##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)



| | [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
| | --- | ---------------------------------------------------------------------------------------

For the quarterly period ended November 30, 2001

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, Washington |  | 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 [   ]

The net number of shares of the Registrants common stock (the
Registrants only outstanding class of stock) outstanding as of January
7, 2002 was 7,538,468.

1



---

TABLE OF CONTENTS



|                               |                                                                                               |                                                      |  |  |  |  |  | 
|------------------------------ | --------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION
|                               | Item 1: Financial Statements                                                                 
|                               |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS               
|                               |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF INCOME         
|                               |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW      
|                               |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|                               | Item 2: Managements Discussion and Analysis of Financial Condition and Results of Operations
|                               | Item 3: Quantitative and Qualitative Disclosures About Market Risk                           
|PART II  OTHER INFORMATION   
|                               | Item 1 Legal Proceedings                                                                     
|                               | Item 2 Changes in Securities and Use of Proceeds                                             
|                               | Item 3 Defaults Upon Senior Securities                                                       
|                               | Item 4 Submission of Matters to a Vote of Security Holders                                   
|                               | Item 5 Other Information                                                                     
|                               | Item 6 Exhibits and Reports on Form 8-K.                                                     
|SIGNATURES                    
|EXHIBIT 99.1                  



---



##### Table of Contents



PENFORD CORPORATION AND SUBSIDIARIES

INDEX

|                                |                                                                                                |                                                                                                           |    |          |     | 
|------------------------------- | ---------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------- | -- | -------- | --- | 
|                                |                                                                                                |                                                                                                           |    | Page No.
|                                |                                                                                                |                                                                                                           |    |         
|PART I   FINANCIAL INFORMATION |                                                                                                |                                                                                                           |    |         
|                               
|                                | Item 1 - Financial Statements                                                                  |                                                                                                           |    |          |    
|                               
|                                |                                                                                                | Condensed Consolidated Balance Sheets
November 30, 2001 and August 31, 2001                               |    |          | 3   | 
|                               
|                                |                                                                                                | Condensed Consolidated Statements of Income
Three Months Ended November 30, 2001
and November 30, 2000    |    |          | 4   | 
|                               
|                                |                                                                                                | Condensed Consolidated Statements of Cash Flow
Three Months Ended November 30, 2001
and November 30, 2000 |    |          | 5   | 
|                               
|                                |                                                                                                | Notes to Condensed Consolidated Financial Statements                                                      |    |          | 6-9 | 
|                               
|                                | Item 2 - Managements Discussion and Analysis of
Financial Condition and Results of Operations |                                                                                                           |    | 10-13    |    
|                               
|                                | Item 3 - Quantitative and Qualitative Disclosures
About Market Risk                            |                                                                                                           |    | 14       |    
|                               
|PART II  OTHER INFORMATION     |                                                                                                |                                                                                                           |    |         
|                               
|                                | Item 1 - Legal Proceedings                                                                     |                                                                                                           |    | 15       |    
|                               
|                                | Item 2 - Changes in Securities and Use of Proceeds                                             |                                                                                                           |    | 15       |    
|                               
|                                | Item 3 - Defaults Upon Senior Securities                                                       |                                                                                                           |    | 15       |    
|                               
|                                | Item 4 - Submission of Matters to a Vote of Security Holders                                   |                                                                                                           |    | 15       |    
|                               
|                                | Item 5 - Other Information                                                                     |                                                                                                           |    | 15       |    
|                               
|                                | Item 6 - Exhibits and Reports on Form 8-K                                                      |                                                                                                           |    | 15-17    |    
|                               
|SIGNATURES                      |                                                                                                |                                                                                                           | 18 |         

