##### Table of Contents



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

FORM 10-Q



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

For the quarterly period ended February 28, 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

---



|                                                |  |                                     
|----------------------------------------------- |  | ------------------------------------
|Washington                                      |  | 91-1221360                          
|                                               
|(State of Incorporation)                        |  | (I.R.S. Employer
Identification No.)
|                                               
|                                               
|                                               
|                                               
|777-108th Avenue N.E., Suite 2390, Bellevue, WA |  | 98004-5193                          
|                                               
|(Address of principal executive offices)        |  | (Zip Code)                          

Registrants telephone number, including area code: (425) 462-6000

Indicate by a check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes [X]        No [   ]

Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of March 30, 2001.

|                              |  |             |           | 
|----------------------------- |  | ----------- | --------- | 
|Class                         |  | Outstanding
|                             
|                             
|                             
|                             
|Common stock, par value $1.00 |  |             | 7,486,055 | 





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TABLE OF CONTENTS



|                               |                                                                                                                    |  |  |  |  |  |  | 
|------------------------------ | ------------------------------------------------------------------------------------------------------------------ |  |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION
|                               | Item 1 - Financial Statements                                                                                     
|                               | Condensed Consolidated Balance Sheets February 28, 2001 and August 31, 2000                                       
|                               | Condensed Consolidated Statements of Operations Three and Six Months Ended February 28, 2001 and February 29, 2000
|                               | Condensed Consolidated Statements of Cash Flow Six Months Ended February 28, 2001 and February 29, 2000           
|                               | 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                                                                                    
|                               | 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                    



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PENFORD CORPORATION AND SUBSIDIARIES

INDEX

|                                                                                                                   |  |          |       | 
|------------------------------------------------------------------------------------------------------------------ |  | -------- | ----- | 
|                                                                                                                   |  | Page No.
|                                                                                                                   |  |         
|PART I    FINANCIAL INFORMATION                                                                                  
|                                                                                                                  
|                                                                                                                  
|                                                                                                                  
|                                                                                                                  
|Item 1 - Financial Statements                                                                                     
|                                                                                                                  
|                                                                                                                  
|                                                                                                                  
|                                                                                                                  
|Condensed Consolidated Balance Sheets
February 28, 2001 and August 31, 2000                                        |  |          | 3     | 
|                                                                                                                  
|                                                                                                                  
|                                                                                                                  
|                                                                                                                  
|Condensed Consolidated Statements of Operations
Three and Six Months Ended February 28, 2001
and February 29, 2000 |  |          | 4     | 
|                                                                                                                  
|                                                                                                                  
|                                                                                                                  
|                                                                                                                  
|Condensed Consolidated Statements of Cash Flow
Six Months Ended February 28, 2001 and
February 29, 2000            |  |          | 5     | 
|                                                                                                                  
|                                                                                                                  
|                                                                                                                  
|                                                                                                                  
|Notes to Condensed Consolidated Financial Statements                                                               |  |          | 6-10  | 
|                                                                                                                  
|                                                                                                                  
|                                                                                                                  
|                                                                                                                  
|Item 2 - Managements Discussion and Analysis of
Financial Condition and Results of Operations                     |  |          | 11-13 | 
|                                                                                                                  
|                                                                                                                  
|                                                                                                                  
|                                                                                                                  
|Item 3 - Quantitative and Qualitative Disclosures
About Market Risk                                                |  |          | 14    | 
|                                                                                                                  
|                                                                                                                  
|                                                                                                                  
|                                                                                                                  
|PART II  OTHER INFORMATION                                                                                       
|                                                                                                                  
|                                                                                                                  
|                                                                                                                  
|                                                                                                                  
|Item 1 - Legal Proceedings                                                                                         |  |          | 15    | 
|                                                                                                                  
|                                                                                                                  
|                                                                                                                  
|                                                                                                                  
|Item 2 - Changes in Securities                                                                                     |  |          | 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                                                                          |  |          | 16-17 | 
|                                                                                                                  
|                                                                                                                  
|                                                                                                                  
|                                                                                                                  
|SIGNATURES                                                                                                         |  |          | 18    | 

2



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##### Table of Contents









PART I  FINANCIAL INFORMATION









|       |                     
|------ | --------------------
|Item 1 | Financial Statements







