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

FORM 10-Q

(Mark One)



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

For the quarterly period ended February 28, 2002

OR



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

For the transition period from ___________________ to ______________________

Commission File No. 0-11488

PENFORD CORPORATION
(Exact name of registrant as specified in its charter)

|                         |  |                                     
|------------------------ |  | ------------------------------------
|Washington               |  | 91-1221360                          
|                         |  |                                     
|(State of Incorporation) |  | (I.R.S. Employer
Identification No.)

|                                                        |  |           
|------------------------------------------------------- |  | ----------
|777-108th Avenue N.E., Suite 2390,
Bellevue, Washington |  | 98004-5193
|                                                        |  |           
|(Address of principal executive offices)                |  | (Zip Code)

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

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

Yes [X]  No [   ]

The net number of shares of the Registrants common stock (the
Registrants only outstanding class of stock) outstanding as of April 8,
2002 was 7,626,369.



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TABLE OF CONTENTS



|                               |                                                                                               |                                                      |  |  |  |  |  | 
|------------------------------ | --------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION
|                               | Item 1: Financial Statements                                                                 
|                               |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS               
|                               |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS     
|                               |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                               |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|                               | Item 2: Managements Discussion and Analysis of Financial Condition and Results of Operations
|                               | Item 3: Quantitative and Qualitative Disclosures About Market Risk                           
|PART II  OTHER INFORMATION   
|                               | Item 1 Legal Proceedings                                                                     
|                               | Item 2 Changes in Securities and Use of Proceeds                                             
|                               | Item 3 Defaults Upon Senior Securities                                                       
|                               | Item 4 Submission of Matters to a Vote of Security Holders                                   
|                               | Item 5 Other Information                                                                     
|                               | Item 6 Exhibits and Reports on Form 8-K.                                                     
|SIGNATURES                    
|Exhibit Index                 
|EX-10.20                      



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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, 2002 and August 31, 2001                                        |  | 3       
|                               |          | Condensed Consolidated Statements of Operations
Three and Six Months Ended February 28, 2002
and February 28, 2001 |  | 4       
|                               |          | Condensed Consolidated Statements of Cash Flows
Six Months Ended February 28, 2002
and February 28, 2001           |  | 5       
|                               |          | Notes to Condensed Consolidated Financial Statements                                                               |  | 6-9     
|                               | Item 2 - | Managements Discussion and Analysis of
Financial Condition and Results of Operations                              |  | 10-14   
|                               | Item 3 - | Quantitative and Qualitative Disclosures
About Market Risk                                                         |  | 15      
|PART II  OTHER INFORMATION    |          |                                                                                                                   
|                               | Item 1 - | Legal Proceedings                                                                                                  |  | 16      
|                               | Item 2 - | Changes in Securities and Use of Proceeds                                                                          |  | 16      
|                               | Item 3 - | Defaults Upon Senior Securities                                                                                    |  | 16      
|                               | Item 4 - | Submission of Matters to a Vote of Security Holders                                                                |  | 16-17   
|                               | Item 5 - | Other Information                                                                                                  |  | 17      
|                               | Item 6 - | Exhibits and Reports on Form 8-K                                                                                   |  | 17-19   
|SIGNATURES                     |          | 20                                                                                                                



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PART I  FINANCIAL INFORMATION




Item 1: Financial Statements




PENFORD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

|                                        |                                      |                   |                                            |                 |   |         |         |         |   |         | 
|--------------------------------------- | ------------------------------------ | ----------------- | ------------------------------------------ | --------------- | - | ------- | ------- | ------- | - | ------- | 
|(Dollars in thousands)                  |                                      | February 28, 2002 |                                            | August 31, 2001
|                                        |                                      |                   |                                            |                
|ASSETS                                 
|Current assets:                         |                                      |                   |                                            |                 |   |         |         |        
|                                        | Trade accounts receivable            |                   | $                                          | 26,777          |   |         | $       | 27,304  |  
|                                        | Inventories                          |                   |                                            | 20,271          |   |         |         | 23,564  |  
|                                        | Prepaid expenses and other           |                   |                                            | 5,996           |   |         |         | 6,505   |  
|                                        |                                      |                   |                                            |                 |   |         |         |        
|                                        |                                      |                   | Total current assets                       |                 |   | 53,044  |         |         |   | 57,373  | 
|Property, plant and equipment, net      |                                      |                   | 133,697                                    |                 |   |         | 140,558 |        
|Deferred income taxes                   |                                      |                   | 13,208                                     |                 |   |         | 13,214  |        
|Restricted cash value of life insurance |                                      |                   | 11,574                                     |                 |   |         | 11,866  |        
|Other assets                            |                                      |                   | 5,596                                      |                 |   |         | 5,838   |        
|Goodwill                                |                                      |                   | 14,840                                     |                 |   |         | 15,264  |        
|                                        |                                      |                   |                                            |                 |   |         |         |        
|                                        |                                      |                   | Total assets                               |                 | $ | 231,959 |         |         | $ | 244,113 | 
|                                        |                                      |                   |                                            |                 |   |         |         |        
|LIABILITIES AND SHAREHOLDERS EQUITY   
|Current liabilities:                    |                                      |                   |                                            |                 |   |         |         |        
|                                        | Bank overdraft, net                  |                   | $                                          | 1,069           |   |         | $       | 1,776   |  
|                                        | Accounts payable                     |                   |                                            | 11,272          |   |         |         | 13,477  |  
|                                        | Accrued liabilities                  |                   |                                            | 9,549           |   |         |         | 8,541   |  
|                                        | Current portion of long-term debt    |                   |                                            | 15,945          |   |         |         | 17,658  |  
|                                        |                                      |                   |                                            |                 |   |         |         |        
|                                        |                                      |                   | Total current liabilities                  |                 |   | 37,835  |         |         |   | 41,452  | 
|Long-term debt                          |                                      |                   | 86,111                                     |                 |   |         | 94,969  |        
|Other postretirement benefits           |                                      |                   | 11,238                                     |                 |   |         | 11,129  |        
|Deferred income taxes                   |                                      |                   | 22,590                                     |                 |   |         | 22,947  |        
|Other liabilities                       |                                      |                   | 8,155                                      |                 |   |         | 7,904   |        
|Shareholders equity:                   |                                      |                   |                                            |                 |   |         |         |        
|                                        | Common stock                         |                   |                                            | 9,581           |   |         |         | 9,511   |  
|                                        | Additional paid-in capital           |                   |                                            | 25,026          |   |         |         | 24,340  |  
|                                        | Retained earnings                    |                   |                                            | 66,002          |   |         |         | 65,526  |  
|                                        | Treasury stock                       |                   |                                            | (32,757         | ) |         |         | (32,757 | )
|                                        | Accumulated other comprehensive loss |                   |                                            | (1,822          | ) |         |         | (908    | )
|                                        |                                      |                   |                                            |                 |   |         |         |        
|                                        |                                      |                   | Total shareholders equity                 |                 |   | 66,030  |         |         |   | 65,712  | 
|                                        |                                      |                   |                                            |                 |   |         |         |        
|                                        |                                      |                   | Total liabilities and shareholders equity |                 | $ | 231,959 |         |         | $ | 244,113 | 
|                                        |                                      |                   |                                            |                 |   |         |         |        

