<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________________ to _______________________
Commission File No. 0-11488
PENFORD CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Washington 91-1221360
------------------------ ------------------
(State of Incorporation) (I.R.S. Employer
Identification No.)
777-108th Avenue N.E., Suite 2390, Bellevue, WA 98004-5193
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (425) 462-6000
Indicate by a check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of April 7, 1999.
Class Outstanding
----------------------------- -----------
Common stock, par value $1.00 7,441,754
<PAGE> 2
PENFORD CORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Condensed Consolidated Balance Sheets
February 28, 1999 and August 31, 1998 3
Condensed Consolidated Statements of Income
Three and Six Months Ended February 28, 1999
and February 28, 1998 4
Condensed Consolidated Statements of Cash Flow
Six Months Ended February 28, 1999 and
February 28, 1998 5
Notes to Condensed Consolidated Financial Statements 6-7
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-11
Item 3 - Quantitative and Qualitative Disclosures
About Market Risk 12
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 13
Item 2 - Changes in Securities 13
Item 3 - Defaults Upon Senior Securities 13
Item 4 - Submission of Matters to a Vote of Security Holders 13
Item 5 - Other Information 13
Item 6 - Exhibits and Reports on Form 8-K 14-16
SIGNATURES 17
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements
PENFORD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
A S S E T S
<TABLE>
<CAPTION>
February 28, 1999 August 31, 1998
----------------- ---------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $1,172 $3,200
Trade accounts receivable 19,901 20,957
Inventories:
Raw materials and other 5,236 7,161
Work in progress 665 900
Finished goods 7,766 8,091
-------- --------
13,667 16,152
Prepaid expenses and other 4,359 5,424
-------- --------
Total current assets 39,099 45,733
Net property, plant and equipment 110,364 107,049
Deferred income taxes 13,814 13,781
Restricted cash value of life insurance 11,392 11,371
Other assets 5,367 5,274
-------- --------
Total assets $180,036 $183,208
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $9,481 $8,509
Accrued liabilities 6,877 5,596
Current portion of long-term debt 3,697 13,697
Accrued liabilities, discontinued operations -- 1,761
-------- --------
Total current liabilities 20,055 29,563
Long-term debt 62,571 60,199
Other postretirement benefits 10,474 10,383
Deferred income taxes 21,698 21,882
Other liabilities 7,660 7,186
Shareholders' equity:
Common stock 9,131 9,130
Additional paid-in capital 20,058 20,223
Retained earnings 57,462 54,644
Treasury stock (28,860) (29,647)
Note receivable from Savings and
Stock Ownership Plan (213) (355)
-------- --------
Total shareholders' equity 57,578 53,995
-------- --------
Total liabilities and shareholders' equity $180,036 $183,208
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
PENFORD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands except share and per share data)
<TABLE>
<CAPTION>
Three Months Six Months
Ended February 28 Ended February 28
--------------------------- ---------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Sales $37,161 $40,723 $75,932 $82,541
Cost of sales 28,273 29,326 56,411 59,733
--------- --------- --------- ---------
Gross margin 8,888 11,397 19,521 22,808
Operating expenses 5,635 6,500 11,309 13,293
--------- --------- --------- ---------
Income from operations 3,253 4,897 8,212 9,515
Interest expense, net (1,316) (1,470) (2,744) (2,879)
--------- --------- --------- ---------
Income from continuing
operations before income taxes 1,937 3,427 5,468 6,636
Income taxes 678 1,203 1,914 2,317
--------- --------- --------- ---------
Income from continuing operations 1,259 2,224 3,554 4,319
Loss from discontinued operations -- (1,209) -- (2,807)
--------- --------- --------- ---------
Net income $1,259 $1,015 $3,554 $1,512
========= ========= ========= =========
Weighted average common shares and
equivalents outstanding 7,851,974 7,519,637 7,800,582 7,525,064
Earnings per common share from
continuing operations;
Basic $0.17 $0.30 $0.48 $0.59
========= ========= ========= =========
Diluted $0.16 $0.30 $0.46 $0.57
