-----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, Lgoj0SmIirsLgzUqtEfA7lxFE+ckfON7+G7Z4hwSWAYdBsk7gW9PwGPB5La4fYh2 op0+ayeLkiLVYBET4uA+UA== 0000891020-98-000515.txt : 19980406 0000891020-98-000515.hdr.sgml : 19980406 ACCESSION NUMBER: 0000891020-98-000515 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19980228 FILED AS OF DATE: 19980403 SROS: NONE 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: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-11488 FILM NUMBER: 98587215 BUSINESS ADDRESS: STREET 1: 777 108TH N E STE 2390 CITY: BELLEVUE STATE: WA ZIP: 98004-5193 BUSINESS PHONE: 4254626000 MAIL ADDRESS: STREET 1: 777 108TH N E STE 2390 CITY: BELLEVUE STATE: WA ZIP: 98009 FORMER COMPANY: FORMER CONFORMED NAME: PENWEST LTD DATE OF NAME CHANGE: 19920703 10-Q 1 FORM 10-Q 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, 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) 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 March 27, 1998.
Class Outstanding ----- ----------- Common stock, par value $1.00 7,300,661
2 PENFORD CORPORATION AND SUBSIDIARIES INDEX
Page No. -------- PART I - FINANCIAL INFORMATION Item 1 - Financial Statements Condensed Consolidated Balance Sheets February 28, 1998 and August 31, 1997 3 Condensed Consolidated Statements of Income Three and Six Months Ended February 28, 1998 and February 28, 1997 4 Condensed Consolidated Statements of Cash Flow Six Months Ended February 28, 1998 and February 28, 1997 5 Notes to Condensed Consolidated Financial Statements 6-8 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 9-12 Item 3 - Quantitative and Qualitative Disclosures 12 About Market Risk 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 13-14 Item 5 - Other Information 14 Item 6 - Exhibits and Reports on Form 8-K 14-16 SIGNATURES 17
2 3 PART I - FINANCIAL INFORMATION Item 1 Financial Statements PENFORD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in Thousands)
February 28, 1998 August 31, 1997 ----------------- --------------- ASSETS Current assets: Cash and cash equivalents $ 176 Trade accounts receivable $ 26,788 27,181 Inventories: Raw materials and other 7,403 6,624 Work in progress 924 886 Finished goods 13,889 14,325 --------- --------- 22,216 21,835 Prepaid expenses and other 7,933 5,179 --------- --------- Total current assets 56,937 54,371 Net property, plant and equipment 131,823 130,374 Deferred income taxes 11,020 11,007 Restricted cash value of life insurance 13,765 12,691 Other assets 7,689 7,486 --------- --------- Total assets $ 221,234 $ 215,929 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Bank overdraft, net $ 1,869 Accounts payable 9,259 $ 10,089 Accrued liabilities 8,748 8,157 Current portion of long-term debt 13,697 5,955 --------- --------- Total current liabilities 33,573 24,201 Long-term debt 54,223 61,791 Other postretirement benefits 10,632 10,294 Deferred income taxes 22,251 22,136 Other liabilities 8,853 8,406 Shareholders' equity: Common stock 9,100 9,093 Additional paid-in capital 19,238 18,466 Retained earnings 94,637 93,854 Treasury stock (30,086) (30,604) Note receivable from Savings and Stock Ownership Plan (497) (639) Cumulative translation adjustment (690) (1,069) --------- --------- Total shareholders' equity 91,702 89,101 --------- --------- Total liabilities and shareholders' equity $ 221,234 $ 215,929 ========= =========
See accompanying notes to condensed consolidated financial statements. 3 4 PENFORD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands except per share data)
Three Months Six Months Ended February 28 Ended February 28 ------------------------------- ------------------------------- 1998 1997 1998 1997 ----------- ----------- ----------- ----------- Sales $ 47,490 $ 48,327 $ 96,013 $ 97,637 Cost of sales 34,780 36,129 70,414 74,629 ----------- ----------- ----------- ----------- Gross margin 12,710 12,198 25,599 23,008 Operating expenses 9,661 9,124 20,376 17,716 ----------- ----------- ----------- ----------- Income from operations 3,049 3,074 5,223 5,292 Other income 1,200 Interest expense, net (1,470) (1,279) (2,879) (2,576) ----------- ----------- ----------- ----------- Income before income taxes 1,579 1,795 2,344 3,916 Income taxes 564 539 832 1,253 ----------- ----------- ----------- ----------- Net income $ 1,015 $ 1,256 $ 1,512 $ 2,663 =========== =========== =========== =========== Weighted average common shares 7,292,632 6,883,499 7,280,334 6,867,378 Weighted average common shares assuming dilution 7,519,637 7,013,463 7,525,064 7,003,261 Earnings per common share $ 0.14 $ 0.18 $ 0.21 $ 0.39 =========== =========== =========== =========== Earnings per common share, assuming dilution $ 0.13 $ 0.18 $ 0.20 $ 0.38 =========== =========== =========== =========== Dividends declared per common share $ 0.05 $ 0.05 $ 0.10 $ 0.10 =========== =========== =========== ===========