The accompanying notes are an integral part of these statements.



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

|                                                                                |                                                   |      |                   |        |                   |      |           |        |   |   |           |        |  |   |           |        |  
|------------------------------------------------------------------------------- | ------------------------------------------------- | ---- | ----------------- | ------ | ----------------- | ---- | --------- | ------ | - | - | --------- | ------ |  | - | --------- | ------ | -
|                                                                                |                                                   |      | Three Months      |        | Six Months       
|                                                                                |                                                   |      | Ended February 28 |        | Ended February 28
|                                                                                |                                                   |      |                   |        |                  
|(Dollars in thousands except share and per share data)                          |                                                   | 2002 |                   | 2001   |                   | 2002 |           | 2001  
|                                                                                |                                                   |      |                   |        |                   |      |           |       
|Sales                                                                           |                                                   | $    | 54,837            |        |                   | $    | 55,843    |        |   | $ | 111,142   |        |  | $ | 107,732   |       
|Cost of sales                                                                   |                                                   |      | 44,773            |        |                   |      | 46,825    |        |   |   | 90,880    |        |  |   | 87,761    |       
|                                                                                |                                                   |      |                   |        |                   |      |           |        |   |   |           |        |  |   |           |       
|                                                                                | Gross margin                                      |      |                   | 10,064 |                   |      |           | 9,018  |   |   |           | 20,262 |  |   |           | 19,971 |  
|Operating expenses                                                              |                                                   |      | 5,346             |        |                   |      | 5,711     |        |   |   | 10,060    |        |  |   | 10,824    |       
|Research and development                                                        |                                                   |      | 1,450             |        |                   |      | 1,694     |        |   |   | 3,021     |        |  |   | 3,344     |       
|Restructure costs                                                               |                                                   |      | 1,383             |        |                   |      |          |        |   |   | 1,383     |        |  |   |          |       
|                                                                                |                                                   |      |                   |        |                   |      |           |        |   |   |           |        |  |   |           |       
|                                                                                | Income from operations                            |      |                   | 1,885  |                   |      |           | 1,613  |   |   |           | 5,798  |  |   |           | 5,803  |  
|Interest expense, net                                                           |                                                   |      | 1,711             |        |                   |      | 2,838     |        |   |   | 3,778     |        |  |   | 5,329     |       
|                                                                                |                                                   |      |                   |        |                   |      |           |        |   |   |           |        |  |   |           |       
|                                                                                | Income (loss) before taxes and
extraordinary item |      |                   | 174    |                   |      |           | (1,225 | ) |   |           | 2,020  |  |   |           | 474    |  
|Income tax expense (benefit)                                                    |                                                   |      | 30                |        |                   |      | (393      | )      |   |   | 636       |        |  |   | 170       |       
|                                                                                |                                                   |      |                   |        |                   |      |           |        |   |   |           |        |  |   |           |       
|Income (loss) before extraordinary item                                         |                                                   |      | 144               |        |                   |      | (832      | )      |   |   | 1,384     |        |  |   | 304       |       
|Extraordinary loss on early extinguishment
of debt, net of income taxes of $478 |                                                   |      |                  |        |                   |      |          |        |   |   |          |        |  |   | 888       |       
|                                                                                |                                                   |      |                   |        |                   |      |           |        |   |   |           |        |  |   |           |       
|Net income (loss)                                                               |                                                   | $    | 144               |        |                   | $    | (832      | )      |   | $ | 1,384     |        |  | $ | (584      | )     
|                                                                                |                                                   |      |                   |        |                   |      |           |        |   |   |           |        |  |   |           |       
|Weighted average common shares and
equivalents outstanding, assuming dilution   |                                                   |      | 7,735,320         |        |                   |      | 7,458,615 |        |   |   | 7,668,426 |        |  |   | 7,651,659 |       
|Earnings (loss) per common share,
basic and diluted:                            |                                                   |      |                   |        |                   |      |           |        |   |   |           |        |  |   |           |       
|                                                                                | Income (loss) before extraordinary item           |      | $                 | 0.02   |                   |      | $         | (0.11  | ) |   | $         | 0.18   |  |   | $         | 0.04   |  
|                                                                                |                                                   |      |                   |        |                   |      |           |        |   |   |           |        |  |   |           |       
|                                                                                | Extraordinary loss                                |      | $                 |       |                   |      | $         |       |   |   | $         |       |  |   | $         | (0.12  | )
|                                                                                |                                                   |      |                   |        |                   |      |           |        |   |   |           |        |  |   |           |       
|                                                                                | Net income (loss)                                 |      | $                 | 0.02   |                   |      | $         | (0.11  | ) |   | $         | 0.18   |  |   | $         | (0.08  | )
|                                                                                |                                                   |      |                   |        |                   |      |           |        |   |   |           |        |  |   |           |       
|Dividends declared per common share                                             |                                                   | $    | 0.06              |        |                   | $    | 0.06      |        |   | $ | 0.12      |        |  | $ | 0.12      |       
|                                                                                |                                                   |      |                   |        |                   |      |           |        |   |   |           |        |  |   |           |       