2



---



##### Table of Contents






PART I  FINANCIAL INFORMATION




Item 1: Financial Statements




PENFORD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

|                                        |  |                   |                                               |                                            |   |         |         |  |   |         |         | 
|--------------------------------------- |  | ----------------- | --------------------------------------------- | ------------------------------------------ | - | ------- | ------- |  | - | ------- | ------- | 
|(Dollars in thousands)                  |  | November 30, 2001 |                                               | August 31, 2001                           
|                                       
|ASSETS                                 
|Current assets:                         |  |                   |                                               |                                            |   |         |         | 
|                                        |  |                   | Trade accounts receivable                     |                                            | $ | 27,245  |         |  | $ | 27,304  |        
|                                        |  |                   | Inventories                                   |                                            |   | 22,137  |         |  |   | 23,564  |        
|                                        |  |                   | Prepaid expenses and other                    |                                            |   | 6,016   |         |  |   | 6,505   |        
|                                        |  |                   |                                               |                                            |   |         |         | 
|                                        |  |                   |                                               | Total current assets                       |   |         | 55,398  |  |   |         | 57,373  | 
|Property, plant and equipment, net      |  |                   | 136,095                                       |                                            |   |         | 140,558 | 
|Deferred income taxes                   |  |                   | 13,190                                        |                                            |   |         | 13,214  | 
|Restricted cash value of life insurance |  |                   | 12,022                                        |                                            |   |         | 11,866  | 
|Other assets                            |  |                   | 5,661                                         |                                            |   |         | 5,838   | 
|Goodwill                                |  |                   | 14,860                                        |                                            |   |         | 15,264  | 
|                                        |  |                   |                                               |                                            |   |         |         | 
|                                        |  |                   |                                               | Total assets                               |   | $       | 237,226 |  |   | $       | 244,113 | 
|                                        |  |                   |                                               |                                            |   |         |         | 
|                                       
|LIABILITIES AND SHAREHOLDERS EQUITY   
|Current liabilities:                    |  |                   |                                               |                                            |   |         |         | 
|                                        |  |                   | Bank overdraft, net                           |                                            | $ | 503     |         |  | $ | 1,776   |        
|                                        |  |                   | Accounts payable                              |                                            |   | 14,178  |         |  |   | 13,477  |        
|                                        |  |                   | Accrued liabilities                           |                                            |   | 8,227   |         |  |   | 8,541   |        
|                                        |  |                   | Current portion of long-term debt             |                                            |   | 17,012  |         |  |   | 17,658  |        
|                                        |  |                   |                                               |                                            |   |         |         | 
|                                        |  |                   |                                               | Total current liabilities                  |   |         | 39,920  |  |   |         | 41,452  | 
|Long-term debt                          |  |                   | 89,874                                        |                                            |   |         | 94,969  | 
|Other postretirement benefits           |  |                   | 11,189                                        |                                            |   |         | 11,129  | 
|Deferred income taxes                   |  |                   | 22,703                                        |                                            |   |         | 22,947  | 
|Other liabilities                       |  |                   | 8,042                                         |                                            |   |         | 7,904   | 
|Shareholders equity:                   |  |                   |                                               |                                            |   |         |         | 
|                                        |  |                   | Common stock                                  |                                            |   | 9,513   |         |  |   | 9,511   |        
|                                        |  |                   | Additional paid-in capital                    |                                            |   | 24,381  |         |  |   | 24,340  |        
|                                        |  |                   | Retained earnings                             |                                            |   | 66,314  |         |  |   | 65,526  |        
|                                        |  |                   | Treasury stock                                |                                            |   | (32,757 | )       |  |   | (32,757 | )      
|                                        |  |                   | Accumulated other comprehensive income (loss) |                                            |   | (1,953  | )       |  |   | (908    | )      
|                                        |  |                   |                                               |                                            |   |         |         | 
|                                        |  |                   |                                               | Total shareholders equity                 |   |         | 65,498  |  |   |         | 65,712  | 
|                                        |  |                   |                                               |                                            |   |         |         | 
|                                        |  |                   |                                               | Total liabilities and shareholders equity |   | $       | 237,226 |  |   | $       | 244,113 | 
|                                        |  |                   |                                               |                                            |   |         |         | 

The accompanying notes are an integral part of these statements.

3



---



##### Table of Contents






PENFORD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

|                                                                                           |                                            |      |                                |        |  |   |           |        |  
|------------------------------------------------------------------------------------------ | ------------------------------------------ | ---- | ------------------------------ | ------ |  | - | --------- | ------ | -
|                                                                                           |                                            |      | Three Months Ended November 30
|(Dollars in thousands except share and per share data)                                     |                                            | 2001 |                                | 2000  
|                                                                                          
|Sales                                                                                      |                                            | $    | 56,305                         |        |  | $ | 51,889    |       
|Cost of sales                                                                              |                                            |      | 46,106                         |        |  |   | 40,936    |       
|                                                                                           |                                            |      |                                |        |  |   |           |       
|                                                                                           | Gross margin                               |      |                                | 10,199 |  |   |           | 10,953 |  
|Operating expenses                                                                         |                                            |      | 4,714                          |        |  |   | 5,113     |       
|Research and development                                                                   |                                            |      | 1,571                          |        |  |   | 1,650     |       
|                                                                                           |                                            |      |                                |        |  |   |           |       
|                                                                                           | Income from operations                     |      |                                | 3,914  |  |   |           | 4,190  |  
|Interest expense, net                                                                      |                                            |      | 2,067                          |        |  |   | 2,491     |       
|                                                                                           |                                            |      |                                |        |  |   |           |       
|                                                                                           | Income before taxes and
extraordinary item |      |                                | 1,847  |  |   |           | 1,699  |  
|Income taxes                                                                               |                                            |      | 607                            |        |  |   | 563       |       
|                                                                                           |                                            |      |                                |        |  |   |           |       
|Income before extraordinary item                                                           |                                            |      | 1,240                          |        |  |   | 1,136     |       
|Extraordinary loss on early
extinguishment of debt, net of
applicable income taxes of $478 |                                            |      |                               |        |  |   | 888       |       
|                                                                                           |                                            |      |                                |        |  |   |           |       
|Net income                                                                                 |                                            | $    | 1,240                          |        |  | $ | 248       |       
|                                                                                           |                                            |      |                                |        |  |   |           |       
|Weighted average common shares and
equivalents outstanding, assuming
dilution              |                                            |      | 7,601,533                      |        |  |   | 7,660,604 |       
|Earnings per common share:                                                                 |                                            |      |                                |        |  |   |           |       
|                                                                                           | Income before extraordinary item           |      | $                              | 0.16   |  |   | $         | 0.15   |  
|                                                                                           |                                            |      |                                |        |  |   |           |       
|                                                                                           | Extraordinary loss                         |      | $                              |       |  |   | $         | (0.12  | )
|                                                                                           |                                            |      |                                |        |  |   |           |       
|                                                                                           | Net income                                 |      | $                              | 0.16   |  |   | $         | 0.03   |  
|                                                                                           |                                            |      |                                |        |  |   |           |       
|Earnings per share, assuming dilution:                                                     |                                            |      |                                |        |  |   |           |       
|                                                                                           | Income before extraordinary item           |      | $                              | 0.16   |  |   | $         | 0.15   |  
|                                                                                           |                                            |      |                                |        |  |   |           |       
|                                                                                           | Extraordinary loss                         |      | $                              |       |  |   | $         | (0.12  | )
|                                                                                           |                                            |      |                                |        |  |   |           |       
|                                                                                           | Net income                                 |      | $                              | 0.16   |  |   | $         | 0.03   |  
|                                                                                           |                                            |      |                                |        |  |   |           |       
|Dividends declared per common share                                                        |                                            | $    | 0.06                           |        |  | $ | 0.06      |       
|                                                                                           |                                            |      |                                |        |  |   |           |       