See accompanying notes to condensed consolidated financial statements. 4 5 PENFORD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (Dollars in Thousands)
Six Months Ended February 28 ------------------------- 1998 1997 -------- -------- Operating Activities: Net income $ 1,512 $ 2,663 Adjustments to reconcile net income to net cash from operating activities: Depreciation 6,542 5,803 Deferred income taxes 102 488 Change in operating assets and liabilities: Trade receivables 393 (820) Inventories (381) 1,215 Accounts payable, prepaids and other (1,708) (696) -------- -------- Net cash from operating activities 6,460 8,653 Investing Activities: Additions to property, plant and equipment (7,874) (13,563) Other 928 512 -------- -------- Net cash used by investing activities (6,946) (13,051) Financing Activities: Proceeds from unsecured line of credit 48,330 42,655 Payments on unsecured line of credit (47,620) (38,915) Proceeds from long-term debt 5,000 5,000 Payments on long-term debt (5,536) (3,492) Exercise of stock options 154 441 Purchase of life insurance for officers' benefit plans (1,158) (1,158) Payment of dividends (729) (684) -------- -------- Net cash from (used by) financing activities (1,559) 3,847 -------- -------- Net decrease in cash and cash equivalents (2,045) (551) Cash and cash equivalents (bank overdraft) at beginning of period 176 (847) -------- -------- Net bank overdraft at end of period ($ 1,869) ($ 1,398) ======== ========
See accompanying notes to condensed consolidated financial statements. 5 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. Operating results for the three and six month periods ended February 28, 1998 are not necessarily indicative of the results that may be expected for the year ending August 31, 1998. 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, 1997. Certain prior year amounts have been reclassified to conform with current year presentation. These reclassifications had no effect on previously reported results of operations. 2. INCOME TAXES The effective tax rate for the quarter and for the six months ended February 28, 1998 was 35.7% and 35.5%, respectively. The effective rate is higher than the federal statutory rate of 34.0% due primarily to the effects of state income taxes. The effective tax rate for the quarter and six months ended February 28, 1997 was 30.0% and 32.0%, respectively. The effective rate was lower than the federal statutory rate in these periods due primarily to the effects of income tax refunds received in the prior year. 3. EARNINGS PER COMMON SHARE During the second quarter of fiscal 1998, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per Share." Statement No. 128 replaced the previously reported primary and fully diluted earnings per share with basic and diluted earnings per share. 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. All earnings per share amounts have been presented and where necessary, have been restated to conform with the requirements of SFAS No. 128. 6 7 The following table presents the computation of basic and diluted earnings per share under SFAS No. 128 (dollars in thousands, except per share data):
Three Months Ended Six Months Ended February 28 February 28 ----------- ----------- 1998 1997 1998 1997 ---------- ---------- ---------- ---------- Net income $ 1,015 $ 1,256 $ 1,512 $ 2,663 ========== ========== ========== ========== Weighted average common shares outstanding 7,292,632 6,883,499 7,280,334 6,867,378 Net effect of dilutive stock options 227,005 129,964 244,730 135,883 ---------- ---------- ---------- ---------- Weighted average common shares outstanding assuming dilution 7,519,637 7,013,463 7,525,064 7,003,261 ========== ========== ========== ========== Earnings per common share $ 0.14 $ 0.18 $ 0.21 $ 0.39 ========== ========== ========== ========== Earnings per common share, assuming dilution $ 0.13 $ 0.18 $ 0.20 $ 0.38 ========== ========== ========== ==========
4. PLANNED INITIAL PUBLIC OFFERING AND SPIN-OFF OF PENWEST PHARMACEUTICALS CO. During the first quarter of fiscal 1998, the Company announced a two stage plan designed to foster the growth potential of its pharmaceuticals business, and separately, its specialty paper chemicals and food ingredients businesses. Under the first stage of the plan, the Company's Penwest Pharmaceuticals Co. (PPC) subsidiary would sell up to 20% of its common stock through an initial public offering. Under the second stage of the plan, Penford would effect a tax-free spin-off to its shareholders of the remaining ownership of PPC shares contingent upon satisfying certain conditions. The spin-off was anticipated to occur in the second calendar quarter of 1998. On October 21, 1997, PPC filed a registration statement with the Securities and Exchange Commission for an initial public offering of 2,500,000 shares of common stock (approximately 15% of its outstanding common stock). The estimated