<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 November 30, 1998
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)
(425) 462-6000
--------------
(Registrant's telephone number, including area code)
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 January 6, 1999.
<TABLE>
<CAPTION>
Class Outstanding
----- -----------
<S> <C>
Common stock, par value $1.00 7,416,788
</TABLE>
1
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PENFORD CORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Condensed Consolidated Balance Sheets 3
November 30, 1998 and August 31, 1998
Condensed Consolidated Statements of Income 4
Three Months Ended November 30, 1998 and
November 30, 1997
Condensed Consolidated Statements of Cash Flow 5
Three Months Ended November 30, 1998 and
November 30, 1997
Notes to Condensed Consolidated Financial Statements 6-7
Item 2 - Management's Discussion and Analysis of 8-11
Financial Condition and Results of Operations
Item 3 - Quantitative and Qualitative Disclosures 11
About Market Risk
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 12
Item 2 - Changes in Securities 12
Item 3 - Defaults Upon Senior Securities 12
Item 4 - Submission of Matters to a Vote of Security Holders 12
Item 5 - Other Information 12
Item 6 - Exhibits and Reports on Form 8-K 12-14
SIGNATURES 15
</TABLE>
2
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PART I - FINANCIAL INFORMATION
Item 1 Financial Statements
PENFORD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
November 30, August 31,
1998 1998
----------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,193 $ 3,200
Trade accounts receivable 19,436 20,957
Inventories:
Raw materials and other 6,769 7,161
Work in progress 653 900
Finished goods 7,887 8,091
--------- ---------
15,309 16,152
Prepaid expenses and other 4,210 5,424
--------- ---------
Total current assets 41,148 45,733
Net property, plant and equipment 109,234 107,049
Deferred income taxes 13,798 13,781
Restricted cash value of life insurance 11,371 11,371
Other assets 5,348 5,274
--------- ---------
Total assets $ 180,899 $ 183,208
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 9,358 $ 8,509
Accrued liabilities 6,931 5,596
Current portion of long-term debt 13,697 13,697
Accrued liabilities, discontinued operations 436 1,761
--------- ---------
Total current liabilities 30,422 29,563
Long-term debt 54,791 60,199
Other postretirement benefits 10,428 10,383
Deferred income taxes 21,712 21,882
Other liabilities 7,510 7,186
Shareholders' equity:
Common stock 9,132 9,130
Additional paid-in capital 20,263 20,223
Retained earnings 56,572 54,644
Treasury stock (29,647) (29,647)
Note receivable from Savings and
Stock Ownership Plan (284) (355)
--------- ---------
Total shareholders' equity 56,036 53,995
--------- ---------
Total liabilities and shareholders' equity $ 180,899 $ 183,208
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
PENFORD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands except per share data)
<TABLE>
<CAPTION>
Three Months Ended November 30,
-------------------------------
1998 1997
----------- -----------
<S> <C> <C>
Sales $ 38,723 $ 41,818
Cost of sales 28,089 30,407
----------- -----------
Gross margin 10,634 11,411
Operating expenses 5,675 6,792
----------- -----------
Income from operations 4,959 4,619
Interest expense, net (1,428) (1,409)
----------- -----------
Income from continuing
operations before income taxes 3,531 3,210
Income taxes 1,236 1,115
----------- -----------
Income from continuing operations 2,295 2,095
Loss from discontinued operations -- (1,598)
----------- -----------
Net income $ 2,295 $ 497
=========== ===========
Weighted average common shares
and equivalents outstanding 7,749,191 7,530,490
Earnings per common share
from continuing operations;
Basic $ 0.31 $ 0.29
=========== ===========
Diluted $ 0.30 $ 0.28
=========== ===========
Earnings per common share;
Basic $ 0.31 $ 0.07
=========== ===========
Diluted $ 0.30 $ 0.07
=========== ===========
Dividends declared per common share $ 0.05 $ 0.05
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
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PENFORD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended
November 30
------------------------
1998 1997
-------- --------
<S> <C> <C>
Operating Activities:
Income from continuing operations $ 2,295 $ 2,095
Adjustments to reconcile income from continuing
operations to net cash from continuing operations:
Depreciation 3,006 2,934
Deferred income taxes (187) 179
Change in operating assets and liabilities of
continuing operations:
Trade receivables 1,521 1,090
Inventories 843 170
Accounts payable, prepaids and other 3,203 (1,630)
-------- --------
Net cash flow from continuing operations 10,681 4,838
Net cash used in discontinued operations (1,017) (2,116)
-------- --------
Net cash from operating activities 9,664 2,722
Investing Activities:
Additions to property, plant and equipment, net (5,175) (2,556)
Other 279 473
-------- --------
Net cash used in investing activities (4,896) (2,083)
Financing Activities:
Proceeds from unsecured line of credit 6,355 22,573
Payments on unsecured line of credit (8,696) (24,565)
Proceeds of long-term debt -- 5,000
Payments on long-term debt (3,067) (2,468)
Exercise of stock options -- 55
Payment of dividends (367) (364)
-------- --------
Net cash from (used in) financing activities (5,775) 231
-------- --------
Net increase (decrease) in cash and equivalents (1,007) 870
Cash and cash equivalents (bank overdrafts) at
beginning of period 3,200 (1,019)
-------- --------
Cash and cash equivalents (bank overdrafts) at
end of period $ 2,193 $ (149)
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
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PENFORD CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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 of the interim
period 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 month period ended November 30, 1998 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
November 30, 1998 there was $2.2 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 November
30, 1997 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, including spin-off costs.