The accompanying notes are an integral part of these statements.

4



---



##### Table of Contents






PENFORD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)

|                       |                                                                                                        |                                      |   |                                |       |   |   |         |        |  
|---------------------- | ------------------------------------------------------------------------------------------------------ | ------------------------------------ | - | ------------------------------ | ----- | - | - | ------- | ------ | -
|                       |                                                                                                        |                                      |   | Three Months Ended November 30
|(Dollars in thousands) |                                                                                                        | 2001                                 |   | 2000                          
|                      
|Operating activities:  |                                                                                                        |                                      |   |                                |       |   |   |        
|                       | Net income                                                                                             |                                      | $ | 1,240                          |       |   | $ | 248     |       
|                       | Adjustments to reconcile net income
to net cash from operations:                                       |                                      |   |                                |       |   |   |         |       
|                       |                                                                                                        | Loss on early extinguishment of debt |   |                                |      |   |   |         | 888    |  
|                       |                                                                                                        | Depreciation and amortization        |   |                                | 4,486 |   |   |         | 4,129  |  
|                       |                                                                                                        | Deferred income taxes                |   |                                | (193  | ) |   |         | 146    |  
|                       | Change in operating assets and liabilities,
excluding impact of Penford Australia Limited
acquisition: |                                      |   |                                |       |   |   |         |       
|                       |                                                                                                        | Trade receivables                    |   |                                | 1,160 |   |   |         | (1,948 | )
|                       |                                                                                                        | Inventories                          |   |                                | 961   |   |   |         | (1,081 | )
|                       |                                                                                                        | Accounts payable, prepaids and other |   |                                | (189  | ) |   |         | (930   | )
|                       |                                                                                                        |                                      |   |                                |       |   |   |        
|                       | Net cash from operating activities                                                                     |                                      |   | 7,465                          |       |   |   | 1,452   |       
|Investing activities:  |                                                                                                        |                                      |   |                                |       |   |   |        
|                       | Investment in property, plant and equipment                                                            |                                      |   | (845                           | )     |   |   | (3,065  | )     
|                       | Acquisition of Penford Australia Limited                                                               |                                      |   |                               |       |   |   | (55,953 | )     
|                       | Other                                                                                                  |                                      |   | 54                             |       |   |   | 368     |       
|                       |                                                                                                        |                                      |   |                                |       |   |   |        
|                       | Net cash used by investing activities                                                                  |                                      |   | (791                           | )     |   |   | (58,650 | )     
|Financing activities:  |                                                                                                        |                                      |   |                                |       |   |   |        
|                       | Proceeds from revolving line of credit                                                                 |                                      |   | 3,140                          |       |   |   | 23,512  |       
|                       | Payments on revolving line of credit                                                                   |                                      |   | (4,291                         | )     |   |   | (17,988 | )     
|                       | Proceeds from long-term debt                                                                           |                                      |   |                               |       |   |   | 104,509 |       
|                       | Payments on long-term debt                                                                             |                                      |   | (3,742                         | )     |   |   | (50,571 | )     
|                       | Payment of fees for early extinguishment of debt                                                       |                                      |   |                               |       |   |   | (1,366  | )     
|                       | Exercise of stock options                                                                              |                                      |   | 6                              |       |   |   | 474     |       
|                       | Payment of dividends                                                                                   |                                      |   | (452                           | )     |   |   | (891    | )     
|                       |                                                                                                        |                                      |   |                                |       |   |   |        
|                       | Net cash provided (used) by financing activities                                                       |                                      |   | (5,339                         | )     |   |   | 57,679  |       
|                       | Effect of exchange rate changes on cash and cash
equivalents                                           |                                      |   | (62                            | )     |   |   | (131    | )     
|                       |                                                                                                        |                                      |   |                                |       |   |   |        
|                       | Net increase in cash and equivalents                                                                   |                                      |   | 1,273                          |       |   |   | 350     |       
|                       | Cash and cash equivalents (bank overdraft) at
beginning of period                                      |                                      |   | (1,776                         | )     |   |   | (313    | )     
|                       |                                                                                                        |                                      |   |                                |       |   |   |        
|                       | Cash and cash equivalents (bank overdraft) at
end of period                                            |                                      | $ | (503                           | )     |   | $ | 37      |       
|                       |                                                                                                        |                                      |   |                                |       |   |   |        

The accompanying notes are an integral part of these statements.