initial public offering price set forth in the registration statement was $10.00 to $12.00 per share with an option for the underwriters to purchase up to 375,000 additional shares for the purpose of covering over-allotments, if any. On December 18, 1997, Penford postponed the initial public offering of PPC due to market conditions for new issues in general as well as for health care and technology stocks in particular. The Company intends to go forward with the offering as soon as practicable after market conditions improve. This postponement will cause the planned spin-off to be delayed beyond the second calendar quarter of 1998. The Company has deferred certain costs incurred in connection with the plan which totaled approximately $3.2 million as of February 28, 1998. It is anticipated that certain of these costs, including additional costs to be incurred, will be charged to expense in the third quarter. 7 8 PPC will retain the net proceeds from the planned initial public offering. Penford will forgive intercompany advances as of the closing of the offering. As of February 28, 1998, the intercompany balance approximated $40.0 million. Had the plan been effected as of February 28, 1998, consolidated assets and shareholders' equity of Penford would have reflected a reduction of approximately $35.0 to $40.0 million, representing the net effects of the proposed distribution. Summarized quarterly financial data of PPC as of February 28, 1998 and for the three and six months then ended follows (in 000's):
Three Months Six Months Ended February 28 Ended February 28 --------------------- --------------------- 1998 1997 1998 1997 ---- ---- ---- ---- Sales $ 6,804 $ 6,478 $ 13,547 $ 12,628 Pre-tax loss (1,847) (888) (4,292) (1,837) Identifiable assets as of February 28 $ 39,284 $ 36,110
8 9 Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Net income for the quarter ended February 28, 1998 was $1.0 million, or $0.13 per share assuming dilution, compared to net income of $1.3 million, or $0.18 per share assuming dilution, for the corresponding period a year ago. Net income for the six months ended February 28, 1998 was $1.5 million, or $0.20 per share assuming dilution, compared to $2.7 million, or $0.38 per share in the corresponding period in fiscal 1997. The first six months of fiscal 1997 included other income of $1.2 million ($800,000 after tax), or $0.11 per share, from a gain on the sale of Southern California air emission credits. Penford's specialty paper chemicals and food ingredients businesses earned income before taxes of $3.4 million in the second quarter compared to $2.7 million the same quarter in the prior year. Penwest Pharmaceuticals Co. incurred a pre-tax loss in the second quarter of $1.8 million compared to a loss of $888,000 in the same quarter in the prior year. The Company, excluding PPC, earned income before taxes of $6.6 million and $5.8 million in the first six months of fiscal 1998 and 1997, respectively. Corresponding losses of PPC for the six month periods were $4.3 million and $1.8 million in fiscal 1998 and 1997, respectively. Total Company sales decreased in the second quarter and first six months of fiscal 1998 to $47.5 million and $96.0 million, respectively, both representing decreases of 1.7% from the corresponding periods in the prior year. The change in sales was primarily due to the effects in the prior year of record high corn costs which are reflected in the pricing of Penford's paper chemical products. Corn prices have moderated and returned to historical levels in the current fiscal year. Fiscal 1998 sales volume increases in the pharmaceuticals and food ingredients businesses offset a portion of the decrease resulting from lower prices. Gross margin in the second quarter improved to 26.8% from 25.2 % in the corresponding quarter a year earlier resulting primarily from lower corn prices and operational efficiency initiatives. Increased sales volumes of high, value-added specialty food grade starches and starch copolymers also contributed to the margin improvement. Gross margin for the six months ended February 28, 1998 increased to 26.7% from 23.8% in the same period last year, as a result of higher sales volumes of Penford paper chemical products, as well as the factors noted above. Operating expenses for the second quarter grew by $537,000, or 5.9%, compared to the prior year period. For the six months ended February 28, 1998, operating expenses increased $2.7 million, or 15.0%. The increase in the second quarter is attributed primarily to higher research and development expenses related to PPC's controlled release drug delivery technology. The year-to-date increase in operating expense is primarily due to higher costs for the pharmaceuticals operations including increased research and development costs and expenses associated with building the infrastructure to support its anticipated