The accompanying notes are an integral part of these statements.



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

|                       |                                                                                                        |                                      |   |                              |        |   |   |         |        |  
|---------------------- | ------------------------------------------------------------------------------------------------------ | ------------------------------------ | - | ---------------------------- | ------ | - | - | ------- | ------ | -
|                       |                                                                                                        |                                      |   | Six Months Ended February 28
|                       |                                                                                                        |                                      |   |                             
|(Dollars in thousands) |                                                                                                        | 2002                                 |   | 2001                        
|                       |                                                                                                        |                                      |   |                             
|Operating activities:  |                                                                                                        |                                      |   |                              |        |   |   |        
|                       | Net income (loss)                                                                                      |                                      | $ | 1,384                        |        |   | $ | (584    | )     
|                       | Adjustments to reconcile net income
to net cash from operations:                                       |                                      |   |                              |        |   |   |         |       
|                       |                                                                                                        | Loss on early extinguishment of debt |   |                              |       |   |   |         | 888    |  
|                       |                                                                                                        | Depreciation and amortization        |   |                              | 8,903  |   |   |         | 8,886  |  
|                       |                                                                                                        | Deferred income taxes                |   |                              | (318   | ) |   |         | 142    |  
|                       | Change in operating assets and liabilities,
excluding impact of Penford Australia Limited
acquisition: |                                      |   |                              |        |   |   |         |       
|                       |                                                                                                        | Trade receivables                    |   |                              | 1,505  |   |   |         | (3,697 | )
|                       |                                                                                                        | Inventories                          |   |                              | 2,865  |   |   |         | (1,768 | )
|                       |                                                                                                        | Accounts payable, prepaids and other |   |                              | (1,481 | ) |   |         | (194   | )
|                       |                                                                                                        |                                      |   |                              |        |   |   |        
|                       | Net cash from operating activities                                                                     |                                      |   | 12,858                       |        |   |   | 3,673   |       
|Investing activities:  |                                                                                                        |                                      |   |                              |        |   |   |        
|                       | Investment in property, plant and equipment                                                            |                                      |   | (2,633                       | )      |   |   | (7,645  | )     
|                       | Acquisition of Penford Australia Limited                                                               |                                      |   |                             |        |   |   | (55,953 | )     
|                       | Other                                                                                                  |                                      |   | 550                          |        |   |   | 1,121   |       
|                       |                                                                                                        |                                      |   |                              |        |   |   |        
|                       | Net cash used by investing activities                                                                  |                                      |   | (2,083                       | )      |   |   | (62,477 | )     
|Financing activities:  |                                                                                                        |                                      |   |                              |        |   |   |        
|                       | Proceeds from revolving line of credit                                                                 |                                      |   | 6,989                        |        |   |   | 42,135  |       
|                       | Payments on revolving line of credit                                                                   |                                      |   | (9,184                       | )      |   |   | (36,411 | )     
|                       | Proceeds from long-term debt                                                                           |                                      |   |                             |        |   |   | 105,509 |       
|                       | Payments on long-term debt                                                                             |                                      |   | (7,483                       | )      |   |   | (50,571 | )     
|                       | Payment of fees for early extinguishment of debt                                                       |                                      |   |                             |        |   |   | (1,366  | )     
|                       | Exercise of stock options                                                                              |                                      |   | 574                          |        |   |   | 531     |       
|                       | Payment of dividends                                                                                   |                                      |   | (904                         | )      |   |   | (891    | )     
|                       |                                                                                                        |                                      |   |                              |        |   |   |        
|                       | Net cash provided (used) by financing activities                                                       |                                      |   | (10,008                      | )      |   |   | 58,936  |       
|                       | Effect of exchange rate changes on cash and cash
equivalents                                           |                                      |   | (60                          | )      |   |   | 49      |       
|                       |                                                                                                        |                                      |   |                              |        |   |   |        
|                       | Net increase in cash and equivalents                                                                   |                                      |   | 707                          |        |   |   | 181     |       
|                       | Cash and cash equivalents (bank overdraft) at
beginning of period                                      |                                      |   | (1,776                       | )      |   |   | (313    | )     
|                       |                                                                                                        |                                      |   |                              |        |   |   |        
|                       | Cash and cash equivalents (bank overdraft) at
end of period                                            |                                      | $ | (1,069                       | )      |   | $ | (132    | )     
|                       |                                                                                                        |                                      |   |                              |        |   |   |         |       

The accompanying notes are an integral part of these statements.