5



---



##### Table of Contents






PENFORD CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



|1. |  | Business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Penford Corporation (Penford or the Company) is in the business of
developing, manufacturing and marketing specialty natural-based
ingredient systems for various applications, including papermaking,
textiles and food products. The Company operates manufacturing
facilities in the United States, Australia, and New Zealand. Penfords
products provide excellent binding and film-forming characteristics that
make customers products better through natural, convenient and cost
effective solutions. Sales of the Companys products are generated using
a combination of direct sales and distributor agreements.                               
|  
|   |  | The Company has extensive research and development capabilities, which
are used in understanding the complex chemistry of carbohydrate-based
materials and their application. In addition, the Company has specialty
processing capabilities for a variety of modified starches, all of which
have similar production methods.                                                                                                                                                                                                                                                                                                                                  
|  
|2. |  | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   |  | The accompanying unaudited financial statements include all adjustments,
consisting only of normal recurring adjustments that, in the opinion of
management, are necessary to present fairly the financial information set
forth therein. Certain information and note disclosures normally
included in financial statements, prepared in accordance with generally
accepted accounting principles, have been condensed or omitted pursuant
to the rules and regulations of the Securities and Exchange Commission
(SEC). Results of operations for the three month period ended November
30, 2001 are not necessarily indicative of future financial results.
|  
|   |  | Penfords revenues and operating results may vary from quarter to
quarter. The Company experiences seasonality with its Penford Australia
operations in that it has lower sales volumes and gross margins in
Australia and New Zealands summer months, which corresponds to the
second fiscal quarter.                                                                                                                                                                                                                                                                                                                                                         
|  
|   |  | Investors should read these interim statements in conjunction with
Managements Discussion and Analysis of Financial Condition and Results
of Operations and the financial statements and notes thereto for the
fiscal year ended August 31, 2001 included in our annual report on Form
10-K, SEC File No. 0-11488.                                                                                                                                                                                                                                                                                                                                           
|  
|   |  | Certain prior year amounts have been reclassified to conform with current
year presentation, which had no effect on previously reported net income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

6



---



##### Table of Contents





|3. |  | Recent Accounting Developments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Effective September 1, 2001, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible
Assets. Under SFAS No. 142, goodwill is no longer amortized but
reviewed for impairment annually, or more frequently if certain
indicators arise. The provisions of this accounting standard also
require the completion of a transitional impairment test within six
months of adoption, with any impairments identified treated as a
cumulative effect of a change in accounting principle. The Company is in
the process of performing the required impairment test.
|  
|   |  | The Companys goodwill of $14.9 million and $15.3 million at November 30,
2001 and August 31, 2001, respectively, represents the excess of
acquisition costs over the fair value of the net assets of Penford
Australia. The decrease in the carrying value of goodwill since August
31, 2001 reflects the impact of exchange rate fluctuations between the
Australian and US dollars on the translation of this asset.                                                                                                                                                                                               
|  
|   |  | In accordance with SFAS No. 142, the Company discontinued the
amortization of goodwill effective September 1, 2001. A reconciliation
of previously reported income before extraordinary item and earnings per
share to the amounts adjusted for the exclusion of goodwill amortization
follows:                                                                                                                                                                                                                                                                                                                       

|                                             |                                           |      |                                |      |  |   |       |      | 
|-------------------------------------------- | ----------------------------------------- | ---- | ------------------------------ | ---- |  | - | ----- | ---- | 
|                                             |                                           |      | Three Months Ended November 30
|                                             |                                           |      |                               
|(Dollars in thousands except per share data) |                                           | 2001 |                                | 2000
|                                            
|Reported income before extraordinary item    |                                           | $    | 1,240                          |      |  | $ | 1,136 |     
|Add: Goodwill amortization                   |                                           |      |                               |      |  |   | 131   |     
|                                             |                                           |      |                                |      |  |   |       |     
|Adjusted income before extraordinary item    |                                           | $    | 1,240                          |      |  | $ | 1,267 |     
|                                             |                                           |      |                                |      |  |   |       |     
|Earnings per common share, basic and diluted |                                           |      |                                |      |  |   |       |     
|                                             | Reported income before extraordinary item |      | $                              | 0.16 |  |   | $     | 0.15 | 
|                                             | Goodwill amortization                     |      |                                |     |  |   |       | 0.02 | 
|                                             |                                           |      |                                |      |  |   |       |     
|                                             | Adjusted income before extraordinary item |      | $                              | 0.16 |  |   | $     | 0.17 | 
|                                             |                                           |      |                                |      |  |   |       |     



|4. |  | Inventories                                
|-- |  | -------------------------------------------
|  
|   |  | The components of inventory are as follows:

|                        |                   |                   |        |                 |  |   |        |        | 
|----------------------- | ----------------- | ----------------- | ------ | --------------- |  | - | ------ | ------ | 
|(Dollars in thousands)  |                   | November 30, 2001 |        | August 31, 2001
|                       
|Raw materials and other |                   | $                 | 8,114  |                 |  | $ | 9,164  |       
|Work in progress        |                   |                   | 545    |                 |  |   | 610    |       
|Finished goods          |                   |                   | 13,478 |                 |  |   | 13,790 |       
|                        |                   |                   |        |                 |  |   |        |       
|                        | Total inventories |                   | $      | 22,137          |  |   | $      | 23,564 | 
|                        |                   |                   |        |                 |  |   |        |       