PENFORD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

|                                        |                                               |                                            |         |              |         |            |         |         |         | 
|--------------------------------------- | --------------------------------------------- | ------------------------------------------ | ------- | ------------ | ------- | ---------- | ------- | ------- | ------- | 
|                                        |                                               |                                            |         | February 28, |         | August 31,
|                                        |                                               |                                            |         | 2001         |         | 2000      
|                                        |                                               |                                            |         |              |         |           
|ASSETS                                 
|                                       
|                                       
|                                       
|                                       
|Current assets:                        
|                                       
|                                       
|                                       
|                                       
|                                        | Trade accounts receivable                     |                                            | $       | 31,012       |         |            | $       | 17,530  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Inventories:                                 
|                                       
|                                       
|                                       
|                                       
|                                        |                                               | Raw materials and other                    |         |              | 8,796   |            |         |         | 3,016   | 
|                                       
|                                       
|                                       
|                                       
|                                        |                                               | Work in progress                           |         |              | 529     |            |         |         | 502     | 
|                                       
|                                       
|                                       
|                                       
|                                        |                                               | Finished goods                             |         |              | 14,916  |            |         |         | 6,701   | 
|                                        |                                               |                                            |         |              |         |            |         |        
|                                        |                                               |                                            | 24,241  |              |         |            | 10,219  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Prepaid expenses and other                    |                                            |         | 7,143        |         |            |         | 5,580   |        
|                                        |                                               |                                            |         |              |         |            |         |        
|                                        |                                               | Total current assets                       |         |              | 62,396  |            |         |         | 33,329  | 
|                                       
|                                       
|                                       
|                                       
|Net property, plant and equipment       |                                               |                                            | 144,136 |              |         |            | 114,848 |        
|                                       
|                                       
|                                       
|                                       
|Deferred income taxes                   |                                               |                                            | 11,414  |              |         |            | 11,466  |        
|                                       
|                                       
|                                       
|                                       
|Restricted cash value of life insurance |                                               |                                            | 11,763  |              |         |            | 12,330  |        
|                                       
|                                       
|                                       
|                                       
|Other assets                            |                                               |                                            | 3,536   |              |         |            | 3,650   |        
|                                       
|                                       
|                                       
|                                       
|Goodwill, net                           |                                               |                                            | 18,457  |              |         |            |        |        
|                                        |                                               |                                            |         |              |         |            |         |        
|                                        |                                               | Total assets                               |         | $            | 251,702 |            |         | $       | 175,623 | 
|                                        |                                               |                                            |         |              |         |            |         |        
|LIABILITIES AND SHAREHOLDERS EQUITY   
|                                       
|                                       
|                                       
|                                       
|Current liabilities:                   
|                                       
|                                       
|                                       
|                                       
|                                        | Bank overdraft, net                           |                                            | $       | 132          |         |            | $       | 313     |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accounts payable                              |                                            |         | 18,938       |         |            |         | 10,068  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accrued liabilities                           |                                            |         | 6,859        |         |            |         | 8,305   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Current portion of long-term debt             |                                            |         | 12,816       |         |            |         | 2,857   |        
|                                        |                                               |                                            |         |              |         |            |         |        
|                                        |                                               | Total current liabilities                  |         |              | 38,745  |            |         |         | 21,543  | 
|                                       
|                                       
|                                       
|                                       
|Long-term debt                          |                                               |                                            | 105,278 |              |         |            | 47,824  |        
|                                       
|                                       
|                                       
|                                       
|Other postretirement benefits           |                                               |                                            | 10,961  |              |         |            | 10,805  |        
|                                       
|                                       
|                                       
|                                       
|Deferred income taxes                   |                                               |                                            | 22,283  |              |         |            | 21,048  |        
|                                       
|                                       
|                                       
|                                       
|Other liabilities                       |                                               |                                            | 7,944   |              |         |            | 6,539   |        
|                                       
|                                       
|                                       
|                                       
|Shareholders equity:                  
|                                       
|                                       
|                                       
|                                       
|                                        | Common stock                                  |                                            |         | 9,449        |         |            |         | 9,392   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Additional paid-in capital                    |                                            |         | 23,734       |         |            |         | 23,129  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Retained earnings                             |                                            |         | 67,616       |         |            |         | 68,100  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Treasury stock                                |                                            |         | (32,757      | )       |            |         | (32,757 | )      
|                                       
|                                       
|                                       
|                                       
|                                        | Accumulated other comprehensive income (loss) |                                            |         | (1,551       | )       |            |         |        |        
|                                        |                                               |                                            |         |              |         |            |         |        
|                                        |                                               | Total shareholders equity                 |         |              | 66,491  |            |         |         | 67,864  | 
|                                        |                                               |                                            |         |              |         |            |         |        
|                                        |                                               | Total liabilities and shareholders equity |         | $            | 251,702 |            |         | $       | 175,623 | 
|                                        |                                               |                                            |         |              |         |            |         |        

See accompanying notes to condensed consolidated financial statements.

3



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##### Table of Contents









PENFORD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands except per share data)