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PENFORD CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Business

Penford Corporation (Penford or the Company) is in the business of
developing, manufacturing and marketing specialty natural-based
ingredient systems for various applications, including papermaking,
textiles and food products. The Company operates manufacturing
facilities in the United States, Australia, and New Zealand. Penfords
products provide excellent binding and film-forming characteristics that
make customers products better through natural, convenient and cost
effective solutions. Sales of the Companys products are generated using
a combination of direct sales and distributor agreements.

The Company has extensive research and development capabilities, which
are used in understanding the complex chemistry of carbohydrate-based
materials and their application. In addition, the Company has specialty
processing capabilities for a variety of modified starches, all of which
have similar production methods.

2. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements
include all adjustments, consisting only of normal recurring adjustments
that, in the opinion of management, are necessary to present fairly the
financial information set forth therein. Certain information and note
disclosures normally included in complete financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission (SEC) for interim financial
reporting. Results of operations for the three- and six-month periods
ended February 28, 2002 are not necessarily indicative of future
financial results.

Penfords revenues and operating results may vary from quarter to
quarter. The Company experiences seasonality with its Penford Australia
operations in that it has lower sales volumes and gross margins in
Australia and New Zealands summer months, which corresponds to the
second fiscal quarter.

Investors should read these interim financial statements in conjunction
with Managements Discussion and Analysis of Financial Condition and
Results of Operations and the consolidated financial statements and
notes thereto for the fiscal year ended August 31, 2001 included in the
Penford Corporation and Subsidiaries annual report on Form 10-K, SEC
File No. 0-11488.

Certain prior year amounts have been reclassified to conform with the
current year presentation, which had no effect on previously reported net
income.



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3. Recent Accounting Developments

Effective September 1, 2001, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible
Assets. Under SFAS No. 142, goodwill is no longer amortized but
reviewed for impairment annually, or more frequently if certain
indicators arise. The provisions of this accounting standard also
require the completion of a transitional impairment test as of the date
of adoption with any impairments identified treated as a cumulative
effect of a change in accounting principle. The Company has completed
the transitional test and determined that there was no impairment of
goodwill at September 1, 2001.

The Companys goodwill of $14.8 million and $15.3 million at February 28,
2002 and August 31, 2001, respectively, represents the excess of
acquisition costs over the fair value of the net assets of Penford
Australia. The decrease in the carrying value of goodwill since August
31, 2001 reflects the impact of exchange rate fluctuations between the
Australian and U.S. dollars on the translation of this asset.

In accordance with SFAS No. 142, the Company discontinued the
amortization of goodwill effective September 1, 2001. A reconciliation
of previously reported income (loss) before extraordinary item and
earnings (loss) per share to the amounts adjusted for the exclusion of
goodwill amortization follows:

|                                                 |                                                  |      |                    |      |                  |      |      |       |   |   |       |      |  |   |     |      | 
|------------------------------------------------ | ------------------------------------------------ | ---- | ------------------ | ---- | ---------------- | ---- | ---- | ----- | - | - | ----- | ---- |  | - | --- | ---- | 
|                                                 |                                                  |      | Three Months Ended |      | Six Months Ended
|                                                 |                                                  |      | February 28        |      | February 28     
|                                                 |                                                  |      |                    |      |                 
|(Dollars in thousands except per share data)     |                                                  | 2002 |                    | 2001 |                  | 2002 |      | 2001 
|                                                 |                                                  |      |                    |      |                  |      |      |      
|Reported income (loss) before extraordinary item |                                                  | $    | 144                |      |                  | $    | (832 | )     |   | $ | 1,384 |      |  | $ | 304 |     
|Add: Goodwill amortization                       |                                                  |      |                   |      |                  |      | 205  |       |   |   |      |      |  |   | 336 |     
|                                                 |                                                  |      |                    |      |                  |      |      |       |   |   |       |      |  |   |     |     
|Adjusted income (loss) before extraordinary item |                                                  | $    | 144                |      |                  | $    | (627 | )     |   | $ | 1,384 |      |  | $ | 640 |     
|                                                 |                                                  |      |                    |      |                  |      |      |       |   |   |       |      |  |   |     |     
|Earnings (loss) per common share, diluted:       |                                                  |      |                    |      |                  |      |      |       |   |   |       |      |  |   |     |     
|                                                 | Reported income (loss) before
extraordinary item |      | $                  | 0.02 |                  |      | $    | (0.11 | ) |   | $     | 0.18 |  |   | $   | 0.04 | 
|                                                 | Goodwill amortization                            |      |                    |     |                  |      |      | 0.03  |   |   |       |     |  |   |     | 0.04 | 
|                                                 |                                                  |      |                    |      |                  |      |      |       |   |   |       |      |  |   |     |     
|                                                 | Adjusted income (loss) before
extraordinary item |      | $                  | 0.02 |                  |      | $    | (0.08 | ) |   | $     | 0.18 |  |   | $   | 0.08 | 
|                                                 |                                                  |      |                    |      |                  |      |      |       |   |   |       |      |  |   |     |     

The impact of the non-amortization of goodwill on net income (loss) and
earnings (loss) per share is the same as in the above table.