growth as well as increased sales and marketing efforts principally related to Penford Products Co. Net interest expense for the second quarter and first half of fiscal 1998 were $1.5 million and $2.9 million, respectively, compared to $1.3 million and $2.6 million in the corresponding 9 10 periods a year ago. The increases reflect higher capitalized interest in the prior year on several large projects in Cedar Rapids, Iowa and Richland, Washington. The effective tax rate for the second quarter and first half of fiscal 1998 was 35.7% and 35.5%, respectively, compared to 30.0% and 32.0% in the corresponding periods a year ago. The increase in the effective tax rate in fiscal 1998 is due to tax refunds received in the previous year and the effects of higher state income taxes in fiscal 1998. LIQUIDITY At February 28, 1998, Penford had working capital of $23.4 million, an unsecured credit agreement of $35.0 million under which there was $25.3 million outstanding, and several uncommitted lines of credit aggregating $15.0 million under which there was $6.7 million outstanding. The Company used operating cash flow and debt to finance capital expenditures during the second quarter and first six months of fiscal 1998. Cash flow from operations for the six months ended February 28, 1998 was $6.5 million compared to $8.7 million in the corresponding period of the prior year. The change in operating cash flow is due to the effects of unusually high corn costs on the components of working capital in the prior year and lower net income in the current year. The Company paid a $0.05 per share dividend on December 5, 1997 and March 6, 1998. CAPITAL RESOURCES Additions to property, plant and equipment during the six months ended February 28, 1998 were $7.9 million. Second quarter additions of $4.0 million were primarily for various improvements to the Penford Products Co. manufacturing facility in Cedar Rapids, Iowa. Capital expenditures for the Company's specialty paper chemicals and food ingredients businesses for the remainder of fiscal 1998 are expected to be consistent with the first half of the year. Commencement of constructing laboratory and manufacturing facilities for PPC in Patterson, New York has been postponed pending completion of the PPC initial public offering. The project has an estimated total cost of approximately $15.0 million. PLANNED INITIAL PUBLIC OFFERING AND SPIN-OFF OF PENWEST PHARMACEUTICALS CO. During the first quarter of fiscal 1998, the Company announced a two stage plan designed to foster the growth potential of its pharmaceuticals business, and separately, its specialty paper chemicals and food ingredients businesses. Under the first stage of the plan, the Company's Penwest Pharmaceuticals Co. (PPC) subsidiary would sell up to 20% of its common stock through an initial public offering. Under the second stage of the plan, Penford would effect a tax-free spin-off to its shareholders of the remaining ownership of PPC shares contingent upon satisfying certain conditions. The spin-off was anticipated to occur in the second calendar quarter of 1998. 10 11 On October 21, 1997, PPC filed a registration statement with the Securities and Exchange Commission for an initial public offering of 2,500,000 shares of common stock (approximately 15% of its outstanding common stock). The estimated initial public offering price set forth in the registration statement was $10.00 to $12.00 per share with an option for underwriters to purchase up to 375,000 additional shares for the purpose of covering over-allotments, if any. On December 18, 1997, Penford postponed the initial public offering of PPC due to market conditions for new issues in general as well as for health care and technology stocks in particular. The Company intends to go forward with the offering as soon as practicable after market conditions improve. This postponement will cause the planned spin-off to be delayed beyond the second calendar quarter of 1998. The Company has deferred certain costs incurred in connection with the plan which totaled approximately $3.2 million as of February 28, 1998. It is anticipated that certain of these costs, including additional costs to be incurred, will be charged to expense in the third quarter. YEAR 2000 The Company has undergone a review of its information systems, including consideration of issues associated with the Year 2000. In connection with the review, and as part of the Company's ongoing capital program, a series of technology related expenditures are planned. Management believes the expenditures, which are currently being implemented, will among other things, satisfy the significant Year 2000 issues. Other Year 2000 expenditures are not expected to be material. FORWARD-LOOKING STATEMENTS The above discussion contains forward-looking statements concerning the completion of the proposed public offering and spin-off of Penwest