7



---



##### Table of Contents





|5. |  | Other Comprehensive Income (Loss)                                  
|-- |  | -------------------------------------------------------------------
|  
|   |  | The components of other comprehensive income (loss) are as follows:

|                                                                                               |  |                                |        |      |  |   |        |  
|---------------------------------------------------------------------------------------------- |  | ------------------------------ | ------ | ---- |  | - | ------ | -
|                                                                                               |  | Three Months Ended November 30
|(Dollars in thousands)                                                                         |  | 2001                           |        | 2000
|                                                                                              
|Net income                                                                                     |  | $                              | 1,240  |      |  | $ | 248    |  
|Change in unrealized gains (losses) on derivative
instruments that qualify as cash flow hedges |  |                                | (31    | )    |  |   | 189    |  
|Foreign currency translation adjustments                                                       |  |                                | (1,014 | )    |  |   | (2,123 | )
|                                                                                               |  |                                |        |      |  |   |        |  
|Comprehensive income (loss)                                                                    |  | $                              | 195    |      |  | $ | (1,686 | )
|                                                                                               |  |                                |        |      |  |   |        |  



|6. |  | Segment Reporting                                                                                                                                          
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The Company operates in one business segment: developing, manufacturing,
and marketing specialty natural-based ingredient systems for various
applications.
|  
|   |  | Information about the Companys operations by geographic area, including
its operations in North America, Australia and New Zealand, follows:              

|                                 |                         |      |        |                                |  |   |        |        |  | 
|-------------------------------- | ----------------------- | ---- | ------ | ------------------------------ |  | - | ------ | ------ |  | 
|                                 |                         |      |        | Three Months Ended November 30
|(Dollars in thousands)           |                         | 2001 |        | 2000                          
|                                
|Sales                            |                         |      |        |                                |  |   |        |       
|                                 | - North America         |      | $      | 40,978                         |  |   | $      | 41,850 | 
|                                 | - Australia/New Zealand |      |        | 15,327                         |  |   |        | 10,039 | 
|                                 |                         |      |        |                                |  |   |        |       
|                                 |                         | $    | 56,305 |                                |  | $ | 51,889 |       
|                                 |                         |      |        |                                |  |   |        |       
|Income before extraordinary item |                         |      |        |                                |  |   |        |       
|                                 | - North America         |      | $      | 554                            |  |   | $      | 793    | 
|                                 | - Australia/New Zealand |      |        | 686                            |  |   |        | 343    | 
|                                 |                         |      |        |                                |  |   |        |       
|                                 |                         | $    | 1,240  |                                |  | $ | 1,136  |       
|                                 |                         |      |        |                                |  |   |        |       

|                       |                         |                   |         |                 |  |   |         |         | 
|---------------------- | ----------------------- | ----------------- | ------- | --------------- |  | - | ------- | ------- | 
|(Dollars in thousands) |                         | November 30, 2001 |         | August 31, 2001
|                      
|Total Assets           |                         |                   |         |                 |  |   |         |        
|                       | - North America         |                   | $       | 170,450         |  |   | $       | 175,038 | 
|                       | - Australia/New Zealand |                   |         | 66,776          |  |   |         | 69,075  | 
|                       |                         |                   |         |                 |  |   |         |        
|                       |                         | $                 | 237,226 |                 |  | $ | 244,113 |        
|                       |                         |                   |         |                 |  |   |         |        

8



---



##### Table of Contents





|7. |  | Earnings Per Common Share                                                            
|-- |  | -------------------------------------------------------------------------------------
|  
|   |  | The following table presents the computation of basic and diluted
earnings per share:

|                                                              |                                              |   |                                |      |  |   |           |      | 
|------------------------------------------------------------- | -------------------------------------------- | - | ------------------------------ | ---- |  | - | --------- | ---- | 
|                                                              |                                              |   | Three Months Ended November 30
|(Dollars in thousands except share and per share data)        | 2001                                         |   | 2000                          
|                                                             
|Income before extraordinary item                              |                                              | $ | 1,240                          |      |  | $ | 1,136     |     
|                                                              |                                              |   |                                |      |  |   |           |     
|Weighted average common
shares outstanding                    |                                              |   | 7,531,203                      |      |  |   | 7,434,047 |     
|Net effect of dilutive
stock options                          |                                              |   | 70,330                         |      |  |   | 226,557   |     
|                                                              |                                              |   |                                |      |  |   |           |     
|Weighted average common shares
outstanding, assuming dilution |                                              |   | 7,601,533                      |      |  |   | 7,660,604 |     
|                                                              |                                              |   |                                |      |  |   |           |     
|                                                              | Earnings per common share                    |   | $                              | 0.16 |  |   | $         | 0.15 | 
|                                                              |                                              |   |                                |      |  |   |           |     
|                                                              | Earnings per common share,
assuming dilution |   | $                              | 0.16 |  |   | $         | 0.15 | 
|                                                              |                                              |   |                                |      |  |   |           |     



|   |  | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|8. |  | Subsequent Event                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   |  | On January 4, 2002, Penford announced that it will strategically
restructure business operations to strengthen the Companys position as
a market leader in delivering technically-differentiated, specialty
ingredients to the food, paper and textile industries. The
restructuring comes as a result of the rapid growth of its North
American food ingredients business, the addition of Penford Australia
Limited in the prior year, and the changing landscape of the North
American paper industry. Penford will relocate corporate headquarters
from Bellevue, Washington to Denver, Colorado, a location more central
to customers and operations, as well as the base of its fast-growing
food ingredients business. Penford anticipates completing the
restructuring during the 2002 fiscal year and expects to record a
restructuring charge in its second fiscal quarter ending February 28,
2002. Details of the restructuring will be finalized over the next 60
days; therefore, the amount of the charge is not currently estimable.