========= ========= ========= =========
Earnings per common share;
Basic $0.17 $0.14 $0.48 $0.21
========= ========= ========= =========
Diluted $0.16 $0.13 $0.46 $0.20
========= ========= ========= =========
Dividends declared per common share $0.05 $0.05 $0.10 $0.10
========= ========= ========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
PENFORD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Dollars in thousands)
<TABLE>
<CAPTION>
Six Months
Ended February 28
-----------------------
1999 1998
-------- --------
<S> <C> <C>
Operating Activities:
Income from continuing operations $3,554 $4,319
Adjustments to reconcile net income from
continuing operations to net cash from
continuing operations:
Depreciation 6,066 5,929
Deferred income taxes (217) 332
Change in operating assets and liabilities
of continuing operations:
Trade receivables 1,056 231
Inventories 2,485 (934)
Accounts payable, prepaids and other 3,535 (1,222)
-------- --------
Net cash flow from continuing operations 16,479 8,655
Net cash used by discontinued operations (1,017) (3,556)
-------- --------
Net cash from operating activities 15,462 5,099
Investing Activities:
Additions to property, plant and equipment, net (9,346) (5,766)
Other 416 756
-------- --------
Net cash used by investing activities (8,930) (5,010)
Financing Activities:
Proceeds from unsecured line of credit 15,895 48,330
Payments on unsecured line of credit (20,246) (47,620)
Proceeds of long-term debt 10,000 5,000
Payments on long-term debt (13,277) (5,536)
Exercise of stock options -- 154
Purchase of treasury stock (196) --
Purchase of life insurance for officers' benefit plans -- (1,158)
Payment of dividends (736) (729)
-------- --------
Net cash used by financing activities (8,560) (1,559)
-------- --------
Net decrease in cash and equivalents (2,028) (1,470)
Cash and cash equivalents (bank overdrafts) at
beginning of period 3,200 (1,019)
-------- --------
Cash and cash equivalents (bank overdrafts) at
end of period $1,172 ($2,489)
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 6
PENFORD CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation for the interim
periods presented have been included. The preparation of financial
statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates. Operating results for
the three and six month periods ended February 28, 1999 are not
necessarily indicative of the results that may be expected for the year
ending August 31, 1999. For further information, refer to the
consolidated financial statements and footnotes thereto included in
Penford Corporation's ("Penford" or the "Company") annual report on Form
10-K for the fiscal year ended August 31, 1998.
Certain prior year amounts have been reclassified to conform with
current year presentation, including the reclassifications necessary to
present Penwest Pharmaceuticals Co. ("PPCO") as a discontinued
operation. These reclassifications had no effect on previously reported
net income.
2. DISCONTINUED OPERATIONS
At the end of fiscal 1998, Penford completed a tax-free distribution to
its shareholders of the Company's pharmaceuticals subsidiary, PPCO. On
August 31, 1998, Penford shareholders of record on August 10, 1998
received PPCO shares on a basis of three shares of PPCO for every two
shares of the Company. Prior to the spin-off, PPCO entered into a $15
million revolving credit facility which is guaranteed by Penford. As of
February 28, 1999 there was $2.5 million owed by PPCO under the
facility.
The consolidated financial statements of the Company prior to fiscal
1999 have been restated to reflect the spin-off of PPCO. Accordingly,
PPCO's operating results and cash flows for the quarter ended February
28, 1998 have been excluded from their respective captions in the
accompanying financial statements. These items have been reported as
Loss from Discontinued Operations and Net Cash Flows from Discontinued
Operations.
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<PAGE> 7
3. INCOME TAXES
The effective tax rate for the quarter and for the six months ended
February 28, 1999 was 35%, which is the same as in the corresponding
periods of the prior year. The effective rate in each fiscal year is
higher than the federal statutory rate of 34.0% due primarily to the
effects of state income taxes.