4. Inventories

The components of inventory are as follows:

|                       |                   |                   |        |                 |  |   |        |        | 
|---------------------- | ----------------- | ----------------- | ------ | --------------- |  | - | ------ | ------ | 
|(Dollars in thousands) |                   | February 28, 2002 |        | August 31, 2001
|                       |                   |                   |        |                
|Raw materials          |                   | $                 | 6,933  |                 |  | $ | 9,164  |       
|Work in progress       |                   |                   | 527    |                 |  |   | 610    |       
|Finished goods         |                   |                   | 12,811 |                 |  |   | 13,790 |       
|                       |                   |                   |        |                 |  |   |        |       
|                       | Total inventories |                   | $      | 20,271          |  |   | $      | 23,564 | 
|                       |                   |                   |        |                 |  |   |        |       



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5. Other Comprehensive Income (Loss)

The components of other comprehensive income (loss) are as follows:

|                                                                                               |  |                    |     |                  |  |      |      |      |  |   |       |   |  |   |        |  
|---------------------------------------------------------------------------------------------- |  | ------------------ | --- | ---------------- |  | ---- | ---- | ---- |  | - | ----- | - |  | - | ------ | -
|                                                                                               |  | Three Months Ended |     | Six Months Ended
|                                                                                               |  | February 28        |     | February 28     
|                                                                                               |  |                    |     |                 
|(Dollars in thousands)                                                                         |  | 2002               |     | 2001             |  | 2002 |      | 2001
|                                                                                               |  |                    |     |                  |  |      |      |     
|Net income (loss)                                                                              |  | $                  | 144 |                  |  | $    | (832 | )    |  | $ | 1,384 |   |  | $ | (584   | )
|Change in unrealized gains (losses) on derivative
instruments that qualify as cash flow hedges |  |                    |    |                  |  |      | (190 | )    |  |   | (31   | ) |  |   | (1     | )
|Foreign currency translation adjustments                                                       |  |                    | 131 |                  |  |      | 573  |      |  |   | (884  | ) |  |   | (1,550 | )
|                                                                                               |  |                    |     |                  |  |      |      |      |  |   |       |   |  |   |        |  
|Comprehensive income (loss)                                                                    |  | $                  | 275 |                  |  | $    | (449 | )    |  | $ | 469   |   |  | $ | (2,135 | )
|                                                                                               |  |                    |     |                  |  |      |      |      |  |   |       |   |  |   |        |  

6. Segment Reporting

The Company operates in one business segment: developing, manufacturing,
and marketing specialty natural-based ingredient systems for various
applications.

Information about the Companys operations by geographic area, including
its operations in North America, Australia and New Zealand, follows:

|                                        |                         |      |                    |        |                  |      |        |        |   |   |         |        |  |   |         |        |  
|--------------------------------------- | ----------------------- | ---- | ------------------ | ------ | ---------------- | ---- | ------ | ------ | - | - | ------- | ------ |  | - | ------- | ------ | -
|                                        |                         |      | Three Months Ended |        | Six Months Ended
|                                        |                         |      | February 28        |        | February 28     
|                                        |                         |      |                    |        |                 
|(Dollars in thousands)                  |                         | 2002 |                    | 2001   |                  | 2002 |        | 2001  
|                                        |                         |      |                    |        |                  |      |        |       
|Sales                                   |                         |      |                    |        |                  |      |        |        |   |   |         |        |  |   |         |       
|                                        | - North America         |      | $                  | 41,008 |                  |      | $      | 41,275 |   |   | $       | 81,986 |  |   | $       | 83,125 |  
|                                        | - Australia/New Zealand |      |                    | 13,829 |                  |      |        | 14,568 |   |   |         | 29,156 |  |   |         | 24,607 |  
|                                        |                         |      |                    |        |                  |      |        |        |   |   |         |        |  |   |         |       
|                                        |                         | $    | 54,837             |        |                  | $    | 55,843 |        |   | $ | 111,142 |        |  | $ | 107,732 |       
|                                        |                         |      |                    |        |                  |      |        |        |   |   |         |        |  |   |         |       
|Income (loss) before extraordinary item |                         |      |                    |        |                  |      |        |        |   |   |         |        |  |   |         |       
|                                        | - North America         |      | $                  | (193   | )                |      | $      | (764   | ) |   | $       | 361    |  |   | $       | (73    | )
|                                        | - Australia/New Zealand |      |                    | 337    |                  |      |        | (68    | ) |   |         | 1,023  |  |   |         | 377    |  
|                                        |                         |      |                    |        |                  |      |        |        |   |   |         |        |  |   |         |       
|                                        |                         | $    | 144                |        |                  | $    | (832   | )      |   | $ | 1,384   |        |  | $ | 304     |       
|                                        |                         |      |                    |        |                  |      |        |        |   |   |         |        |  |   |         |       

|                       |                         |                   |         |                 |  |   |         |         | 
|---------------------- | ----------------------- | ----------------- | ------- | --------------- |  | - | ------- | ------- | 
|(Dollars in thousands) |                         | February 28, 2002 |         | August 31, 2001
|                       |                         |                   |         |                
|Total Assets           |                         |                   |         |                 |  |   |         |        
|                       | - North America         |                   | $       | 167,718         |  |   | $       | 175,038 | 
|                       | - Australia/New Zealand |                   |         | 64,241          |  |   |         | 69,075  | 
|                       |                         |                   |         |                 |  |   |         |         | 
|                       |                         | $                 | 231,959 |                 |  | $ | 244,113 |        
|                       |                         |                   |         |                 |  |   |         |         | 



