-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D0IbToFDGzB2vhvWSsEOuEYpbSg+l5rFaiNc1coqLNvIGpbFc3bDgHFxSsqPylRZ jTX0vMRoLXZmPv+0/nRjmg== 0001035704-03-000146.txt : 20030227 0001035704-03-000146.hdr.sgml : 20030227 20030227132422 ACCESSION NUMBER: 0001035704-03-000146 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20020831 FILED AS OF DATE: 20030227 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PENFORD CORP CENTRAL INDEX KEY: 0000739608 STANDARD INDUSTRIAL CLASSIFICATION: GRAIN MILL PRODUCTS [2040] IRS NUMBER: 911221360 STATE OF INCORPORATION: WA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-11488 FILM NUMBER: 03582756 BUSINESS ADDRESS: STREET 1: 7094 SOUTH REVERE PARKWAY CITY: ENGLEWOOD STATE: C0 ZIP: 80112-3932 BUSINESS PHONE: 303-649-1900 MAIL ADDRESS: STREET 1: 7094 SOUTH REVERE PARKWAY STREET 2: - CITY: ENGLEWOOD STATE: C0 ZIP: 80112-3932 FORMER COMPANY: FORMER CONFORMED NAME: PENWEST LTD DATE OF NAME CHANGE: 19920703 11-K 1 d03645e11vk.txt FORM 11-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) [ X ] ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended AUGUST 31, 2002 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to --------------- --------------- Commission File Number 0-11488 PENFORD CORPORATION SAVINGS AND STOCK OWNERSHIP PLAN - -------------------------------------------------------------------------------- (Full title of the plan) PENFORD CORPORATION 7094 SOUTH REVERE PARKWAY ENGLEWOOD, COLORADO 80112 - -------------------------------------------------------------------------------- (Name of issuer and address of issuer's principal executive office) Penford Corporation Savings and Stock Ownership Plan Index to Financial Statements and Supplemental Schedules August 31, 2002 and 2001 and for the Year Ended August 31, 2002 Report of Independent Auditors ............................................ 3 Audited Financial Statements: Statements of Net Assets Available for Benefits ..................... 4 Statement of Changes in Net Assets Available for Benefits ........... 5 Notes to Financial Statements ....................................... 6 Supplemental Schedules: Schedule H, Line 4(i) - Schedule of Assets (Held At End of Year) .... 13 Schedule H, Line 4(j) - Schedule of Reportable Transactions ......... 14 Signatures ................................................................ 15 Exhibit No. 23 Consent of Ernst & Young LLP, Independent Auditors ......... 16
2 Report of Independent Auditors Administrative Committee Penford Corporation Savings and Stock Ownership Plan We have audited the accompanying statements of net assets available for benefits of Penford Corporation Savings and Stock Ownership Plan as of August 31, 2002 and 2001, and the related statement of changes in net assets available for benefits for the year ended August 31, 2002. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at August 31, 2002 and 2001, and the changes in its net assets available for benefits for the year ended August 31, 2002, in conformity with accounting principles generally accepted in the United States. Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedules of assets (held at end of year) as of August 31, 2002, and reportable transactions for the year then ended, are presented for purposes of additional analysis and are not a required part of the financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole. Denver, Colorado February 10, 2003. /s/ Ernst & Young -------------------- ERNST & YOUNG 3 Penford Corporation Savings and Stock Ownership Plan Statements of Net Assets Available for Benefits
AUGUST 31, 2002 2001 -------------- -------------- ASSETS Investments, at fair value: Common trust funds $ 13,898,271 $ 13,515,046 Common stock 10,633,323 12,350,344 Participant loans 294,916 264,606 -------------- -------------- 24,826,510 26,129,996 Receivables: Employer contributions -- 176,889 Due from broker for securities sold 3,562 45,085 Accrued interest and dividends 36,511 43,480 -------------- -------------- 40,073 265,454 -------------- -------------- Total assets 24,866,583 26,395,450 LIABILITIES Accrued expenses 9,306 39,188 Due to broker for securities purchased -- 127,345 -------------- -------------- Total liabilities 9,306 166,533 -------------- -------------- Net assets available for benefits $ 24,857,277 $ 26,228,917 ============== ==============
See accompanying notes. 4 Penford Corporation Savings and Stock Ownership Plan Statement of Changes in Net Assets Available for Benefits Year Ended August 31, 2002 ADDITIONS Investment income: Interest and dividends $ 196,151 -------------- Contributions: Employer, net of forfeitures 793,760 Participants 1,471,672 -------------- 2,265,432 -------------- Total additions 2,461,583 -------------- DEDUCTIONS Net depreciation in fair value of investments 1,179,561 Benefits paid to participants 2,467,320 Administrative expenses 186,342 -------------- Total deductions 3,833,223 -------------- Net decrease (1,371,640) NET ASSETS AVAILABLE FOR BENEFITS Beginning of year 26,228,917 -------------- End of year $ 24,857,277 ==============