|                                                                     |                   |         |           |                      |       |                      |           |      |      |      |           |   |      |   |           |   |      | 
|-------------------------------------------------------------------- | ----------------- | ------- | --------- | -------------------- | ----- | -------------------- | --------- | ---- | ---- | ---- | --------- | - | ---- | - | --------- | - | ---- | 
|                                                                     |                   |         |           | Three Months         |       | Six Months          
|                                                                     |                   |         |           | Ended February 28/29 |       | Ended February 28/29
|                                                                     |                   |         |           |                      |       |                     
|                                                                     |                   |         |           | 2001                 |       | 2000                 |           | 2001 |      | 2000
|                                                                     |                   |         |           |                      |       |                      |           |      |      |     
|Sales                                                                |                   | $       | 50,709    |                      |       | $                    | 38,333    |      |      | $    | 97,562    |   |      | $ | 78,886    |  
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|Cost of sales                                                        |                   |         | 41,691    |                      |       |                      | 27,128    |      |      |      | 77,591    |   |      |   | 56,615    |  
|                                                                     |                   |         |           |                      |       |                      |           |      |      |      |           |   |      |   |           |  
|Gross margin                                                         |                   |         | 9,018     |                      |       |                      | 11,205    |      |      |      | 19,971    |   |      |   | 22,271    |  
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|Operating expenses                                                   |                   |         | 5,752     |                      |       |                      | 4,474     |      |      |      | 10,891    |   |      |   | 9,069     |  
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|Research and development                                             |                   |         | 1,694     |                      |       |                      | 1,295     |      |      |      | 3,344     |   |      |   | 2,667     |  
|                                                                     |                   |         |           |                      |       |                      |           |      |      |      |           |   |      |   |           |  
|Income from operations                                               |                   |         | 1,572     |                      |       |                      | 5,436     |      |      |      | 5,736     |   |      |   | 10,535    |  
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|Interest expense                                                     |                   |         | (2,724    | )                    |       |                      | (1,205    | )    |      |      | (5,057    | ) |      |   | (2,481    | )
|                                                                     |                   |         |           |                      |       |                      |           |      |      |      |           |   |      |   |           |  
|Income (loss) before taxes                                           |                   |         | (1,152    | )                    |       |                      | 4,231     |      |      |      | 679       |   |      |   | 8,054     |  
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|Income tax expense (benefit)                                         |                   |         | (358      | )                    |       |                      | 1,481     |      |      |      | 268       |   |      |   | 2,820     |  
|                                                                     |                   |         |           |                      |       |                      |           |      |      |      |           |   |      |   |           |  
|Net income (loss)                                                    |                   | $       | (794      | )                    |       | $                    | 2,750     |      |      | $    | 411       |   |      | $ | 5,234     |  
|                                                                     |                   |         |           |                      |       |                      |           |      |      |      |           |   |      |   |           |  
|Weighted average common shares and
equivalents outstanding  diluted |                   |         | 7,458,615 |                      |       |                      | 7,770,532 |      |      |      | 7,651,659 |   |      |   | 7,740,074 |  
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|Earnings per common share:                                          
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                     | Net income (loss)
|                                                                     |                   | Basic   |           | $                    | (0.11 | )                    |           | $    | 0.37 |      |           | $ | 0.06 |   |           | $ | 0.71 | 
|                                                                     |                   |         |           |                      |       |                      |           |      |      |      |           |   |      |   |           |  
|                                                                     |                   | Diluted |           | $                    | (0.11 | )                    |           | $    | 0.35 |      |           | $ | 0.05 |   |           | $ | 0.68 | 
|                                                                     |                   |         |           |                      |       |                      |           |      |      |      |           |   |      |   |           |  
|Dividends declared per common share                                  |                   | $       | 0.06      |                      |       | $                    | 0.05      |      |      | $    | 0.12      |   |      | $ | 0.10      |  
|                                                                     |                   |         |           |                      |       |                      |           |      |      |      |           |   |      |   |           |  

See accompanying notes to condensed consolidated financial statements.

4



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PENFORD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(Dollars in thousands)

