-----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, WfROz7ib+ZMpxri3YMq/0iq9I/jinp2EBJm/M/LrjU5uWRbvsYWbfqWWj+HVwoSa QQan0pNhfGpx70nk3mDdQw== 0000891020-99-000051.txt : 19990114 0000891020-99-000051.hdr.sgml : 19990114 ACCESSION NUMBER: 0000891020-99-000051 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981130 FILED AS OF DATE: 19990113 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: 10-Q SEC ACT: SEC FILE NUMBER: 000-11488 FILM NUMBER: 99505560 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 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.
Class Outstanding ----- ----------- Common stock, par value $1.00 7,416,788
1 2 PENFORD CORPORATION AND SUBSIDIARIES INDEX
Page No. -------- 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
2 3 PART I - FINANCIAL INFORMATION Item 1 Financial Statements PENFORD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in Thousands)
November 30, August 31, 1998 1998 ----------- ---------- 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 ========= =========
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 Ended November 30, ------------------------------- 1998 1997 ----------- ----------- 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 =========== ===========
See accompanying notes to condensed consolidated financial statements. 4 5 PENFORD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (Dollars in Thousands)
Three Months Ended November 30 ------------------------ 1998 1997 -------- -------- 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) ======== ========
See accompanying notes to condensed consolidated financial statements. 5 6 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 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):
Three Months Ended November 30 ------------------------------- 1998 1997 ---------- ------------- 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 ========== =============
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 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 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 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 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 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: (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)
12 13 (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)
13 14 (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
(b) There were no filings on Form 8-K in the quarter ended November 30, 1998. 14 15 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 EX-27 2 FINANCIAL DATA SCHEDULE
5 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. 3-MOS AUG-31-1999 SEP-01-1998 NOV-30-1998 2,193 0 19,436 0 15,309 41,148 109,234 0 180,899 30,422 0 0 0 9,132 46,904 180,899 38,723 38,723 28,089 28,089 5,675 0 1,428 3,531 1,236 2,295 0 0 0 2,295 0.31 0.30
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