See accompanying notes. 5 Penford Corporation Savings and Stock Ownership Plan Notes to Financial Statements 1. DESCRIPTION OF THE PLAN The following description of the Penford Corporation Savings and Stock Ownership Plan (the Plan) provides only general information. Participants should refer to the actual Plan document or the Summary Plan Description for a more complete description of the Plan's provisions. Copies are available from the Plan's Administrative Committee. GENERAL The Plan is a defined-contribution plan available to all U.S. employees, including part-time employees, who have worked a specified period of time for Penford Corporation (the Company). Employees who have completed one month of service with the Company are eligible to participate in the Plan. The Plan was created effective September 1, 1984. It is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). CONTRIBUTIONS Effective September 1, 2001, participants may contribute a maximum of 16% of their eligible annual compensation. Participants may elect to invest their contribution in any of the Plan's fund options, with the exception of the Penwest Pharmaceuticals Co. (PPCO) Stock Fund. Following the initial investment in the PPCO Stock Fund on September 1, 1998, which was a result of the tax-free distribution of the Company's pharmaceuticals subsidiary, Penwest Pharmaceuticals Co., no additional investments are allowed to this fund. At any time, but limited to once per month, participants have the opportunity to change their investment option previously elected. The Plan provides a 100% match on the first 3% of salary deferrals and a 50% match on the next 3% up to a maximum of 6% of the employee's contribution. The match dollars are invested in the funds to which the participant directs his contributions. The Company may also make annual discretionary profit-sharing contributions to the Plan. Profit-sharing contributions are allocated based on participant compensation. There were no profit-sharing contributions paid to the Plan for fiscal year 2002. Forfeitures are used to reduce employer contributions to the Plan for the next Plan year. In September 2001, $35,323 was applied to reduce employer contributions. As of August 31, 2002, the Plan had $73,282 in forfeitures available to offset future employer contributions. 6 Penford Corporation Savings and Stock Ownership Plan Notes to Financial Statements 1. DESCRIPTION OF THE PLAN (CONTINUED) PARTICIPANT ACCOUNTS Individual accounts are maintained for all Plan participants. These accounts reflect participants' contributions and related Company matching and profit-sharing contributions to the Plan as well as allocations of earnings or losses on the Plan's investments. Allocations of Plan earnings are based on each participant's account balance. VESTING Participants are immediately vested in their contributions, plus actual earnings thereon. Participants in the employ of the Company on or after September 1, 2001 are immediately vested in employer matching contributions, plus actual earnings thereon. Participants who terminated employment prior to September 1, 2001 were subject to the previous vesting schedule of 20% vesting each year over a five-year period with respect to employer matching contributions. All employer profit sharing contributions are also subject to a vesting schedule of 20% per year over a five-year period. PAYMENT OF BENEFITS Distributions to terminated participants for vested account balances are made in cash, unless elected to be made in Penford Corporation common stock, as soon as practicable after termination. Participants are eligible for distribution of 100% of their vested account balance, including both participant and employer contributions, as soon as practicable after their normal or postponed retirement date, at death, or at total disability, as defined by the Plan document. Participants with a vested balance of $5,000 or more may elect to maintain their account balance in the Plan until otherwise required to receive a distribution. PARTICIPANT LOANS Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their vested account balance. Loan terms range from one to five years or up to 15 years for the purchase of a primary residence. The loans are secured by the balance in the participant's account and bear interest at a rate commensurate with local prevailing rates as determined by the Plan Administrative Committee. Principal and interest are paid ratably through payroll deductions. 7 Penford Corporation Savings and Stock Ownership Plan Notes to Financial Statements 1. DESCRIPTION OF THE PLAN (CONTINUED) PLAN TERMINATION Although the Company has not expressed any intent to do so, it has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100% vested in their accounts. 2. SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The accounting records of the Plan are maintained on the accrual basis of accounting. INVESTMENT VALUATION AND INCOME RECOGNITION Assets of the Plan are invested in nine funds, including seven common trust funds and two common stock funds. The common stock funds are comprised of the Company's common stock and the common stock of PPCO to the extent participants received PPCO shares in connection with the spin-off of PPCO in 1998. The unit value of each common trust fund is stated at fair value, determined on a daily basis by reference to the market values of the underlying assets. Investments in common stock are stated at fair value based on closing market prices on the last business day of the year. Participant loans are recorded at their outstanding balances, which approximate fair value. Purchases and sales of investments are recorded on the trade dates. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. 8 Penford Corporation Savings and Stock Ownership Plan Notes to Financial Statements 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) EXPENSES The Plan's administrative expenses are paid by either the Plan or the Company, as provided by the Plan document. Expenses paid or accrued by the Plan for 2002 were $186,342. RISKS AND UNCERTAINTIES The Plan provides for various investment options. Investment securities are exposed to various risks, such as interest rate, market, and credit. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in interest rates, market values and credit ratings in the near term would materially affect the value of participants' account balances, and the amounts reported in the statements of net assets available for benefits and the statement of changes in net assets available for benefits. 3. INVESTMENTS Individual investments whose fair value was in excess of 5% of Plan net assets at year-end were as follows:
AUGUST 31, 2002 2001 ------------------------- Penford Corporation common stock* 7,296,070 $ 6,475,962 Penwest Pharmaceuticals Co. common stock* 3,337,253 5,874,382 Frank Russell Trust Company: Commingled Employee Benefit Funds Trust Short-Term Investment Fund 3,572,038 2,288,487 Commingled Employee Benefit Funds Trust Global Aggressive Balanced Fund 5,461,607 6,098,580 Commingled Employee Benefit Funds Trust Tactical Asset Allocation Fund 2,151,459 2,217,927 Commingled Employee Benefit Funds Trust Global Equity Fund 2,035,331 2,585,886
*Nonparticipant directed 9 Penford Corporation Savings and Stock Ownership Plan Notes to Financial Statements 3. INVESTMENTS (CONTINUED) During the year ended August 31, 2002, the Plan's investments (including investments bought and sold, as well as held, during the year) appreciated (depreciated) in fair value as determined by quoted market prices as follows:
NET REALIZED AND UNREALIZED APPRECIATION (DEPRECIATION) IN FAIR VALUE OF INVESTMENTS --------------- Common trust funds $ (1,309,418) Common stock 129,857 --------------- $ (1,179,561) ===============
4. NONPARTICIPANT-DIRECTED INVESTMENTS The Penford Corporation Stock Fund and the PPCO Stock Fund both contain amounts in which participants are not yet vested and, therefore, cannot be directed into other investment funds by the participants. As the breakdown between amounts that are participant directed and nonparticipant directed cannot be readily determined, the funds are considered to be nonparticipant directed. Information about the net assets and the significant components of changes in net assets related to the nonparticipant-directed investments is as follows:
AUGUST 31 2002 2001 -------------- -------------- Investments, at fair value: Common trust funds $ 302,950 $ 182,167 Penford Corporation common stock 7,296,070 6,475,962 Penwest Pharmaceuticals Co. common stock 3,337,253 5,874,382 Employer contributions receivable -- 7,725 Due from broker for securities sold -- 45,085 Accrued interest and dividends 31,118 36,716 -------------- -------------- $ 10,967,391 $ 12,622,037 ============== ==============
10 Penford Corporation Savings and Stock Ownership Plan Notes to Financial Statements 4. NONPARTICIPANT-DIRECTED INVESTMENTS (CONTINUED)
YEAR ENDED AUGUST 31, 2002 ----------------- Changes in net assets: Contributions: Employer, net of forfeitures $ 43,882 Participants 118,711 Interfund transfers 31,396 Interest and dividends 94,427 Net depreciation in fair value of investments 129,857 Benefits paid to participants (2,072,919) ----------------- $ (1,654,646) =================
5. RECONCILIATION TO FORM 5500 The following provides a reconciliation of net assets available for benefits per the financial statements to the Form 5500:
AUGUST 31, 2002 2001 -------------- -------------- Net assets available for benefits per the financial statements $ 24,857,277 $ 26,228,917 Less: Benefit claims payable per Form 5500 -- (46,106) -------------- -------------- Net assets available for benefits per Form 5500 $ 24,857,277 $ 26,182,811 ============== ==============
The following is a reconciliation of benefits paid to participants per the financial statements to the Form 5500:
YEAR ENDED AUGUST 31, 2002 ----------------- Benefits paid to participants per the financial statements $ 2,467,320 Less: Benefit claims payable at the beginning of the year per Form 5500 (46,106) ----------------- Benefits paid to participants per Form 5500 $ 2,421,214 =================