8



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##### Table of Contents



7. Earnings (Loss) Per Common Share Before Extraordinary Item

The following table presents the computation of basic and diluted
earnings (loss) per share before extraordinary item:

|                                                                              |  |                    |           |                  |  |      |           |      |  |   |           |  |  |   |           | 
|----------------------------------------------------------------------------- |  | ------------------ | --------- | ---------------- |  | ---- | --------- | ---- |  | - | --------- |  |  | - | --------- | 
|                                                                              |  | Three Months Ended |           | Six Months Ended
|                                                                              |  | February 28        |           | February 28     
|                                                                              |  |                    |           |                 
|                                                                              |  | 2002               |           | 2001             |  | 2002 |           | 2001
|                                                                              |  |                    |           |                  |  |      |           |     
|Income (loss) before extraordinary item (in thousands)                        |  | $                  | 144       |                  |  | $    | (832      | )    |  | $ | 1,384     |  |  | $ | 304       | 
|                                                                              |  |                    |           |                  |  |      |           |      |  |   |           |  |  |   |           | 
|Weighted average common
shares outstanding                                    |  |                    | 7,556,052 |                  |  |      | 7,458,615 |      |  |   | 7,543,627 |  |  |   | 7,446,331 | 
|Net effect of dilutive
stock option                                           |  |                    | 179,268   |                  |  |      |          |      |  |   | 124,799   |  |  |   | 205,328   | 
|                                                                              |  |                    |           |                  |  |      |           |      |  |   |           |  |  |   |           | 
|Weighted average common shares
outstanding, assuming dilution                 |  |                    | 7,735,320 |                  |  |      | 7,458,615 |      |  |   | 7,668,426 |  |  |   | 7,651,659 | 
|                                                                              |  |                    |           |                  |  |      |           |      |  |   |           |  |  |   |           | 
|Earnings (loss) per common share before
extraordinary item, basic and diluted |  | $                  | 0.02      |                  |  | $    | (0.11     | )    |  | $ | 0.18      |  |  | $ | 0.04      | 

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 reported for the three-month
period ended February 28, 2001, common stock equivalent shares totaling
184,099 were anti-dilutive, and therefore, not included in the weighted
average common shares outstanding calculation.

8. Restructure Costs

On January 4, 2002, Penford announced that it will strategically
restructure business operations. As part of the restructuring, Penford
will relocate its corporate headquarters from Bellevue, Washington to
Denver, Colorado, and terminate the seven employees based in Bellevue.
The Company anticipates the relocation to be completed by late fall
2002.

In connection with this restructuring, the Company recorded a charge of
$1.4 million, consisting of employee termination costs, lease
termination costs and other costs associated with the closure of the
Bellevue office.



9



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

Forward-looking Statements

This report contains forward-looking statements concerning Penfords
performance and financial results, including sales increases resulting from
continued stabilization in the North American paper industry, anticipated
increases in specialty food starches sales resulting from continued acceptance
and penetration of protein binder and coating products, sales increases
resulting from seasonality, improvements in gross margin percentages resulting
from increases in sales volumes and improvement in product mix, declines in
natural gas prices, expected levels of operating and research and development
expenses, including expected increases in and funding of operating expenses for
a strategic restructuring and transition, the level of anticipated interest
rates, including the possibility of entering into interest rate swap agreements
to limit exposure to higher interest rates, the anticipated level of capital
investment, and the expectation that we will continue to pay a quarterly
dividend. There are a variety of factors that 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 our 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 Penford operates. Accordingly, there can be no assurance that future
activities or results will be as anticipated.

Forward-looking statements are based on our estimates and opinions on the date
the statements are made. We assume no obligation to update any forward-looking
statements if circumstances or estimates or opinions should change.

Additional information that could affect Penfords financial results is
included in our 2001 Annual Report to Shareholders and our Form 10-K for the
fiscal year ended August 31, 2001 on file with the Securities and Exchange
Commission.

Restructuring Announcement

On January 4, 2002, we announced that we will strategically restructure
business operations to strengthen our position as a market leader in delivering
technically-differentiated, specialty ingredients to the food, paper and
textile industries. The restructuring comes as a result of the rapid growth of
our North American food ingredients business, the addition of Penford Australia
Limited last year and the changing landscape of the North American paper
industry. We will relocate corporate headquarters from Bellevue, Washington
to Denver, Colorado, a location more central to customers and operations, as
well as the base of our fast-growing food ingredients business. We anticipate
completing the restructuring late this fall.



10



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

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

In connection with this restructuring, we recorded a charge of $1.4 million,
consisting of employee termination costs, lease termination costs, and other
costs associated with the closure of the Bellevue office, during the second
quarter ended February 28, 2002.

In addition to these costs, we will incur incremental general and
administrative costs during the transition period that do not meet the
technical accounting definition of restructure costs. These costs will include
recruiting and relocation fees for the new chief executive officer, chief
financial officer and other members of the corporate staff, and overlap of key
personnel during the transition, as well as the costs associated with
establishing the new office in the Denver area. We expect that incremental
general and administrative expenses will be approximately $0.2  $0.3 million
per quarter through late fall 2002.

Results of Operations

Three months ended February 28, 2002 compared to three months ended February
28, 2001

In the three months ended February 28, 2002, sales decreased $1.0 million, or
2%, to $54.8 million. The decrease from $55.8 million in the prior year is
attributed to the decline in sales volumes for paper customers due to continued
weakness in the North American paper industry. As a result, sales of our
industrial products declined $1.4 million, or 5%, over the comparative period
last year. Offsetting this decrease were higher sales volumes of specialty
starch-based ingredients systems for the North American food industry. Sales
for these products grew $1.2 million, or 12%, over last years second quarter,
mainly the result of new sales to a global food service customer starting in
March 2001 under terms of a two-year agreement, as well as new customer and
market initiatives. Reported sales for our Australian operations decreased by
$0.7 million, or 5%, due primarily to the decline in the U.S.-Australian dollar
exchange rate. On a local currency basis, however, sales for Penford Australia
increased slightly.