4. EARNINGS PER COMMON SHARE
The following table presents the computation of basic and diluted
earnings per share under SFAS No. 128 (In thousands, except share and
per share data):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
February 28 February 28
----------------------- -----------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Income from continuing operations $ 1,259 $ 2,224 $ 3,554 $ 4,319
========= ========= ========= =========
Net income $ 1,259 $ 1,015 $ 3,554 $ 1,512
========= ========= ========= =========
Weighted average common
shares outstanding 7,396,069 7,292,632 7,376,475 7,280,334
Net effect of dilutive
stock options 455,905 227,005 424,107 244,730
--------- --------- --------- ---------
Weighted average common shares
outstanding assuming dilution 7,851,974 7,519,637 7,800,582 7,525,064
========= ========= ========= =========
Earnings (loss) per common share, basic
Continuing operations $ 0.17 $ 0.30 $ 0.48 $ 0.59
Discontinued operations -- (0.16) -- (0.38)
--------- --------- --------- ---------
Net income $ 0.17 $ 0.14 $ 0.48 $ 0.21
========= ========= ========= =========
Earnings (loss) per common share, diluted
Continuing operations $ 0.16 $ 0.30 $ 0.46 $ 0.57
Discontinued operations -- (0.17) -- (0.37)
--------- --------- --------- ---------
Net income $ 0.16 $ 0.13 $ 0.46 $ 0.20
========= ========= ========= =========
</TABLE>
Basic earnings per share reflects only the weighted average common
shares outstanding. Diluted earnings per share reflects weighted average
common shares outstanding and the effect of any dilutive common stock
equivalent shares.
7
<PAGE> 8
Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SPIN-OFF OF PENWEST PHARMACEUTICALS CO.
At the end of fiscal 1998, Penford effected a tax-free distribution to its
shareholders of the Company's pharmaceuticals subsidiary, Penwest
Pharmaceuticals Co. ("PPCO"). The distribution was completed on August 31, 1998
representing the culmination of the plan to foster the growth potential of the
Company's specialty paper chemical and food ingredients businesses, and
separately, the pharmaceuticals business.
In fiscal 1998, the Company recorded certain restructuring costs consisting
primarily of estimated costs associated with implementing the spin-off,
severance costs and other facilities charges. The obligation related to the
spin-off as of August 31, 1998 of approximately $1.8 million has been
substantially paid as of February 28, 1999. Prior to the spin-off, PPCO entered
into a $15 million revolving credit facility, which is guaranteed by Penford. As
of February 28, 1999 there was $2.5 million owed by PPCO under the facility.
The financial results discussed below are comprised of the Company's operations
in the carbohydrate-based specialty paper chemical and food ingredients
businesses.
RESULTS OF OPERATIONS
Net income for the quarter ended February 28, 1999 was $1.3 million, or $0.16
per share assuming dilution, compared to net income of $1.0 million, or $0.13
per share assuming dilution, for the corresponding period a year ago. The prior
year's quarter included after-tax losses of $1.2 million, or $0.17 per share
assuming dilution, related to the operations of PPCO. Net income for the six
months ended February 28, 1999 was $3.6 million, or $0.46 per share assuming
dilution, compared to $1.5 million, or $0.20 per share in the corresponding
period in fiscal 1998. The prior year's six-month period included after-tax
losses of $2.8 million, or $0.37 per share assuming dilution, related to the
operations of PPCO.
Total Company sales decreased in the second quarter and first six months of
fiscal 1999 to $37.2 million and $75.9 million, respectively, representing
decreases of 8.7% and 8.0%, respectively, from the corresponding periods in the
prior year. The change in sales was primarily due to lower sales volumes at
Penford Products Co., the Company's specialty paper chemicals business, which
decreased approximately 4.4% and 5.2%, respectively, from the same prior year
periods. The Company's second quarter continued to be negatively impacted by the
conditions of the North American paper industry. Increased imports of coated and
uncoated printing and writing papers primarily from Asia and South America
resulted in lower production rates at the North American paper customers served
by Penford Products Co.
Partially offsetting the volume decline at Penford Products Co. was the
continued strong progress at Penford Food Ingredients Co. Sales volumes of
specialty potato-based food starches increased by 42.2% in the first half of
fiscal 1999 over the same period a year ago.
8
<PAGE> 9
Increased sales volume of specialty starches for whole and processed meats and a
strong market for coating products are attributed to the volume growth.
Gross margin in the second quarter of fiscal 1999 declined to 23.9% from 28.0%
in the corresponding quarter a year earlier due to the decreased manufacturing
efficiency of specialty carbohydrate-based paper chemicals resulting from lower
production volumes. The decrease in gross margin percentage is also due to
increased margin pressures attributed to competitive pricing arising from the
adverse conditions in the North American paper industry. Increased sales and
production volumes of higher margin, specialty food-grade starches partially
offset the decrease in gross margin. Gross margin for the six months ended
February 28, 1999 decreased to 25.7% from 27.6% in the same period a year
earlier primarily as a result of the factors noted above.