11 Penford Corporation Savings and Stock Ownership Plan Notes to Financial Statements 5. RECONCILIATION TO FORM 5500 (CONTINUED) Benefit claims payable are recorded on the Form 5500 for benefit claims that have been processed and approved for payment prior to year-end but are not recorded in the financial statements until benefit claims are paid. 6. INCOME TAX STATUS The Plan has received a determination letter from the Internal Revenue Service dated February 6, 2003, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the Code) and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The plan administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan is qualified and the related trust is tax exempt. 12 Penford Corporation Savings and Stock Ownership Plan Schedule H, Line 4(i)--Schedule of Assets (Held At End of Year) EIN: 91-1221360 Plan Number: 003 August 31, 2002
(c) (b) DESCRIPTION OF INVESTMENT INCLUDING IDENTITY OF ISSUE, BORROWER, MATURITY RATE, RATE OF INTEREST, PAR, (d) (e) (a) LESSOR, OR SIMILAR PARTY OR MATURITY VALUE COST CURRENT VALUE - ------------------------------------------------------------------------------------------------------------- COMMON TRUST FUNDS * Frank Russell Trust Company 3,572,038 units of the Commingled $ 3,572,038 Employee Benefit Funds Trust Short-Term Investment Fund (1) * Frank Russell Trust Company 270,243 units of the Commingled 5,461,607 Employee Benefit Funds Trust Global Aggressive Balanced Fund (1) * Frank Russell Trust Company 12,538 units of the Commingled 284,361 Employee Benefit Funds Trust Growth Fund (1) * Frank Russell Trust Company 19,520 units of the Commingled 322,071 Employee Benefit Funds Trust Small Capitalization Fund (1) * Frank Russell Trust Company 4,073 units of the Commingled 71,404 Employee Benefit Funds Trust All International Fund (1) * Frank Russell Trust Company 84,437 units of the Commingled 2,151,459 Employee Benefit Funds Trust Tactical Asset Allocation Fund (1) * Frank Russell Trust Company 81,740 units of the Commingled 2,035,331 Employee Benefit Funds Trust Global Equity Fund (1) ------------- 13,898,271 COMMON STOCK * Penford Corporation 515,988 common shares $ 6,869,043 7,296,070 * Penwest Pharmaceuticals Co. 283,780 common shares 2,393,404 3,337,253 ------------- 10,633,323 * PARTICIPANT LOANS Interest rates range from 5.25% to 294,916 10.50% maturing through 2017 ------------- $ 24,826,510 =============
* Denotes party-in-interest to the Plan. (1) Cost information is omitted as investments are participant directed. 13 Penford Corporation Savings and Stock Ownership Plan Schedule H, Line 4(j)--Schedule of Reportable Transactions EIN: 91-1221360 Plan Number: 003 For the Year Ended August 31, 2002
(a) (c) (d) (g) IDENTITY OF PARTY INVOLVED (b) PURCHASE SELLING COST OF AND DESCRIPTION OF ASSET DESCRIPTION OF TRANSACTION PRICE PRICE ASSETS - -------------------------------------------------------------------------------------------------------------------------------- Category (iii) - A series of transactions in excess of 5% of Plan assets. Frank Russell Trust Company Penford Corporation common stock $ 869,135 $ -- $ 869,135 Frank Russell Trust Company Penford Corporation common stock $ -- $ 2,060,577 $ 2,045,461 ------------- --------------- --------------- (h) CURRENT VALUE OF (a) ASSET ON (i) IDENTITY OF PARTY INVOLVED (b) TRANSACTION NET GAIN AND DESCRIPTION OF ASSET DESCRIPTION OF TRANSACTION DATE OR (LOSS) - ------------------------------------------------------------------------------------------------------------- Category (iii) - A series of transactions in excess of 5% of Plan assets. Frank Russell Trust Company Penford Corporation common stock $ 869,135 $ -- Frank Russell Trust Company Penford Corporation common stock $ 2,060,577 $ 15,116 --------------- ---------------
There were no Category (i), (ii), or (iv) reportable transactions during the year ended August 31, 2002. Columns (e) and (f) have not been presented, as this information is not applicable. 14 SIGNATURES The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. Penford Corporation Savings and Stock Ownership Plan February 27, 2003 By: /s/ Steven O. Cordier ---------------------------------- Steven O. Cordier Penford Corporation Vice President and Chief Financial Officer 15 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 23 Consent of Ernst &. Young, LLP.
EX-23 3 d03645exv23.txt CONSENT OF ERNST & YOUNG LLP Exhibit 23 Consent of Independent Auditors We consent to the incorporation by reference in the Registration Statement (Form S-8, No. 33-88946) pertaining to the Penford Corporation Savings and Stock Ownership Plan of our report dated February 10, 2003 with respect to the financial statements and supplemental schedules of Penford Corporation Savings and Stock Ownership Plan included in this Annual Report (Form 11-K) for the year ended August 31, 2002. Denver, Colorado /s/ Ernst & Young LLP February 24, 2003 ------------------------ ERNST & YOUNG LLP 16 -----END PRIVACY-ENHANCED MESSAGE-----