9



---



##### Table of Contents






Item 2: Managements Discussion and Analysis of Financial Condition and
Results of Operations

Forward-looking Statements

Investors should read the following discussion and analysis in conjunction with
the consolidated financial statements and notes thereto included elsewhere in
this report. In addition to historical information, the following discussion
contains certain forward-looking statements within the meaning of Section 21E
of the Securities and Exchange Act, as amended, that involve known and unknown
risks and uncertainties, such as statements of our plans, objectives,
expectations and intentions. You should read the cautionary statements made in
this report as being applicable to all related forward-looking statements
wherever they appear in this report. Our actual results could differ
materially from those discussed in the forward-looking statements. Factors
that could cause or contribute to such differences include, but are not limited
to, those discussed in our reports filed with the Securities and Exchange
Commission, including our annual report on Form 10-K for the year ended August
31, 2001. You should not rely on these forward-looking statements, which
reflect only our opinion as of the date of this report. We do not assume any
obligation to revise forward-looking statements.

Restructuring Announcement

On January 4, 2002, we announced that we will strategically restructure
business operations to strengthen our position as a market leader in delivering
technically-differentiated, specialty ingredients to the food, paper and
textile industries. The restructuring comes as a result of the rapid growth of
our North American food ingredients business, the addition of Penford Australia
Limited last year and the changing landscape of the North American paper
industry. We will relocate corporate headquarters from Bellevue, Washington
to Denver, Colorado, a location more central to customers and operations, as
well as the base of our fast-growing food ingredients business. We anticipate
completing the restructuring during the 2002 fiscal year and expect to record a
restructuring charge in our second fiscal quarter ending February 28, 2002.
Details of the restructuring will be finalized over the next 60 days;
therefore, the amount of the charge is not currently estimable.

Our board of directors has appointed Thomas D. Malkoski to serve as our new
CEO, as Jeffrey T. Cook, the current president and CEO, will not be relocating
to Denver for personal reasons. Malkoski will join Penford effective
immediately as our new CEO and as a member of our board of directors, while
Cook will remain president until an effective transition is completed. Cook
also will continue as a member of our board of directors.

Malkoski brings extensive branded foods and specialty food ingredients
experience to Penford Corporation. He also has significant knowledge in
running complex organizations the size of Penford. Malkoski spent the last
four years as president and CEO of North American operations for Griffith
Laboratories, a specialty food ingredients business. Prior to this, he worked
for Chiquita Brands International, successfully managing its Asian and South
Pacific operations for several years. Malkoski began his career with Procter
and Gamble in 1980 where he progressed to major product category management
responsibilities.

10



---



##### Table of Contents



Results of Operations

In the three months ended November 30, 2001, sales increased $4.4 million, or
8.5%, to $56.3 million. The increase from $51.9 million in the prior year is
attributed to both higher sales volumes of specialty starch-based ingredients
systems for the food industry and the acquisition of Penford Australia in
September 2000. Revenue for specialty potato-based food starches grew 35% over
last years first quarter, mainly the result of new customer and market
initiatives. In addition, the inclusion of a full quarter of Penford
Australias results, as well as new value-added market successes in Asia and
Australia, improved overall sales and more than offset the decrease in sales of
the industrial ingredients group. Volumes for paper customers were down 11.1%
from the same quarter last year due to continued weakness in the North American
paper industry.

We expect that sales will improve modestly over the coming fiscal quarters as
we expect some stabilization in the North American paper industry and growth in
food products sales due to continued acceptance and penetration of protein
binder and coating products. This trend will be moderated in our second fiscal
quarter for seasonal softness in our Australian/New Zealand operations.

Gross margin was $10.2 million, or 18.1% of sales, for the three months ended
November 30, 2001, compared to $11.0 million, or 21.1% of sales, for the
corresponding prior year period. The decline in gross margin was caused
primarily by the negative impact of lower sales volumes of products to paper
customers referred to above. Natural gas prices, one of our significant
production cost components, is not significantly different compared to the same
period last year. As we begin to see some modest improvements in sales
volumes, we expect we will see some improvement in our gross margin percentage
over the coming fiscal quarters. However, this trend also will be moderated in
the second fiscal quarter by seasonal softness in our Australian/New Zealand
operations.

Operating expenses in the first quarter of $4.7 million were approximately $0.4
million less than the same period last year. This decrease was due to cost
savings realized from recent workforce reductions, decreased travel,
elimination of goodwill amortization (see Recent Accounting Developments) as
well as cost control measures put into place during the quarter. Research and
development expenses decreased $0.1 million, or 5%, in the three months ended
November 30, 2001 from the corresponding prior year period, also due to
workforce reductions and cost control measures. While most factors will
continue in future fiscal quarters, we expect some increase in marketing
expenses as we invest in development of new products and markets for our
specialty food ingredients customers. However, we do not expect a significant
change in the relationship of operating expenses to sales, except for the
impact of a restructuring charge expected during the three months ended
February 28, 2002 (see Restructuring Announcement).