|                      |                                                                   |                                                                                                       |                                      |         |                      |        |      |         |       |        |  
|--------------------- | ----------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------- | ------------------------------------ | ------- | -------------------- | ------ | ---- | ------- | ----- | ------ | -
|                      |                                                                   |                                                                                                       |                                      |         | Six Months          
|                      |                                                                   |                                                                                                       |                                      |         | Ended February 28/29
|                      |                                                                   |                                                                                                       |                                      |         |                     
|                      |                                                                   |                                                                                                       |                                      |         | 2001                 |        | 2000
|                      |                                                                   |                                                                                                       |                                      |         |                      |        |     
|Operating Activities:
|                     
|                     
|                     
|                     
|                      | Net income                                                        |                                                                                                       | $                                    | 411     |                      |        | $    | 5,234   |      
|                     
|                     
|                     
|                     
|                      | Adjustments to reconcile net income
to net cash from operations: 
|                     
|                     
|                     
|                     
|                      |                                                                   | Depreciation and amortization                                                                         |                                      |         | 8,681                |        |      |         | 6,709 |       
|                     
|                     
|                     
|                     
|                      |                                                                   | Deferred income taxes                                                                                 |                                      |         | 132                  |        |      |         | (330  | )     
|                     
|                     
|                     
|                     
|                      |                                                                   | Change in operating assets and liabilities excluding
impact of Penford Australia Limited acquisition:
|                     
|                     
|                     
|                     
|                      |                                                                   |                                                                                                       | Trade receivables                    |         |                      | (3,697 | )    |         |       | (1,674 | )
|                     
|                     
|                     
|                     
|                      |                                                                   |                                                                                                       | Inventories                          |         |                      | (1,768 | )    |         |       | (566   | )
|                     
|                     
|                     
|                     
|                      |                                                                   |                                                                                                       | Accounts payable, prepaids and other |         |                      | (599   | )    |         |       | 2,119  |  
|                      |                                                                   |                                                                                                       |                                      |         |                      |        |      |        
|                      | Net cash from operating activities                                |                                                                                                       |                                      | 3,160   |                      |        |      | 11,492  |      
|                     
|                     
|                     
|                     
|Investing Activities:
|                     
|                     
|                     
|                     
|                      | Additions to property, plant and equipment, net                   |                                                                                                       |                                      | (7,653  | )                    |        |      | (8,529  | )    
|                     
|                     
|                     
|                     
|                      | Acquisition of Penford Australia Limited                          |                                                                                                       |                                      | (59,113 | )                    |        |      |        |      
|                     
|                     
|                     
|                     
|                      | Other                                                             |                                                                                                       |                                      | 1,309   |                      |        |      | 513     |      
|                      |                                                                   |                                                                                                       |                                      |         |                      |        |      |        
|                      | Net cash used by investing activities                             |                                                                                                       |                                      | (65,457 | )                    |        |      | (8,016  | )    
|                     
|                     
|                     
|                     
|Financing Activities:
|                     
|                     
|                     
|                     
|                      | Proceeds from revolving line of credit                            |                                                                                                       |                                      | 41,093  |                      |        |      | 30,282  |      
|                     
|                     
|                     
|                     
|                      | Payments on revolving line of credit                              |                                                                                                       |                                      | (35,386 | )                    |        |      | (28,470 | )    
|                     
|                     
|                     
|                     
|                      | Proceeds from long-term debt                                      |                                                                                                       |                                      | 107,510 |                      |        |      |        |      
|                     
|                     
|                     
|                     
|                      | Payments on long-term debt                                        |                                                                                                       |                                      | (50,571 | )                    |        |      | (3,277  | )    
|                     
|                     
|                     
|                     
|                      | Exercise of stock options                                         |                                                                                                       |                                      | 530     |                      |        |      | 148     |      
|                     
|                     
|                     
|                     
|                      | Purchase of treasury stock                                        |                                                                                                       |                                      |        |                      |        |      | (767    | )    
|                     
|                     
|                     
|                     
|                      | Payment of dividends                                              |                                                                                                       |                                      | (891    | )                    |        |      | (747    | )    
|                      |                                                                   |                                                                                                       |                                      |         |                      |        |      |        
|                      | Net cash provided (used) by financing activities                  |                                                                                                       |                                      | 62,285  |                      |        |      | (2,831  | )    
|                      |                                                                   |                                                                                                       |                                      |         |                      |        |      |        
|                      | Effect of exchange rate changes on cash and cash equivalents      |                                                                                                       |                                      | 193     |                      |        |      |        |      
|                      |                                                                   |                                                                                                       |                                      |         |                      |        |      |        
|                      | Net increase (decrease) in cash and equivalents                   |                                                                                                       |                                      | 181     |                      |        |      | 645     |      
|                     
|                     
|                     
|                     
|                      | Cash and cash equivalents (bank overdraft) at
beginning of period |                                                                                                       |                                      | (313    | )                    |        |      | 15      |      
|                      |                                                                   |                                                                                                       |                                      |         |                      |        |      |        
|                      | Cash and cash equivalents (bank overdraft) at
end of period       |                                                                                                       | $                                    | (132    | )                    |        | $    | 660     |      
|                      |                                                                   |                                                                                                       |                                      |         |                      |        |      |        

See accompanying notes to condensed consolidated financial statements.

5



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##### 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 carbohydrate-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 condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation for the
interim periods presented have been included. 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 and six month periods ended February 28, 2001 are
not necessarily indicative of the results that may be expected for the
year ending August 31, 2001. For further information, refer to the
consolidated financial statements and footnotes thereto included in
Penford Corporations annual report on Form 10-K for the fiscal year
ended August 31, 2000.



|3. |  | Recent Accounting Developments
|-- |  | ------------------------------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Effective September 1, 2000, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133 establishes standards
for recognition and measurement of derivatives and hedging activities.
In the first quarter of fiscal 2001, the Company recorded an immaterial
cumulative effect of change in accounting principle to other
comprehensive income for derivatives which hedge the variable cash flows
of certain forecasted transactions.

6



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##### Table of Contents





|4. |  | Acquisition of Penford Australia Limited
|-- |  | ----------------------------------------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On September 29, 2000, Penford Corporation completed its acquisition of
Starch Australasia Limited from Goodman Fielder Limited for $54.5 million
(USD) in cash, plus costs incurred directly related to the acquisition of
approximately $4.6 million (USD), including accounting, financing,
taxation, legal and other due diligence efforts. Starch Australasia
Limited, renamed Penford Australia Limited (Penford Australia), is
Australias sole producer of corn starch products and a world leader in
the research, development and commercialization of novel starch-based
products. Penford Australia manufactures products used to enhance the
functionality of packaged food products, as well as products used in the
mining and paper industries. Its operations include three manufacturing
facilities, two in Australia and one in New Zealand, for processing
specialty corn starches and wheat related products.
|
| | The acquisition was recorded using the purchase method of accounting.
Accordingly, a portion of the purchase price was allocated to net
tangible and intangible assets acquired based on their estimated fair
values. The balance of the purchase price was recorded as goodwill,
which is being amortized over a twenty year period. Five months of
Penford Australias results of operations, from the September 29, 2000
date of acquisition, are included in the consolidated financial
statements for the six months ended February 28, 2001.                                                                                                                                                                                                                                                                                                                                                                                  
|
| | The following unaudited pro forma financial information presents the
combined results of operations of the Company and Penford Australia, as
if the acquisition had occurred on September 1, 2000 and 1999,
respectively. The unaudited pro forma financial information does not
necessarily reflect the results of operations that would have occurred
had the Company and Penford Australia constituted a single entity during
such periods (dollars in thousands except per share data).                                                                                                                                                                                                                                                                                                                                                                                                                                         