6
<PAGE> 7
3. INCOME TAXES
The effective tax rate for the quarter ended November 30, 1998 is 35%.
The effective rate is higher than the federal statutory rate of 34% due
primarily to the impact 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 (dollars in thousands, except per
share data):
<TABLE>
<CAPTION>
Three Months Ended
November 30
-------------------------------
1998 1997
---------- -------------
<S> <C> <C>
Income from continuing operations $ 2,295 $ 2,095
========== =============
Net income $ 2,295 $ 497
========== =============
Weighted average common
shares outstanding 7,356,882 7,268,036
Net effect of dilutive
stock options 392,309 262,454
---------- -------------
Weighted average common shares
outstanding assuming dilution 7,749,191 7,530,490
========== =============
Earnings (loss) per common share, basic
Continuing operations $ 0.31 $ 0.29
Discontinued operations -- (0.22)
---------- -------------
Net income $ 0.31 $ 0.07
========== =============
Earnings (loss) per common share, diluted
Continuing operations $ 0.30 $ 0.28
Discontinued operations -- (0.21)
---------- -------------
Net income $ 0.30 $ 0.07
========== =============
</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 remaining obligation related
to the spin-off as of November 30, 1998 of $436,000 reflects a decrease of
approximately $1.3 million from August 31, 1998. The decrease is the result of
cash payments during the first quarter of fiscal 1999. Prior to the spin-off,
PPCO entered into a $15 million revolving credit facility which is guaranteed
by Penford. As of November 30, 1998 there was $2.2 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 CONTINUING OPERATIONS
Net income was $2.3 million, or $0.30 per share assuming dilution, for the three
months ended November 30, 1998, compared to net income of $497,000, or $0.07 per
share assuming dilution, for the corresponding period a year ago. The prior
year's three month period included an after-tax loss of $1.6 million, or $0.21
per share assuming dilution, related to the operations of PPCO.
Consolidated sales decreased $3.1 million, or 7.4%, to $38.7 million in the
three months ended November 30, 1998 from $41.8 million in the corresponding
period a year ago. The decrease is primarily due to the adverse impact of Asian
and worldwide economic conditions on the operations of the North American paper
customers served by Penford Products Co. and the extended downtime these
customers took at the end of the first quarter. As a result, sales volumes at
Penford Products Co. decreased approximately 6.0% from the same period in the
prior year. Mitigating the difficult economic conditions and customer downtime
was continued growth in sales of specialty starch copolymers for non-paper
applications such as textiles.
Sales volumes of specialty potato-based food starches at Penford Food
Ingredients ("PFI") increased by 53.8% in the first quarter of fiscal 1999 over
the same period a year ago. The increase was primarily due to the strong market
for coatings products and increased sales volume of starches for processed meat
applications.
8
<PAGE> 9
Gross margin for the three months ended November 30, 1998 was 27.5% compared to
27.3% for the corresponding period a year ago. The improvement in gross margin
percentage is attributed to increased manufacturing efficiency associated with
higher production volumes and increased sales volumes of higher margin potato
starch products at Penford Food Ingredients offsetting lower volumes of
specialty carbohydrate-based paper chemicals. Total gross margin for the three
months ended November 30, 1998 was $10.6 million compared to $11.4 million for
the corresponding period a year ago. The decrease of $800,000 is primarily due
to lower sales volumes at Penford Products Co. partially offset by increased
sales volumes achieved at Penford Food Ingredients. Paper industry analysts do
not expect improvements in the North American paper industry until the second
half of calendar 1999. Accordingly, the Company expects to continue to be
negatively impacted by current market conditions until the moderation of the
import/export imbalance induced by the Asian economic downturn.
Operating expenses decreased $1.1 million to $5.7 million in the first quarter
ended November 30, 1998, compared to $6.8 million in the corresponding quarter a
year ago. The decrease in operating expense is due to reductions in corporate
office expenses, and to a lesser extent, the company-wide emphasis on cost
containment.