Operating expenses for the second fiscal quarter declined by $865,000, or 13.3%,
compared to the prior year period. For the six months ended February 28, 1999,
operating expenses decreased $2.0 million, or 14.9%. The decrease in operating
expense is due to reductions in corporate office expenses and the company-wide
emphasis on cost containment.
On March 22, 1999, the Company announced a plan to reduce the administrative
workforce at Penford Products Co. by approximately 15% in an effort to align
operating costs with current market conditions. The workforce reduction will be
implemented through the combination of a voluntary retirement incentive program
and involuntary layoffs. The voluntary retirement incentive program is expected
to minimize the number of involuntary layoffs, and will be funded primarily
through the Company's defined benefit retirement plan. Although the number of
employees accepting early retirement will not be known until the end of the
third fiscal quarter, the reduction in workforce could result in a pre-tax
earnings charge as high as $2.1 million.
Net interest expense for the second quarter and first half of fiscal 1999 was
$1.3 million and $2.7 million, respectively, compared to $1.5 million and $2.9
million in the corresponding periods a year ago. The decreases reflect lower
outstanding debt balances.
The effective tax rate for the second quarter and first half of fiscal 1999 was
35%, compared to 35% in the corresponding periods a year ago. The effective tax
rate is higher than the federal statutory rate of 34% due to the impact of state
income taxes.
LIQUIDITY AND CAPITAL RESOURCES
At February 28, 1999, Penford had working capital of $19.0 million, an unsecured
credit agreement of $75.0 million under which there was $44.0 million
outstanding, and several uncommitted lines of credit aggregating $10.0 million
under which there was no amount outstanding. The Company used available cash and
operating cash flow primarily to pay down $7.6 million of debt and to finance
capital expenditures of $8.9 million during the first six months of fiscal 1999.
Cash flow from continuing operations for the six months ended February 28, 1999
was $16.5 million compared to $8.7 million in the corresponding period of the
prior year. The
9
<PAGE> 10
increase in operating cash flow is due to decreases in inventory and
fluctuations in the other components of working capital.
The Company began paying a quarterly cash dividend of $0.05 per share in 1992
and has paid such dividends each quarter since.
In November of 1998, the Board of Directors authorized a stock repurchase
program for the purchase of up to 500,000 shares of the outstanding stock of the
company. The Company repurchased 14,500 shares of its common stock in the first
six months of fiscal 1999 for approximately $196,000.
Net additions to property, plant and equipment during the six months ended
February 28, 1999 were $9.3 million. Second quarter additions of $4.2 million
were primarily for various improvements to the Penford Products Co.
manufacturing facility in Cedar Rapids, Iowa and equipment additions at the
Penford Food Ingredients Co. facility in Plover, Wisconsin. Capital expenditures
for the Company's specialty paper chemicals and food ingredients businesses for
fiscal 1999 are expected to be approximately $12 to $14 million. See
"Forward-looking Statements."
YEAR 2000
The Company has undergone an assessment of its information systems for
compliance with the Year 2000 issue. The assessment and resulting remediation
efforts are addressing all facets of the Company including plant automation
software including embedded controllers and process control devices, materials
management, engineering, laboratory, business systems and general user software.
In connection with the Company's ongoing capital program, and as part of the
Year 2000 remediation, a series of technology related expenditures are planned,
many of which have been, or are currently being implemented. The Company
anticipates that internal Year 2000 compliance issues will be substantially
remediated in the first half of calendar 1999. See "Forward-looking Statements."
It is anticipated that total expenses for Year 2000 remediation efforts may
range from $500,000 to $700,000, approximately 75% of which had been expended as
of February 28, 1999. See "Forward-looking Statements."
The Company does not anticipate significant delays in finalizing internal Year
2000 remediation efforts. See "Forward-looking Statements." However, third
parties having a material relationship with the Company may be a potential risk
based on their Year 2000 preparedness, which is not within the Company's
control. The Company has identified and evaluated the Year 2000 preparedness of
critical customers, suppliers and service providers. Based on the results of the
review, no alternative courses of action to the initial remediation plan were
warranted.