|                     |         |   |                  |     |      |   |         |     | 
|-------------------- | ------- | - | ---------------- | --- | ---- | - | ------- | --- | 
|                     |         |   | Six Months Ended
|                     |         |   | February 28/29  
|                     |         |   |                 
|                     |         |   | 2001             |     | 2000
|                     |         |   |                  |     |     
|Sales                |         | $ | 104,193          |     |      | $ | 114,778 |    
|                    
|                    
|                    
|                    
|Net income           |         | $ | 487              |     |      | $ | 4,524   |    
|                    
|                    
|                    
|                    
|Net income per share
|                     | Basic   |   | $                | .07 |      |   | $       | .61 | 
|                     |         |   |                  |     |      |   |         |    
|                     | Diluted |   | $                | .06 |      |   | $       | .58 | 
|                     |         |   |                  |     |      |   |         |    

7



---



##### Table of Contents





|5. |  | Credit Facilities
|-- |  | -----------------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On September 29, 2000, the Company obtained interim financing to finance
the acquisition of Penford Australia and to replace its existing credit
facilities. As a result, except for a $5 million uncommitted line of
credit that remained in place, all outstanding debt as of August 31, 2000
was replaced by a $120 million bridge loan with a syndicate of banks,
consisting of the same three banks responsible for the previous $75
million unsecured credit facility. The new borrowings under the bridge
loan totaled $109.5 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | On November 15, 2000, a new $130 million credit facility was completed
with the aforementioned syndicate of banks, including the addition of an
Australian bank, which replaced the bridge loan. The credit facility
consists of various agreements with $65 million in term loans and $65
million of revolving lines of credit. The revolving lines of credit
expire on October 31, 2003, and the term loans expire on October 31,
2005. Borrowing rates available to the Company under the entire credit
facility are based on either the LIBOR or prime rate, depending on the
selection of borrowing options. All of Penfords assets secure the
credit facility, and the new agreements include, among other terms,
financial covenants with limitations on indebtedness, minimum net worth
and maintenance of certain leverage, interest and fixed charge coverage
ratios. The Company has obtained a waiver for noncompliance with certain
of the financial covenants this fiscal year.



|6. |  | Comprehensive Income
|-- |  | --------------------



| |                                                                                     
| | ------------------------------------------------------------------------------------
| | The components of comprehensive income (loss) are as follows (dollars in
thousands):

|                                                                                       |  |                    |      |                  |  |      |       |      |  |   |        |   |  |   |       | 
|-------------------------------------------------------------------------------------- |  | ------------------ | ---- | ---------------- |  | ---- | ----- | ---- |  | - | ------ | - |  | - | ----- | 
|                                                                                       |  | Three Months Ended |      | Six Months Ended
|                                                                                       |  | February 28/29     |      | February 28/29  
|                                                                                       |  |                    |      |                 
|                                                                                       |  | 2001               |      | 2000             |  | 2001 |       | 2000
|                                                                                       |  |                    |      |                  |  |      |       |     
|Net income (loss)                                                                      |  | $                  | (794 | )                |  | $    | 2,750 |      |  | $ | 411    |   |  | $ | 5,234 | 
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Change in unrealized losses on derivative
instruments that qualify as cash flow hedges |  |                    | (190 | )                |  |      |      |      |  |   | (1     | ) |  |   |      | 
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Foreign currency translation adjustments                                               |  |                    | 573  |                  |  |      |      |      |  |   | (1,550 | ) |  |   |      | 
|                                                                                       |  |                    |      |                  |  |      |       |      |  |   |        |   |  |   |       | 
|Comprehensive income (loss)                                                            |  | $                  | (411 | )                |  | $    | 2,750 |      |  | $ | (1,140 | ) |  | $ | 5,234 | 
|                                                                                       |  |                    |      |                  |  |      |       |      |  |   |        |   |  |   |       | 



| |                                                                                                                                                                                                                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The foreign currency translation adjustment reflects the translation of
the Companys investment in its Australian operations to U.S. dollars
from Australian dollars. The foreign currency exchange rates as of
September 29, 2000 (date of acquisition), November 30, 2000, and February
28, 2001 were $0.542, $0.521, and $0.526 U.S. dollars to the Australian
dollar, respectively.

