniquely positioned to move forward into the new millennium. We start with a strong technology and market base within the North American paper industry. We intend to leverage that base geographically and technologically to provide long-term high growth opportunities.

Complementing our strong paper industry foundation is a profitable double-digit growth business in modified starch-based food ingredients.

Underlying all of this is Penford Corporation's continued commitment to invest in its businesses to bring long-term value to its customers and shareholders.