Pharmaceuticals Co., estimated capital expenditures, and the anticipated results of the Company. There are a variety of factors which could cause actual events to differ materially from those projected in the forward-looking statements, including without limitation: (i) the risk that the public offering or the spin-off may not be completed as the result of future developments in Penford Corporation's or Penwest Pharmaceuticals Co.'s business or conditions in the securities markets, failure to obtain necessary government rulings or approvals or third party consents or agreements or other developments; and (ii) 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; technical difficulties or cost overruns in the Company's Year 2000 compliance program; competition; the possibility of interruption of business activities due to accidents, strikes, weather or other factors; product development risk; patents and intellectual property matters (including patent infringement litigation, including the patent infringement suit brought by Bayer AG and Pfizer Inc. against Mylan Laboratories Inc. as described in the Company's Form 10-K for the fiscal year ended August 31, 1997 on file with the Securities and Exchange Commission); dependence on collaborators; regulatory and manufacturing issues including the difficulties of obtaining FDA or other regulatory approvals; changes in raw material prices; changes in general economic conditions or developments with respect to specific industries or customers affecting demand for the Company's products; or other unforeseen developments in the industries in which the Company operates. Accordingly, there can be no assurance that the public offering or spin-off will be completed, or that future activities or results will be as anticipated. 11 12 The registration statement filed by PPC with the Securities and Exchange Commission has not yet become effective. The securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. The discussion included herein shall not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of these securities in any state or jurisdiction, in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. Additional information which could affect the Company's financial results is included in the Company's 1997 Annual Report to Shareholders and its Form 10-K for the fiscal year ended August 31, 1997 on file with the Securities and Exchange Commission. Penford assumes no obligation to update any forward-looking statements should circumstances change. Item 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable 12 13 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, 1997. In November, 1997, the Company was notified by the Idaho Falls Police Department that a nearby resident had complained about health problems allegedly caused by starch emissions from the Company's Idaho Falls facility. Subsequently, the Idaho Department of Environmental Quality contacted the Company with regard to possible violations of the Company's air quality permit limits. In December, 1997, a group of nearby residents filed a Notice of Intent to Bring Suit with the Idaho Department of Environmental Quality and the U.S. Environmental Protection Agency pursuant to the Clean Air Act, the Comprehensive Environmental Response, Compensation and Liability Act, and the Emergency Planning and Community Right-to-Know Act. The Company is investigating these issues; however, the Company is unable at this time to determine whether any claim or action will be commenced or to estimate the Company's potential exposure, if any. 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 27, 1998. (b) The following directors were elected to serve a term of three years: Tod R. Hamachek and Sally G. Narodick. The board is comprised of those elected this year and the following directors completing their terms: Richard E. Engebrecht, Paul E. Freiman, Paul H. Hatfield, William G. Parzybok, Jr., N. Stewart Rogers, and William K. Street. (c) The following matters were voted upon at the meeting: 1. For the election of directors:
% of % of For Voted Withheld Voted --- ----- -------- ----- Tod R. Hamachek 6,284,705 99.82% 11,055 0.18% Sally G. Narodick 6,282,347 99.79% 13,413 0.21%
13 14 2. Ratification of selection of Ernst & Young LLP as independent auditors of the Company:
Broker For Against Abstain Non-Vote --------- --------- --------- --------- 6,269,619 7,546 18,595 0