Net interest expense was $1.4 million for the three months ended November 30,
1998 and 1997 on comparable outstanding debt balances.
The effective tax rate for the first quarter of fiscal 1999 was 35.0%. The
effective tax rate in fiscal 1999 is higher than the federal statutory rate of
34% due to the impact of state income taxes. The effective tax rate for the
quarter ended November 30, 1997 was also 35% due to the effect of state income
taxes.
LIQUIDITY AND CAPITAL RESOURCES
At November 30, 1998, Penford had working capital of $10.7 million, an unsecured
credit agreement of $75.0 million under which there was $34.0 million
outstanding, and several uncommitted lines of credit aggregating $10.0 million
under which there was $2.0 million outstanding. During the first quarter of
fiscal 1999, the Company used operating cash flow to pay down approximately $5.4
million of debt and to finance capital expenditures of approximately $5.2
million.
Cash flow from continuing operations for the quarter ended November 30, 1998 was
$10.7 million compared to $4.8 million in the corresponding quarter of the prior
year. The increase in operating cash flow is due to fluctuations in the
components of working capital and to a lesser extent, higher income from
continuing operations in the current year.
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 4,500 shares of its common stock in December,
1998 for $70,000.
9
<PAGE> 10
Additions to property, plant and equipment during the three months ended
November 30, 1998 were $5.2 million. First quarter additions of approximately
$2.8 million were for various improvements to the Penford Products Co.
manufacturing facility in Cedar Rapids, Iowa. The remaining $2.4 million
resulted principally from additions of manufacturing equipment installed at the
PFI facility in Plover, Wisconsin and improvements to PFI's information systems.
Capital expenditures for the Company's specialty paper chemicals and food
ingredients businesses for the fiscal 1999 year are expected to be approximately
$10.0 to $12.0 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 60% of which had been expended as
of November 30, 1998. 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 is in the process of identifying and evaluating the Year
2000 preparedness of critical customers, suppliers and service providers. This
review should be completed early in calendar 1999. Pending the results of that
review, the Company will, if necessary, consider alternatives to its planned
course of efforts.
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 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 and financial condition.
In addition, disruptions in the economy generally resulting from Year 2000
issues could also materially adversely affect the Company. Due to the
uncertainty inherent in the Year 2000 problem, resulting in part from the
uncertainty of the Year 2000 readiness of critical third-parties, the Company is
unable to determine at this time whether the consequences of Year 2000 failures
will have a material impact on the Company.
10
<PAGE> 11
The Company has contingency plans for certain critical applications and is
working on such plans for others. 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, long-term debt maturities, the price and availability of raw
materials, 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.
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.
11
<PAGE> 12
PART II - OTHER INFORMATION
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
Not applicable
Item 5 Other Information
Not applicable
Item 6 Exhibits and Reports on Form 8-K.
(a) Exhibits:
<TABLE>
<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)
</TABLE>
12
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<TABLE>
<S> <C>
(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)
(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)
</TABLE>
13
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<TABLE>
<S> <C>
(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)
(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 November 30, 1998.
14
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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)
January 11, 1999 /s/ Jeffrey T. Cook
- ---------------- ------------------------------------------
Date Jeffrey T. Cook
President and
Chief Executive Officer (Principal
Executive Officer)
January 11, 1999 /s/ Keith T. Fujinaga
- ---------------- ------------------------------------------
Date Keith T. Fujinaga
Corporate Controller
(Chief Accounting Officer)
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT NOVEMBER 30, 1998, THE CONDENSED
CONSOLIDATED STATEMENT OF INCOME AT NOVEMBER 30, 1998, AND THE CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOW AT NOVEMBER 30, 1998, 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> SEP-01-1998
<PERIOD-END> NOV-30-1998
<CASH> 2,193
<SECURITIES> 0
<RECEIVABLES> 19,436
<ALLOWANCES> 0
<INVENTORY> 15,309
<CURRENT-ASSETS> 41,148
<PP&E> 109,234
<DEPRECIATION> 0
<TOTAL-ASSETS> 180,899
<CURRENT-LIABILITIES> 30,422
<BONDS> 0
0
0
<COMMON> 9,132
<OTHER-SE> 46,904
<TOTAL-LIABILITY-AND-EQUITY> 180,899
<SALES> 38,723
<TOTAL-REVENUES> 38,723
<CGS> 28,089
<TOTAL-COSTS> 28,089
<OTHER-EXPENSES> 5,675
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,428
<INCOME-PRETAX> 3,531
<INCOME-TAX> 1,236
<INCOME-CONTINUING> 2,295
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,295
<EPS-PRIMARY> 0.31
<EPS-DILUTED> 0.30
</TABLE>