Management of the Company believes it has an effective program in place to
resolve the Year 2000 issue in a timely manner. As noted above, the Company has
not yet fully completed all necessary phases of the Year 2000 program. The
failure to correct a material Year 2000 problem could result in an interruption
in, or a failure of certain normal business activities. Such failures could
adversely affect the Company's results of operations, liquidity
10
<PAGE> 11
and financial condition. In addition, disruptions in the economy generally
resulting from Year 2000 issues could also materially adversely affect the
Company. Although there is uncertainty inherent in the Year 2000 problem,
resulting in part from the uncertainty of the full extent of the readiness of
critical third-parties, and the Company is unable to determine all of the
consequences of Year 2000 failures, the impact on the Company is not expected to
be material.
The Company has contingency plans for its critical applications. These
contingency plans involve, among other actions, manual workarounds, increasing
inventories, and adjusting staffing strategies.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements concerning the estimated capital
expenditures, estimated expenses related to year 2000 issues and year 2000
preparedness, the information in Item 3 of this report and the anticipated
results of the Company. Certain forward-looking statements are identified with a
cross-reference to this section. There are a variety of factors which could
cause actual events or results to differ materially from those projected in the
forward-looking statements, including without limitation, competition; the
possibility of interruption of business activities due to equipment problems,
accidents, strikes, weather or other factors; product development risk; changes
in corn and other raw material prices; changes in general economic conditions or
developments with respect to specific industries or customers affecting demand
for the Company's products; unanticipated costs, expenses or third party claims;
the risk that results may be effected by construction delays, cost overruns,
technical difficulties, nonperformance by contractors or changes in capital
improvement project requirements or specifications; the possibility of technical
difficulties or cost overruns in the Company's Year 2000 compliance program; or
other unforeseen developments in the industries in which the Company operates.
Accordingly, there can be no assurance that future activities or results will be
as anticipated.
Forward-looking statements are based on the estimates and opinions of management
on the date the statements are made. The Company assumes no obligation to update
any forward-looking statements if circumstances or management's estimates or
opinions should change.
Additional information which could affect the Company's financial results is
included in the Company's 1998 Annual Report to Shareholders and its Form 10-K
for the fiscal year ended August 31, 1998 on file with the Securities and
Exchange Commission.
11
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Item 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES
About Market Risk
MARKET RISK SENSITIVE INSTRUMENTS AND POSITIONS
The market risk associated with the Company's market risk sensitive instruments
is the potential loss from adverse changes in interest rates and commodities
prices.
The Company is unaware of any material changes to the market risk disclosures
referred to in the Company's Report on Form 10-K for the year ended August 31,
1998.
12
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PART II - OTHER INFORMATION
<TABLE>
<S> <C>
Item 1 Legal Proceedings
The registrant is unaware of any material developments in the legal
proceedings referred to in the Registrant's Report on Form 10-K for
the year ended August 31, 1998.
Item 2 Changes in Securities
Not applicable
Item 3 Defaults Upon Senior Securities
Not applicable
Item 4 Submission of Matters to a Vote of Security Holders
(a) The annual meeting of shareholders of Penford Corporation was held on
January 25, 1999.
(b) The following directors were elected to serve a term of three years:
William G. Parzybok, Jr., William K. Street, and John C. Hunter III.
Jeffrey T. Cook was elected to serve until the annual meeting of
shareholders to be held in 2001. The board is comprised of those
elected this year and the following directors completing their terms:
Paul H. Hatfield, Sally G. Narodick, and N. Stewart Rogers.
(c) The following matters were voted upon at the meeting:
1. For the election of directors:
</TABLE>
<TABLE>
<CAPTION>
% of % of
For Voted Withheld Voted
--------- ------ -------- -----
<S> <C> <C> <C> <C>
Jeffrey T. Cook 6,210,710 99.84% 10,158 0.16%
John C. Hunter III 6,212,133 99.86% 8,735 0.14%
William G. Parzybok, Jr. 6,203,468 99.72% 17,400 0.28%
William K. Street 6,208,967 99.81% 11,901 0.19%
</TABLE>
<TABLE>
<S> <C>
2. Ratification of selection of Ernst & Young LLP as independent
auditors of the Company:
</TABLE>
<TABLE>
For Against Abstain
--------- ------- -------
<S> <C> <C>
6,208,023 7,297 5,548
</TABLE>
<TABLE>
<S> <C>
(d) Not applicable
Item 5 Other Information
Not applicable
</TABLE>
13
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Item 6 Exhibits and Reports on Form 8-K.