(d) Not applicable Item 5 Other Information Not applicable Item 6 Exhibits and Reports on Form 8-K. (a) Exhibits: (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) 14 15 (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 with Messrs. Hamachek, Cook, Widmaier, Talley, Horn, Rydzewski and Belsheim (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) Credit Agreement dated as of December 22, 1995 among Penford Corporation, and its subsidiaries, Bank of America National Trust and Savings Association, ABN-AMRO Bank, N.V., The Bank of Nova Scotia, and Seattle-First National Bank (filed as an exhibit to Registrant's Form 10-Q for the quarter ended February 29, 1996) (10.11) Amendment to Credit Agreement dated as of May 7, 1997 among Penford Corporation and its subsidiaries, Bank of America National Trust and Savings Association, ABN-AMRO Bank N.V., the Bank of Nova Scotia and Seattle-First National Bank (filed as an exhibit to the Registrant's Form 10-Q for the quarter ended May 31, 1997) (10.12) Second Amendment to Credit Agreement dated as of November 28, 1997 among Penford Corporation and its subsidiaries, Bank of America National Trust and Savings Association, ABN-AMRO Bank, N.V., The Bank of Nova Scotia, and Seattle-First National Bank (filed as an exhibit to the Registrant's Form 10-Q for the quarter ended November 30, 1997) (10.13) 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) (10.14) Separation Agreement dated as of November 10, 1997 between Registrant and Penwest Pharmaceuticals Co. (filed as an exhibit to Registrant's Form 10-K for fiscal year ended August 31, 1997) 27 Financial Data Schedules 15 16 (b) A Form 8-K was filed on December 18, 1997 reporting under Item 5 Registrant's postponement of the initial public offering of Penwest Pharmaceuticals Co. Filed as an exhibit was a copy of a press release dated December 18, 1997 relating to such postponement. 16 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) April 3, 1998 /s/Tod R. Hamachek - ------------- ------------------------------------ Date Tod R. Hamachek President and Chief Executive Officer (Principal Executive Officer) April 3, 1998 /s/Jeffrey T. Cook - ------------- ------------------------------------ Date Jeffrey T. Cook Vice President, Finance and Chief Financial Officer (Principal Financial Officer) 17 EX-27 2 FINANCIAL DATA SCHEDULE FOR QUARTER ENDED 2.28.98
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AT FEBRUARY 28, 1998, THE CONDENSED CONSOLIDATED STATEMENTS OF INCOME AT FEBRUARY 28, 1998, AND THE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW AT FEBRUARY 28, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS AUG-31-1998 DEC-01-1997 FEB-28-1998 0 0 26,788 0 22,216 56,937 131,823 0 221,234 33,573 0 0 0 9,100 82,602 221,234 47,490 47,490 34,780 34,780 9,661 0 1,470 1,579 564 1,015 0 0 0 1,015 0.14 0.13
EX-27.1 3 FINANCIAL DATA SCHEDULE FOR YEAR ENDED 8.31.97
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AT AUGUST 31, 1997, THE CONDENSED CONSOLIDATED STATEMENTS OF INCOME AT AUGUST 31, 1997, AND THE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW AT AUGUST 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 12-MOS AUG-31-1997 SEP-01-1996 AUG-31-1996 0 176 27,181 0 21,835 54,371 130,374 0 215,929 24,201 0 0 0 9,093 80,008 215,929 196,634 196,634 146,081 146,081 36,583 0 5,323 9,919 3,294 6,625 0 0 0 6,625 0.95 0.93
EX-27.2 4 FINANCIAL DATA SCHEDULE FOR QUARTER ENDED 11.30.96
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEETS AT NOVEMBER 30, 1996 (UNAUDITED), THE CONDENSED CONSOLIDATED STATEMENTS OF INCOME AT NOVEMBER 30, 1996 (UNAUDITED), AND THE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW AT NOVEMBER 30, 1996 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS AUG-31-1997 SEP-01-1996 NOV-30-1996 1,708 0 23,485 0 20,836 51,677 126,838 0 207,092 24,989 0 0 0 8,684 70,618 207,092 49,310 49,310 38,454 38,454 8,636 0 1,298 2,122 715 1,407 0 0 0 1,407 0.21 0.20
EX-27.3 5 FINANCIAL DATA SCHEDULE FOR YEAR ENDED 8.31.96
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10K FOR THE PERIOD ENDED AUGUST 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR AUG-31-1996 SEP-01-1995 AUG-31-1996 0 0 26,766 0 22,111 52,651 121,173 0 202,518 23,261 0 0 0 8,677 69,461 202,518 194,474 194,474 147,711 147,711 34,455 0 4,824 7,484 2,432 0 0 0 0 5,052 0.74 0.72
EX-27.4 6 FINANCIAL DATA SCHEDULE FOR QUARTER ENDED 11.30.95
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEETS AT NOVEMBER 30, 1995 (UNAUDITED), THE CONDENSED CONSOLIDATED STATEMENTS OF INCOME AT NOVEMBER 30, 1995 (UNAUDITED), AND THE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW AT NOVEMBER 30, 1995 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS AUG-31-1996 SEP-01-1995 NOV-30-1995 5,505 0 25,427 0 15,439 50,771 111,558 0 189,372 19,319 0 0 0 8,606 65,666 189,372 45,624 45,624 33,456 33,456 8,567 0 1,054 2,547 799 1,748 0 0 0 1,748 0.26 0.25
EX-27.5 7 FINANCIAL DATA SCHEDULE FOR YEAR ENDED 8.31.95
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM A FORM 10K FOR THE PERIOD ENDED AUGUST 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR AUG-31-1995 SEP-01-1994 AUG-31-1995 5,334 0 23,943 0 14,209 48,933 111,440 0 186,760 19,747 0 0 0 8,591 63,391 186,760 174,200 174,200 126,341 126,341 32,886 0 4,765 11,107 3,890 0 0 0 0 7,271 1.07 1.03
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