Net interest expense fell $0.4 million, or 17%, to $2.1 million in the first
quarter of fiscal 2001, compared to $2.5 million in the same period last year.
Lower average debt balances and the decline in market interest rates drove the
improvement. As we expect to continue to reduce our debt load through
scheduled repayments on term loans and repayments of revolving credit
arrangements, interest expense will decline. However, interest expense also
will be impacted by any further changes in market interest rates.

11



---



##### Table of Contents



During the three months ended November 30, 2000, we prepaid our private
placement debt facilities in connection with a comprehensive refinancing to
fund the acquisition of Penford Australia. The early repayment of the private
placement facilities required prepayment fees, which resulted in a loss on
early extinguishment of debt of $1.4 million, which is presented as an
extraordinary item, net of the related tax benefit of $478,000.

Net income was $1.2 million, or $0.16 per common share, assuming dilution for
the three months ended November 30, 2001, compared to income before
extraordinary item of $1.1 million, or $0.15 per common share, assuming
dilution for the corresponding period a year ago. Including the extraordinary
loss, net income for the three months ended November 30, 2000 was $0.2 million,
or $0.03 per share.

Liquidity and Capital Resources

At November 30, 2001, Penford had working capital of $15.5 million and $106.9
million outstanding under its credit facilities, which are comprised of term
loans, revolving credit and overnight borrowing facilities. We currently have
available borrowing capacity of approximately $20 million on our revolving
credit and overnight borrowing facilities to fund operations, as it is not our
practice to carry cash balances.

Cash flow from operations for the three months ended November 30, 2001 was $7.5
million compared to $1.5 million in the corresponding period of the prior year.
The increase in operating cash flow is due primarily to favorable changes in
working capital.

We invested $0.8 million in property, plant and equipment during the three
months ended November 30, 2001, compared to $3.0 million in the same period
last year. Current acquisitions were primarily improvements at the Companys
industrial ingredients production facility in Cedar Rapids, Iowa. We expect,
in the near term, to increase our capital investment to levels similar to the
prior year to continue upgrades and operational efficiency improvements at our
Cedar Rapids facility, as well as at our other North American, Australian and
New Zealand production facilities. We may make commitments for significant new
capital projects as we improve the cash generated from operations. In the
meantime, we continue to make efficiency and safety improvements as required to
maintain our operations in good working order.

On September 29, 2000, we acquired Penford Australia, our operations in
Australia and New Zealand, for $56.0 million, which was financed through
additional borrowings.

We made payments on our term loan and revolving credit facilities totaling $4.9
million during the three months ended November 30, 2001. During the balance of
this fiscal year, term loan payments of approximately $11.1 million are due
that will be paid primarily from cash generated from operations. In the prior
year, our financing activities revolved primarily around refinancing and
additional borrowings for the acquisition of Penford Australia.

Penford has paid a quarterly cash dividend since 1992. The quarterly dividend
rate paid since April 2000 has remained at $0.06 per share. We paid $452,000
in dividends to our shareholders this quarter. In the same period last year,
we paid dividends of $891,000, which

12



---



##### Table of Contents



represented payments for two quarterly dividends. Although our Board of
Directors reviews the dividend policy on a periodic basis, we anticipate that
we will continue to pay quarterly dividends in the foreseeable future.

The Board of Directors has authorized a stock repurchase program for the
purchase of up to 500,000 shares of our outstanding common stock. Repurchases
under the program to date have totaled 281,300 shares for $4.3 million in prior
years. We have not purchased any of our common stock during fiscal 2001 or to
date in fiscal 2002.

Recent Accounting Developments

Effective September 1, 2001, we adopted Statement of Financial Accounting
Standards (SFAS) No. 142, Goodwill and Other Intangible Assets. Under SFAS
No. 142, goodwill is no longer amortized but reviewed for impairment annually,
or more frequently if certain indicators arise. The provisions of this
accounting standard also require the completion of a transitional impairment
test within six months of adoption, with any impairments identified treated as
a cumulative effect of a change in accounting principle. We are in the process
of performing the required impairment test.

13



---



##### Table of Contents






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, foreign currency
exchange 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,
2001.

14



---



##### Table of Contents






PART II  OTHER INFORMATION




Item 1  Legal Proceedings

| |                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A complaint was filed in late November 1999 against Penford in the
United States District Court for the District of Idaho. The
complaint sought civil penalties for alleged violations of the Clean
Air Act claims and compensatory damages for alleged trespass,
nuisance and personal injury claims. The Clean Air Act claims were
dismissed with prejudice by the federal courts Summary Judgment
order dated July 24, 2001.

| |                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In December 2001, the Court entered an order granting plaintiffs
counsels motion to withdraw from the case on the grounds that they
have been unable to obtain information from their clients that might
substantiate the plaintiffs personal injury claims. The court has
directed the plaintiffs to appear or obtain counsel by January 20,
2002, or risk dismissal of their claims with prejudice.




Item 2  Changes in Securities and Use of Proceeds

| |               
| | --------------
| | 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

| |                                                                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On January 4, 2002, the Registrant issued a press release announcing
that it will strategically restructure business operations to
strengthen the Companys position as a market leader in delivering
technically-differentiated, specialty ingredients to the food, paper
and textile industries. For further information, refer to the press
release filed as exhibit 99.1 to this Form 10-Q.




