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Penn Engineering Announces Record Annual Sales and Earnings for 1999

27 January 2000

Summary: Penn Engineering Announces Record Annual Sales and Earnings for 1999; Declares Quarterly Cash Dividend of Twelve Cents Per Share; and Announces Reorganization of Distribution Division.

    DANBORO, Pa.--Jan. 26, 2000--Penn Engineering & Manufacturing Corp. today announced net income of $4,298,934 or $.50 per diluted share, on quarterly net sales of $56,658,753 for the fourth quarter ended December 31, 1999.
    For the comparable 1998 quarterly period, net income was $4,550,709 or $0.53 per diluted share, on net sales of $44,610,523.
    For the twelve months ended December 31, 1999, net income was a record $17,089,800 or $1.97 per diluted share on record net sales of $198,073,717, as compared to net income of $16,579,566, or $1.91 per diluted share, on net sales of $179,687,024 for the twelve months ended December 31, 1998.
    For the Fastener Operation, sales and operating income for the quarter ended December 31, 1999 were $47,411,430 and $5,495,445 respectively, versus $36,483,394 and $3,903,490, respectively, for the quarter ended December 31, 1998.
    For the twelve months ended December 31, 1999, sales and operating income were $162,946,313 and $22,048,251 respectively, versus $146,930,821 and $19,695,232 respectively, for the twelve months ended December 31, 1998.
    For the Motor Operation, sales and operating income for the quarter ended December 31, 1999 were $9,247,323 and $816,515 respectively, versus $8,127,130 and $952,883, respectively, for the quarter ended December 31, 1998.
    For the twelve months ended December 31, 1999, sales and operating income were $35,127,404 and $2,989,974 respectively, versus $32,756,203 and $2,723,192 respectively, for the twelve months ended December 31, 1998.

    Dividend Declared:

    Today the Board of Directors declared a quarterly cash dividend of 12 cents per share on both classes of common stock, payable April 5, 2000 to stockholders of record, March 15, 2000.

    Management Comments:

    Kenneth A. Swanstrom, Chairman and Chief Executive Officer, stated, "1999 was a good year for Penn Engineering. By all measurements - sales, operating income, net income, units shipped, and across both of our lines of business - we had a record year.
    "Overall, earnings per share for the full year increased 3% to $1.97 per diluted share. As we mentioned in the third quarter, the net effect of R.C. Dudek becoming a subsidiary of the Company reduced fourth quarter 1999 EPS by approximately $0.10 per diluted share. We expect the R.C. Dudek acquisition will positively impact our financial results in the year 2000."

    Business Summary:

    Penn Engineering & Manufacturing Corp. is the leading manufacturer of self-clinching fasteners used by the computer, telecommunications, electronics, and automotive industries. The Company's Pittman division manufactures high performance permanent magnet dc motors used in electronics, medical, and manufacturing applications.
    During the quarter Penn Engineering also formed the Arconix(TM) Group to serve as the Company's worldwide distribution division for PEM(R) fastening products and quality products from other sources, and to provide diverse inventory management services.
    Arconix Group consolidates Penn Engineering's existing sales, marketing, and warehousing operations in Doncaster, England, and Singapore with those of the Company's recent acquisition of R.C. Dudek & Company, Inc. (Oxnard, CA) in the United States. Victor E. Carlson has been named Vice President/General Manager of the Arconix Group.

    Forward looking statement information:

    Statements in this press release, other than statements of historical data, are considered forward looking statements under the Private Securities Litigation Reform Act of 1995. These statements are subject to various risks and uncertainties that could cause actual results to differ from those contemplated in these statements.
    These factors are discussed in the company's Securities and Exchange Commission Filings.

                PENN ENGINEERING & MANUFACTURING CORP.
                         Income Statement Data
              Amounts in Thousands, Except Per Share Data


                         3 Months Ended          12 Months Ended
                       Dec. 31,   Dec. 31,      Dec. 31,    Dec. 31, 
                         1999       1998          1999        1998
                       --------   --------      --------    --------
Net Sales              $56,659    $44,611     $ 198,074   $ 179,687
Cost of Goods Sold     $39,120    $31,215     $ 135,521   $ 124,468
Gross Profit           $17,539    $13,396     $  62,553   $  55,219
Selling, General, and
 Administrative 
 Expense               $11,227    $ 8,539     $  37,515   $  32,800
Operating Income       $ 6,312    $ 4,857     $  25,038   $  22,419
Other Income           $   139    $   689     $     662   $   1,781
Income before Income
 Taxes                 $ 6,451    $ 5,546     $  25,700   $  24,200
Income Taxes           $ 2,152    $   995     $   8,610   $   7,620
Net Income             $ 4,299    $ 4,551     $  17,090   $  16,580

Weighted Average Shares
     Outstanding
         Basic           8,625      8,627         8,638       8,633
         Diluted         8,653      8,640         8,653       8,659

Earnings Per Share
         Basic:        $  0.50     $ 0.53     $    1.98   $    1.92
         Diluted:      $  0.50     $ 0.53     $    1.97   $    1.91