We expect that overall sales will improve modestly over the coming fiscal
quarters as we expect continued stabilization in the North American paper
industry. Further, we expect growth in food products sales due to continued
acceptance and penetration of protein binder and coating products, however at
lower rates on a year-to-year basis, because future comparative periods will
both include the new sales to a global food service company. Finally, the
second quarter is a seasonal low for our Australian operations, while third and
fourth quarters are traditionally stronger quarters.



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Gross margin was $10.1 million, or 18% of sales, for the three months ended
February 28, 2002, compared to $9.0 million, or 16% of sales, for the
corresponding prior-year period. The increase in gross margin was caused
primarily by the decline in natural gas prices, one of our significant
production cost components. This improvement was offset somewhat by the
negative impact of lower sales volumes of products to our paper customers and
some unfavorable product mix shifts. As we begin to see some modest
improvements in sales volumes and mix, we expect to see further improvement in
our gross margin percentage over the coming fiscal quarters.

Operating expenses for the three months ended February 28, 2002, exclusive of
the restructuring charge of $1.4 million, were $5.3 million, approximately $0.4
million less than the same period last year. This decrease was due to cost
savings realized from recent workforce reductions and elimination of goodwill
amortization (see Recent Accounting Developments). Included in operating
expenses this quarter are approximately $0.2 million of transition expenses
related to the strategic restructuring, which do not meet the technical
accounting definition of restructure costs. While most factors will continue
in near-term fiscal quarters, we expect some increase in marketing expenses as
we invest in development of new markets for our specialty food ingredients
customers. However, we do not expect a significant change in the relationship
of operating expenses to sales.

Research and development expenses decreased $0.2 million, or 14%, in the three
months ended February 28, 2002 from the corresponding prior-year period, also
due to workforce reductions. We expect to continue our ongoing investment in
research and development at levels similar to that of the second quarter and as
required to support new market initiatives.

Interest expense decreased $1.1 million, or 40%, to $1.7 million for the three
months ended February 28, 2002, compared to $2.8 million in the same period
last year. Lower average debt balances and the decline in market interest
rates drove the improvement. We expect interest expense will decline as we
reduce our debt through scheduled repayments on term loans and repayments on
our revolving credit arrangements. However, interest expense also will be
impacted by any further changes in market interest rates, as our credit
facilities have variable interest rates. We may enter into interest rate swap
agreements to limit our exposure to higher interest rates.

The effective tax rate for the three months ended February 28, 2002 varied from
Federal statutory rates due to the offsetting effects of taxable income and
losses incurred in different U.S. and foreign jurisdictions.

Net income was $0.1 million, or $0.02 per common share, for the three months
ended February 28, 2002, compared to a net loss of $0.8 million, or $0.11 per
common share, for the corresponding period a year ago. Excluding the
restructuring charge, net income for the three months ended February 28, 2002
was $1.0 million, or $0.14 per common share.

Six months ended February 28, 2002 compared to six months ended February 28,
2001

Sales for the six months ended February 28, 2002 increased 3% to $111.1
million. The increase from $107.7 million in the prior year is attributed to
the acquisition of Penford Australia in September 2000 and higher sales volumes
to our customers in the food industry. These increases were offset by the
decline in sales volumes to our North American paper customers.



12



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Gross margin for the six months ended February 28, 2002 was $20.3 million, or
18% of sales, compared to $20.0 million, or 19% of sales, for the corresponding
prior-year period. For the year-to-date period, the benefit of lower natural
gas prices has not fully offset the negative impact of lower sales volumes of
products to our paper customers.

Operating expenses for the six months ended February 28, 2002, exclusive of the
restructuring charge of $1.4 million, were $10.1 million. This compares to
$10.8 million for the corresponding period in the prior year, a decline of 7%,
attributable to cost savings realized from workforce reductions late last
fiscal year, decreased travel, and the elimination of goodwill amortization
(see Recent Accounting Developments). Research and development expenses
decreased $0.3 million, or 10% in the six months ended February 28, 2002
compared to prior year period, also due to workforce reductions.

Interest expense declined $1.6 million, or 29%, to $3.8 million for the six
months ended February 28, 2002, compared to $5.3 million in the same period
last year for the reasons described in the quarterly comparison.

During the six months ended February 28, 2001, we prepaid our private placement
debt facilities in connection with a comprehensive refinancing to fund the
acquisition of Penford Australia. The early repayment of the private placement
facilities required prepayment fees, which resulted in a loss on early
extinguishment of debt of $1.4 million, which is presented as an extraordinary
item, net of the related tax benefit of $478,000.

Net income for the six months ended February 28, 2002 was $1.4 million, or
$0.18 per common share, compared to income before extraordinary item of $0.3
million, or $0.04 per common share, for the same period last year. Excluding
the restructuring charge, net income for the six months ended February 28, 2002
was $2.3 million, or $0.30 per common share. Including the extraordinary loss,
the net loss for the six months ended February 28, 2001 was $0.6 million, or
$0.08 per common share.

Liquidity and Capital Resources

At February 28, 2002, Penford had working capital of $15.2 million and $102.1
million outstanding under its credit facilities, which are comprised of term
loans, revolving credit and overnight borrowing facilities. We currently have
available borrowing capacity of approximately $20 million on our revolving
credit and overnight borrowing facilities to fund operations, as it is not our
practice to carry cash balances.

Cash flow from operations for the six months ended February 28, 2002 was $12.9
million compared to $3.7 million in the corresponding period of the prior year.
The increase in operating cash flows is due primarily to favorable changes in
working capital and improved profitability. In addition to normal operating
expenses, we will use cash generated from operations to fund the $1.4 million
costs of the strategic restructuring over the next 24 months.