8



---



##### Table of Contents





|7. |  | Segment Reporting
|-- |  | -----------------



| |                                                                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company operates in one business segment: developing, manufacturing,
and marketing specialty carbohydrate-based ingredient systems for
various applications.                                         
|
| | Information about the Companys operations by geographic area, including
its operations in North America and its recently acquired business in
Australia and New Zealand, follows (dollars in thousands):

|                  |                         |   |                    |        |                  |   |        |        |      |   |        |        |  |   |        |        | 
|----------------- | ----------------------- | - | ------------------ | ------ | ---------------- | - | ------ | ------ | ---- | - | ------ | ------ |  | - | ------ | ------ | 
|                  |                         |   | Three Months Ended |        | Six Months Ended
|                  |                         |   | February 28/29     |        | February 28/29  
|                  |                         |   |                    |        |                 
|                  |                         |   | 2001               |        | 2000             |   | 2001   |        | 2000
|                  |                         |   |                    |        |                  |   |        |        |     
|Sales            
|                 
|                 
|                 
|                 
|                  | - North America         |   | $                  | 37,034 |                  |   | $      | 38,333 |      |   | $      | 74,443 |  |   | $      | 78,886 | 
|                 
|                 
|                 
|                 
|                  | - Australia/New Zealand |   |                    | 13,675 |                  |   |        |       |      |   |        | 23,119 |  |   |        |       | 
|                  |                         |   |                    |        |                  |   |        |        |      |   |        |        |  |   |        |       
|                  |                         | $ | 50,709             |        |                  | $ | 38,333 |        |      | $ | 97,562 |        |  | $ | 78,886 |       
|                  |                         |   |                    |        |                  |   |        |        |      |   |        |        |  |   |        |       
|Net Income (Loss)
|                 
|                 
|                 
|                 
|                  | - North America         |   | $                  | (704   | )                |   | $      | 2,750  |      |   | $      | 89     |  |   | $      | 5,234  | 
|                 
|                 
|                 
|                 
|                  | - Australia/New Zealand |   |                    | (90    | )                |   |        |       |      |   |        | 322    |  |   |        |       | 
|                  |                         |   |                    |        |                  |   |        |        |      |   |        |        |  |   |        |       
|                  |                         | $ | (794               | )      |                  | $ | 2,750  |        |      | $ | 411    |        |  | $ | 5,234  |       
|                  |                         |   |                    |        |                  |   |        |        |      |   |        |        |  |   |        |       

|             |                         |   |              |         |            |   |         |         | 
|------------ | ----------------------- | - | ------------ | ------- | ---------- | - | ------- | ------- | 
|             |                         |   | February 28, |         | August 31,
|             |                         |   | 2001         |         | 2000      
|             |                         |   |              |         |           
|Total Assets
|            
|            
|            
|            
|             | - North America         |   | $            | 182,070 |            |   | $       | 175,623 | 
|            
|            
|            
|            
|             | - Australia/New Zealand |   |              | 69,632  |            |   |         |        | 
|             |                         |   |              |         |            |   |         |        
|             |                         | $ | 251,702      |         |            | $ | 175,623 |        
|             |                         |   |              |         |            |   |         |        

9



---



##### Table of Contents





|8. |  | Earnings (Loss) Per Common Share
|-- |  | --------------------------------



| |                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------
| | The following table presents the computation of basic and diluted
earnings per share (dollars in thousands except per share data):

|                                                             |         |   |                    |       |                  |   |           |      |      |   |           |      |  |   |           |      | 
|------------------------------------------------------------ | ------- | - | ------------------ | ----- | ---------------- | - | --------- | ---- | ---- | - | --------- | ---- |  | - | --------- | ---- | 
|                                                             |         |   | Three Months Ended |       | Six Months Ended
|                                                             |         |   | February 28/29     |       | February 28/29  
|                                                             |         |   |                    |       |                 
|                                                             |         |   | 2001               |       | 2000             |   | 2001      |      | 2000
|                                                             |         |   |                    |       |                  |   |           |      |     
|Net income (loss)                                            |         | $ | (794               | )     |                  | $ | 2,750     |      |      | $ | 411       |      |  | $ | 5,234     |     
|                                                             |         |   |                    |       |                  |   |           |      |      |   |           |      |  |   |           |     
|Weighted average common
shares outstanding                   |         |   | 7,458,615          |       |                  |   | 7,417,890 |      |      |   | 7,446,331 |      |  |   | 7,421,301 |     
|                                                            
|                                                            
|                                                            
|                                                            
|Net effect of dilutive
stock options                         |         |   |                   |       |                  |   | 352,642   |      |      |   | 205,328   |      |  |   | 318,773   |     
|                                                             |         |   |                    |       |                  |   |           |      |      |   |           |      |  |   |           |     
|Weighted average common shares
outstanding assuming dilution |         |   | 7,458,615          |       |                  |   | 7,770,532 |      |      |   | 7,651,659 |      |  |   | 7,740,074 |     
|                                                             |         |   |                    |       |                  |   |           |      |      |   |           |      |  |   |           |     
|Earnings (loss) per common share:                           
|                                                            
|                                                            
|                                                            
|                                                            
|Net income                                                  
|                                                             | Basic   |   | $                  | (0.11 | )                |   | $         | 0.37 |      |   | $         | 0.06 |  |   | $         | 0.71 | 
|                                                             |         |   |                    |       |                  |   |           |      |      |   |           |      |  |   |           |     
|                                                             | Diluted |   | $                  | (0.11 | )                |   | $         | 0.35 |      |   | $         | 0.05 |  |   | $         | 0.68 | 
|                                                             |         |   |                    |       |                  |   |           |      |      |   |           |      |  |   |           |     



| |                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.
|
| | Due to the loss quarter ended February 28, 2001, common stock equivalent
shares of 184,099 were anti-dilutive, and therefore, not included in the
weighted average common shares outstanding calculation.                           