<TABLE>
<CAPTION>
(a) Exhibits:
<S> <C>
(3.1) Restated Articles of Incorporation of Registrant (filed as an
Exhibit to Registrant's Form 10-K for fiscal year ended
August 31, 1995)
(3.2) Articles of Amendment to Restated Articles of Incorporation
of Registrant (filed as an exhibit to Registrant's Form 10-K
for fiscal year ended August 31, 1997)
(3.3) Bylaws of Registrant as amended and restated as of October
20, 1997 (filed as an exhibit to Registrant's Form 10-K for
fiscal year ended August 31, 1997)
(4.1) Amended and Restated Rights Agreement dated as of April 30,
1997 (filed as an Exhibit to Registrant's Amendment to
Registration Statement on Form 8-A/A dated May 5, 1997)
(10.1) Senior Note Agreement among Penford Corporation as Borrower
and Mutual of Omaha and Affiliates as lenders, dated November
1, 1992 (filed as an Exhibit to Registrant's Form 10-Q for
the quarter ended February 28, 1993)
(10.2) Loan Agreement among Penford Corporation as Borrower and
Seattle-First National Bank as Lender, dated December 1, 1989
(Registrant agrees to furnish a copy of this instrument to
the Commission on request)
(10.3) Penford Corporation Supplemental Executive Retirement Plan,
dated March 19, 1990 (filed as an Exhibit to Registrant's
Form 10-K for the fiscal year ended August 31, 1991)
(10.4) Penford Corporation Supplemental Survivor Benefit Plan, dated
January 15, 1991 (filed as an Exhibit to Registrant's Form
10-K for the fiscal year ended August 31, 1991)
(10.5) Penford Corporation Deferred Compensation Plan, dated January
15, 1991 (filed as an Exhibit to Registrant's Form 10-K for
the fiscal year ended August 31, 1991)
(10.6) Change of Control Agreements between Penford Corporation and
Messrs. Cook, Widmaier, Talley, Horn, and Rydzewski (a
representative copy of these agreements is filed as an
exhibit to Registrant's Form 10-K for the fiscal year ended
August 31, 1995)
(10.7) Penford Corporation 1993 Non-Employee Director Restricted
Stock Plan (filed as an Exhibit to Registrant's Form 10-Q for
the quarter ended November 30, 1993)
(10.8) Note Agreement dated as of October 1, 1994 among Penford
Corporation, Principal Mutual Life Insurance Company and TMG
Life Insurance Company (filed as an Exhibit to Registrant's
Form 10-Q for the quarter ended February 28, 1995)
(10.9) Penford Corporation 1994 Stock Option Plan as amended and
restated as of January 21, 1997 (filed on Form S-8 dated
March 17, 1997)
</TABLE>
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<TABLE>
<S> <C>
(10.10) Penford Corporation Stock Option Plan for Non-Employee
Directors (filed as an exhibit to the Registrant's Form 10-Q
for the quarter ended May 31, 1996)
(10.11) Separation Agreement dated as of July 31, 1998 between
Registrant and Penwest Pharmaceuticals Co. (filed as an
exhibit to Registrant's Form 8-K dated August 31, 1998)
(10.12) Services Agreement dated as of July 31, 1998 between
Registrant and Penwest Pharmaceuticals Co. (filed as an
exhibit to Registrant's Form 8-K dated August 31, 1998)
(10.13) Employee Benefits Agreement dated as of July 31, 1998 between
Registrant and Penwest Pharmaceuticals Co. (filed as an
exhibit to Registrant's Form 8-K dated August 31, 1998)
(10.14) Tax Allocation Agreement dated as of July 31, 1998 between
Registrant and Penwest Pharmaceuticals Co. (filed as an
exhibit to Registrant's Form 8-K dated August 31, 1998)
(10.15) Excipient Supply Agreement dated as of July 31, 1998 between
Registrant and Penwest Pharmaceuticals Co. (filed as an
exhibit to Registrant's Form 8-K dated August 31, 1998)
(10.16) Restatement and Exchange Agreement amending the Senior Note
Agreement among Penford Corporation as Borrower and Mutual of
Omaha and Affiliates as lenders, dated as of August 1, 1998
(filed as an exhibit to Registrant's Form 10-K for the fiscal
year ended August 31, 1998)
(10.17) Guaranty Agreement dated as of August 1, 1998 by Penford
Products Co., a wholly-owned subsidiary of Registrant, of the
Restatement and Exchange Agreement among Registrant and
Mutual of Omaha and Affiliates (filed as an exhibit to
Registrant's Form 10-K for the fiscal year ended August 31,
1998).