Item 6  Exhibits and Reports on Form 8-K.

| |     |  |          |  |  |                                                                                                                                                                                                                                                               
| | --- |  | -------- |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) |  | Exhibits |  |  |                                                                                                                                                                                                                                                               
|
| |     |  | (2.1)    |  |  | Starch Australasia Share Sale Agreement completed as
of September 29, 2000 among Penford Holdings Pty. Limited, a
wholly owned subsidiary of Registrant, and Goodman Fielder
Limited (filed as an exhibit to Registrants Form 8-K/A dated
September 29, 2000)
|
| |     |  | (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)                                                                                                     

15



---



##### Table of Contents



| |  |  |         |  |  |                                                                                                                                                                                                                                                                                                                             
| |  |  | ------- |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  | (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)  |  |  | 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)*                                                                                                                                                 
|
| |  |  | (10.2)  |  |  | 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)*                                                                                                                                                   
|
| |  |  | (10.3)  |  |  | 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)*                                                                                                                                                           
|
| |  |  | (10.4)  |  |  | Change of Control Agreements between Penford Corporation and
Messrs. Cook, Horn, Keeley, and Kunerth (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)*                                                                                
|
| |  |  | (10.5)  |  |  | 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)*                                                                                                                                                               
|
| |  |  | (10.6)  |  |  | Penford Corporation 1994 Stock Option Plan as amended and
restated as of January 21, 1997 (filed on Form S-8 dated March
17, 1997)*                                                                                                                                                                                         
|
| |  |  | (10.7)  |  |  | Penford Corporation Stock Option Plan for Non-Employee
Directors (filed as an exhibit to Registrants Form 10-Q for the
quarter ended May 31, 1996)*                                                                                                                                                                        
|
| |  |  | (10.8)  |  |  | 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)                                                                                                                                                      
|
| |  |  | (10.9)  |  |  | 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)                                                                                                                                                        
|
| |  |  | (10.10) |  |  | 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)*                                                                                                                                              
|
| |  |  | (10.11) |  |  | 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)                                                                                                                                                  
|
| |  |  | (10.12) |  |  | 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)                                                                                                                                                
|
| |  |  | (10.13) |  |  | Amended and Restated Credit Agreement dated as of November 15,
2000 among Penford Corporation and Penford Products Co. as
borrowers, and certain commercial lending institutions as
lenders,
and the Bank of Nova Scotia, as agent for the lenders
(filed as an exhibit to Registrants Form 8-K/A dated
September 29, 2000)

16



---



##### Table of Contents



| |  |  |         |  |  |                                                                                                                                                                                                                                                                                                                                                                                     
| |  |  | ------- |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  | (10.14) |  |  | Debenture Trust Deed dated as of November 15, 2000 among
Penford Holdings Pty. Limited as issuer and ANZ Capel Court
Limited as trustee (filed as an exhibit to Registrants Form
8-K/A dated September 29, 2000)                                                                                                                                                                   
|
| |  |  | (10.15) |  |  | Syndicated Facility Agreement dated as of November 15, 2000
among Penford Australia Limited, a wholly owned subsidiary of
Penford Holdings Pty. Limited, as borrowers, and Australia and
New Zealand Banking Group Limited as lender and agent (filed as
an exhibit to Registrants Form 8-K/A dated September 29, 2000)                                                            
|
| |  |  | (10.16) |  |  | Intercreditor Agreement dated as of November 15, 2000 by and
among The Bank of Nova Scotia, KeyBank National Association, U.S.
National Association and Australia and New Zealand Banking Group
Limited (filed as an exhibit to Registrants Form 8-K/A dated
September 29, 2000)                                                                                                   
|
| |  |  | (10.17) |  |  | First Amendment dated as of April 12, 2001 to Amended and
Restated Credit Agreement dated as of November 15, 2000 among
Penford Corporation and Penford Products Co. as borrowers, and
certain commercial lending institutions as lenders, and the Bank
of Nova Scotia, as agent for the lenders (filed as an exhibit to
Registrants Form 10-Q for the quarter ended May 31, 2001) 
|
| |  |  | (10.18) |  |  | Waiver Agreement dated as of April 12, 2001 to Amended and
Restated Credit Agreement dated as of November 15, 2000 among
Penford Corporation and Penford Products Co. as borrowers, and
certain commercial lending institutions as lenders, and the Bank
of Nova Scotia, as agent for the lenders (filed as an exhibit to
Registrants Form 10-Q for the quarter ended May 31, 2001)
|
| |  |  | (10.19) |  |  | Second Amendment dated as of May 31, 2001 to Amended and
Restated Credit Agreement dated as of November 15, 2000 among
Penford Corporation and Penford Products Co. as borrowers, and
certain commercial lending institutions as lenders, and the Bank
of Nova Scotia, as agent for the lenders (filed as an exhibit to
Registrants Form 10-Q for the quarter ended May 31, 2001)  
|
| |  |  | (99.1)  |  |  | Press release dated January 4, 2002                                                                                                                                                                                                                                                                                                                                                 



---

| | * | Denotes management contract or compensatory plan or
arrangements
| | - | ----------------------------------------------------------------



| | (b) |  | There were no filings on Form 8-K in the quarter ended November 30, 2001.
| | --- |  | -------------------------------------------------------------------------

17



---



##### Table of Contents






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, 2002 |  | /s/ Jacqueline L. Davidson                                                 
|                 |  |                                                                            
|Date             |  | Jacqueline L. Davidson
Vice President of Finance
(Chief Accounting
Officer)

18