10



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##### Table of Contents











|       |                                                                                      
|------ | -------------------------------------------------------------------------------------
|Item 2 | MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

Sales increased to $50.7 million from $38.3 million, or 32.3%, in the second
quarter of fiscal 2001 compared to the same prior year period. Sales for the
first six months of fiscal 2001 increased to $97.6 from $78.9, or 23.7%, versus
last years same six-month period. The increases in sales for the quarter and
six-month period were primarily due to the acquisition of Penford Australia and
higher sales volume of the Companys specialty starch-based ingredient systems
for the food industry. However, lower sales volumes for paper customers due to
a softened demand in the North American paper industry, as well as competitive
pricing pressures, suppressed overall sales growth.

Sales revenue of specialty potato-based food starches increased 12.9% in the
second quarter of fiscal 2001 ending February 28, 2001 over the same period a
year ago. The increase over last years strong quarter was primarily due to
solid performance in both coating and processed meat applications.

Gross margin decreased to $9.0 million, or 17.8% of sales, in the second
quarter, from $11.2 million, or 29.2% of sales, in the corresponding prior year
period. The decline in gross margin was caused by higher natural gas costs in
North America, which significantly impacted manufacturing costs, offset by an
increased demand for higher margin specialty food ingredients. For these same
reasons, gross margin for the six months ended February 28, 2001 decreased to
$20.0 million, or 20.5% of sales, from $22.3 million, or 28.2% of sales, for
the same six-month period in the prior year. The higher year-to-date versus
quarterly gross margin percentage is primarily attributed to energy costs,
which peaked during the second quarter.

Operating expenses in the second quarter of $5.8 million were approximately
$1.3 million higher compared to the same quarter in the prior year. For the
six months ended February 28, 2001, operating expense rose to $10.9 million
from $9.1 million, or 20.1%. Research and development expenses increased in
the second quarter and first six months of fiscal 2001 to $1.7 million and $3.3
million, respectively, representing increases of 30.8% and 25.4% from the
corresponding periods in the prior year. The increases in operating and
research and development expenses are primarily due to the inclusion of Penford
Australia in the Companys overall results.

Net interest expense for the second quarter and first six months of fiscal 2001
was $2.7 million and $5.1 million, respectively, compared to $1.2 million and
$2.5 million, respectively, in the corresponding periods in the prior year.
The increases are attributed to higher debt balances as a result of the
acquisition of Penford Australia.

The effective tax rate for the second quarter and first six months of fiscal
2001, varied from the Federal statutory rates due to the effect of state and
foreign tax.

11



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##### Table of Contents



Net loss for the quarter ended February 28, 2001 was $0.8 million, or $0.11 per
share, versus net income of $2.8 million, or $0.35 per share, in the second
quarter of last year. In the first six months of fiscal 2001, Penford earned
$0.4 million, or $0.05 per share, compared to net income of $5.2 million, or
$0.68 per share, for the corresponding period a year ago.

Due to operating results that were less than projected, the Company did not
meet certain of the financial covenants of its credit agreement for which it
has obtained a waiver. Further, the Company is in the process of renegotiating
and expects to amend its credit agreement to adjust covenant levels to reflect
its current operating environment. In exchange for this amendment to its
credit agreement, the Company expects to pay a higher margin over base interest
rates and increased fees. However, given the current decline in overall market
interest rates, the Company does not expect a significant increase in interest
expense for fiscal year ending August 31, 2001.

Liquidity and Capital Resources

In connection with the completion of the acquisition of Penford Australia on
September 29, 2000, the Company obtained interim financing for replacing its
credit facilities. The interim financing was replaced by a new $130 million
credit facility completed on November 15, 2000, with a syndicate of banks. The
credit facility consists of various agreements with $65 million in term loans
and $65 million of revolving lines of credit. The revolving lines of credit
expire on October 31, 2003, and the term loans expire on October 31, 2005. At
February 28, 2001, there was $112.2 million outstanding under the facilities.
Borrowing rates available to the Company under the entire credit facility are
based on either the LIBOR or prime rate, depending on the selection of
borrowing options. All of Penfords assets secure the credit facility, and the
new agreements include, among other terms, financial covenants with limitations
on indebtedness, minimum net worth and maintenance of certain leverage,
interest and fixed charge coverage ratios. The Company has obtained a waiver
of the requirements for the leverage and interest coverage ratios through
February 28, 2001. The next date on which compliance with the coverage ratios
will be measured is May 31, 2001. The Company is in the process of
renegotiating and expects to obtain before May 31, 2001, an amendment to its
credit agreement to adjust these covenant levels to reflect its current
operating environment.

At February 28, 2001, Penford had working capital of $23.7 million and $47.0
million outstanding under the $65 million revolving lines of credit. The
Company also has a $5 million uncommitted line of credit under which there was
$3.1 million outstanding. The Company used its debt proceeds and operating
cash flow to finance the purchase of Penford Australia and other capital
expenditures during the first six months of fiscal 2001.

Cash flow from operations for the six months ended February 28, 2001 was $3.2
million compared to $11.5 million in the corresponding period of the prior
year. The decrease in operating cash flow is mainly due to the lower earnings
experienced during the current fiscal year.