(10.18) Intercreditor Agreement dated as of August 1, 1998 among the
parties to the Credit Agreement dated July 2, 1998 and the
parties to the Senior Note Agreements dated as of August 1,
1998 (filed as an exhibit to Registrant's Form 10-K for the
fiscal year ended August 31, 1998).
(10.19) Restatement and Exchange Agreement amending the Note
Agreement among Penford Corporation as Borrower, and
Principal Mutual Life Insurance Company and TMG Life
Insurance Company as lenders, dated as of August 1, 1998
(filed as an exhibit to Registrant's Form 10-K for the fiscal
year ended August 31, 1998).
(10.20) Guaranty Agreement dated as of August 1, 1998 by Penford
Products Co., a wholly-owned subsidiary of Registrant, of the
Restatement and Exchange Agreement among Registrant,
Principal Mutual Life Insurance Company, and TMG Life
Insurance Company (filed as an exhibit to Registrant's Form
10-K for the fiscal year ended August 31, 1998)
(10.21) Credit Agreement dated as of July 2, 1998 among Penford
Corporation and Penford Products Co. as borrowers, and
certain commercial lending institutions as the lenders, and
The Bank of Nova Scotia, as agent for the lenders (filed as
an exhibit to Registrant's Form 10-K for the fiscal year
ended August 31, 1998)
</TABLE>
15
<PAGE> 16
<TABLE>
<S> <C>
(10.22) Specific Guarantee made by Penford Corporation in favor of
The Bank of Nova Scotia (the "Bank") in respect to the
indebtedness and liability of Penwest Pharmaceuticals Co. to
the Bank under a letter loan agreement dated as of July 2,
1998 (filed as an exhibit to Registrant's Form 10-K for the
fiscal year ended August 31, 1998)
(10.23) Specific Guarantee made by Penford Products Co. in favor of
The Bank of Nova Scotia (the "Bank") in respect to the
indebtedness and liability of Penwest Pharmaceuticals Co. to
the Bank under a letter loan agreement dated as of July 2,
1998 (filed as an exhibit to Registrant's Form 10-K for the
fiscal year ended August 31, 1998)
(10.24) Revolving Term Credit Facility in Favor of Penwest
Pharmaceuticals Co. as borrowers and The Bank of Nova Scotia
as lender dated as of July 2, 1998 (filed as an exhibit to
Registrant's Form 10-K for the fiscal year ended August 31,
1998)
27 Financial Data Schedule
</TABLE>
(b) There were no filings on Form 8-K in the quarter ended February 28, 1999.
16
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Penford Corporation
-------------------
(Registrant)
February 12, 1999 /s/ JEFFREY T. COOK
- ----------------- ------------------------------------
Date Jeffrey T. Cook
President and
Chief Executive Officer
(Principal Executive Officer)
February 12, 1999 /s/ KEITH T. FUJINAGA
- ----------------- ------------------------------------
Date Keith T. Fujinaga
Corporate Controller
(Chief Accounting Officer)
17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT FEBRUARY 28, 1999, THE CONDENSED
CONSOLIDATED STATEMENT OF INCOME AT FEBRUARY 28, 1999, AND THE CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOW AT FEBRUARY 28, 1999, AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1999
<PERIOD-START> DEC-01-1998
<PERIOD-END> FEB-28-1999
<CASH> 1,172
<SECURITIES> 0
<RECEIVABLES> 19,901
<ALLOWANCES> 0
<INVENTORY> 13,667
<CURRENT-ASSETS> 39,099
<PP&E> 110,364
<DEPRECIATION> 0
<TOTAL-ASSETS> 180,036
<CURRENT-LIABILITIES> 20,055
<BONDS> 0
0
0
<COMMON> 9,131
<OTHER-SE> 48,447
<TOTAL-LIABILITY-AND-EQUITY> 180,036
<SALES> 37,161
<TOTAL-REVENUES> 37,161
<CGS> 28,273
<TOTAL-COSTS> 28,273
<OTHER-EXPENSES> 5,635
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,316
<INCOME-PRETAX> 1,937
<INCOME-TAX> 678
<INCOME-CONTINUING> 1,259
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,259
<EPS-PRIMARY> 0.17
<EPS-DILUTED> 0.16
</TABLE>