Additions to property, plant and equipment during the six months ended February
28, 2001 were $7.7 million. Second quarter additions of $4.6 million were
primarily for various improvements at the Companys industrial facility in
Cedar Rapids, Iowa and equipment additions and improvements at all of the
Companys food-grade manufacturing facilities.

12



---



##### Table of Contents



The Company began paying a quarterly cash dividend of $0.05 per share in 1992
and has continued to pay quarterly dividends ever since. On April 3, 2000, the
Board of Directors approved an increase in the quarterly cash dividend to $0.06
per share.

The Board of Directors has authorized a stock repurchase program for the
purchase of up to 500,000 shares of the outstanding common stock of the
Company. Repurchases under the program to date have totaled 281,300 shares for
$4.3 million, although the Company has not purchased any of its common stock
during the first six months of fiscal 2001.

Forward-looking Statements

This report contains forward-looking statements concerning the performance and
results of the Company. 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 including unfavorable shifts in product mix;
unanticipated costs, expenses or third party claims; the risk that results may
be affected by construction delays, cost overruns, technical difficulties,
nonperformance by contractors or changes in capital improvement project
requirements or specifications; interest rate and energy cost volatility;
foreign currency exchange rate fluctuations; 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 2000 Annual Report to Shareholders and its Form 10-K
for the fiscal year ended August 31, 2000 on file with the Securities and
Exchange Commission.

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,
2000, other than the increase in the amount of borrowings undertaken
principally to finance the acquisition of Penford Australia.

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, alleging
various violations of the Federal Clean Air Act, as well as claims
for trespass and nuisance by alleged emissions from Penfords Idaho
Falls starch processing plant. The subject of the complaint involves
alleged excessive starch emissions that occurred in 1996 and 1997,
which were previously disclosed by the Company, and certain other
alleged violations relating to the plant. The complaint sought civil
penalties, together with private damages. By agreement of the
Parties, the Federal Clean Air Act claims were dismissed with
prejudice.
|
| | In December 2000, the plaintiffs filed an amended complaint adding
several new plaintiffs, adding claims for emotional distress and
outrage, and purporting to re-assert the Clean Air Act Claims on
behalf of the new plaintiffs. Penfords motion to dismiss the Clean
Air Act claims is set for hearing in April 2001. Penford continues
its efforts to resolve the state law claims by negotiation.                                                                                                                                                                                                                                                                                         









|       |                      
|------ | ---------------------
|Item 2 | Changes in Securities



| |               
| | --------------
| | Not applicable









|       |                                
|------ | -------------------------------
|Item 3 | Defaults Upon Senior Securities
|      
|       | Not applicable                 









|       |                                                    
|------ | ---------------------------------------------------
|Item 4 | Submission of Matters to a Vote of Security Holders



| | (a) |  | The annual meeting of shareholders of Penford Corporation was held on
January 30, 2001.                                                                                                                                                                                                                                    
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | The following directors were elected to serve a term of three years:
Jeffrey T. Cook and Sally G. Narodick. The board is comprised of
those elected this year and the following directors completing their
terms: John C. Hunter III, William G. Parzybok, Jr., Paul H.
Hatfield, Richard T. Crowder, and James E. Warjone.
|
| | (c) |  | The following matters were voted upon at the meeting:
1.     For the election of directors:                                                                                                                                                                                                                                

|                  |  |     |           |       |  |          |       |       |  |  |         |     |  |  |      |  
|----------------- |  | --- | --------- | ----- |  | -------- | ----- | ----- |  |  | ------- | --- |  |  | ---- | -
|                  |  |     |           |       |  | %of      |       |       |  |  |         | %of
|                  |  | For |           | Voted |  | Withheld |       | Voted
|                  |  |     |           |       |  |          |       |      
|Jeffrey T. Cook   |  |     | 5,621,530 |       |  |          | 94.62 | %     |  |  | 319,756 |     |  |  | 5.38 | %
|                 
|                 
|                 
|                 
|Sally G. Narodick |  |     | 5,810,660 |       |  |          | 97.80 | %     |  |  | 130,626 |     |  |  | 2.20 | %



| | (d) |  | Not applicable
| | --- |  | --------------









|       |                  
|------ | -----------------
|Item 5 | Other Information
|      
|       | Not applicable   

15



---



##### Table of Contents











|       |                                  
|------ | ---------------------------------
|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)                                                                                                    
|      
|      
|      
|      
|(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 the 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)                                                                                       

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|        |  |                                                                                                                                                                                                                                                                                                                             
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       
|       
|       
|       
|(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)
|       
|       
|       
|       
|(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)                                           



| | (b) |  | Reports on Form 8-K
| | --- |  | -------------------



| |                                                                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A Form 8-K dated January 18, 2001 was filed reporting under
Item 5, Registrants intention to form a joint venture with
Cargill combining their industrial starch businesses in
North America. Filed as an exhibit was a copy of the press
release dated January 17, 2001.

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##### 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)
| | --------------------------------



|April 16, 2001Date |  | /s/ Jacqueline L. Davidson
Jacqueline L. Davidson
Vice President of Finance
(Chief Accounting Officer)
|------------------ |  | ------------------------------------------------------------------------------------------------------

18