We invested $2.6 million in property, plant and equipment during the six months
ended February 28, 2002, compared to $7.6 million in the same period last year.
Current acquisitions were primarily improvements at the Companys industrial
ingredients production facility in Cedar Rapids, Iowa. We expect, in the near
term, to increase our capital investment to levels similar to the prior year to
continue upgrades and operational efficiency improvements at our Cedar Rapids
facility, as well as at our other North



13



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American, Australian and New Zealand production facilities. As announced on
February 19, 2002, we will invest in food-grade production capability at our
Cedar Rapids facility, leveraging those existing assets and improving
utilization. We may make further commitments for significant new capital
projects as we improve the amount of cash generated from operations. In the
meantime, we continue to make efficiency and safety improvements as required to
maintain our operations in good working order. We expect our capital
investments to be approximately $10 million this fiscal year.

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

We made payments on our term loan and revolving credit facilities totaling $9.7
million during the six months ended February 28, 2002. During the balance of
this fiscal year, term loan payments of approximately $7.5 million are due that
we plan to pay primarily from cash generated from operations. In the prior
year, our financing activities revolved primarily around refinancing and
additional borrowings for the acquisition of Penford Australia.

Penford has paid a quarterly cash dividend since 1992. The quarterly dividend
rate paid since April 2000 has remained at $0.06 per share. We paid $0.9
million in dividends to our shareholders during the first half of this fiscal
year, approximately the same as the first half of last year. Although our
Board of Directors reviews the dividend policy on a periodic basis, we
anticipate that we will continue to pay quarterly dividends in the foreseeable
future.

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

Recent Accounting Developments

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



14



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Item 3: Quantitative and Qualitative Disclosures About Market Risk

Market Risk Sensitive Instruments and Positions

The market risk associated with the our market risk sensitive instruments is
the potential loss from adverse changes in interest rates, foreign currency
exchange rates, and commodities prices.

We are unaware of any material changes to the market risk disclosures referred
to in our annual report on Form 10-K for the year ended August 31, 2001, other
than a 9% decline in the outstanding balance of long-term debt, which reduces
our potential interest rate exposure.



15



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##### Table of Contents






PART II  OTHER INFORMATION




Item 1 Legal Proceedings

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

In December 2001, the Court entered an order granting plaintiffs
counsels motion to withdraw from the case on the grounds that they
have been unable to obtain information from their clients that might
substantiate the plaintiffs personal injury claims. The court then
ordered the plaintiffs to appear in the case by January 20, 2002.
Only two of the plaintiffs appeared. Penfords motion to dismiss the
claims of all but the two responding plaintiffs is presently before
the court, as is Penfords motion for summary judgment against the
plaintiffs personal injury claims.

Recently, the plaintiffs have obtained new counsel, and are
challenging Penfords motion for summary judgment.




Item 2 Changes in Securities and Use of Proceeds

Not applicable




Item 3 Defaults Upon Senior Securities

Not applicable




Item 4 Submission of Matters to a Vote of Security Holders



|(a) |  | The annual meeting of shareholders of Penford Corporation was held on
February 25, 2002.
|--- |  | ----------------------------------------------------------------------------------------
|   
|(b) |  | At the annual shareholders meeting, the following directors were
elected to serve:      

|                     |  |                         
|-------------------- |  | ------------------------
|Term to Expire 2003: |  | Richard T. Crowder      
|Term to Expire 2004: |  | Thomas D. Malkoski      
|Term to Expire 2005: |  | John C. Hunter, III     
|                     |  | William G. Parzybok, Jr.
|                     |  | James E. Warjone        

The Board is comprised of those directors elected this year and the
following directors completing their terms: Paul H. Hatfield, Jeffrey
T. Cook and Sally G. Narodick.



16



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##### Table of Contents





|(c) |  | The following matters were voted upon at the meeting:
|--- |  | -----------------------------------------------------



| | 1. |  | For the election of directors:
| | -- |  | ------------------------------

|                         |  |     |           |       |  |          |       |       |  |  |         |      |  |  |      |  
|------------------------ |  | --- | --------- | ----- |  | -------- | ----- | ----- |  |  | ------- | ---- |  |  | ---- | -
|                         |  |     |           |       |  | % of     |       |       |  |  |         | % of
|                         |  | For |           | Voted |  | Withheld |       | Voted
|                         |  |     |           |       |  |          |       |      
|Richard T. Crowder       |  |     | 5,964,054 |       |  |          | 91.23 | %     |  |  | 573,298 |      |  |  | 8.77 | %
|Thomas D. Malkoski       |  |     | 6,106,906 |       |  |          | 93.42 | %     |  |  | 430,446 |      |  |  | 6.58 | %
|John C. Hunter, III      |  |     | 5,964,254 |       |  |          | 91.23 | %     |  |  | 573,098 |      |  |  | 8.77 | %
|William G. Parzybok, Jr. |  |     | 5,963,952 |       |  |          | 91.23 | %     |  |  | 573,400 |      |  |  | 8.77 | %
|James E. Warjone         |  |     | 6,105,251 |       |  |          | 93.39 | %     |  |  | 432,101 |      |  |  | 6.61 | %



| | 2. |  | Approval of amendment to 1994 Stock Option Plan
increasing the total aggregate number of shares for which options
may be issued under such plan by 500,000 shares.
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                |  |       |           |             |  |      |       |  
|--------------- |  | ----- | --------- | ----------- |  | ---- | ----- | -
|                |  |       |           |             |  | % of
|                |  | Votes |           | and Against
|                |  |       |           |            
|For             |  |       | 3,378,161 |             |  |      | 61.37 | %
|Against         |  |       | 2,126,061 |             |  |      | 38.63 | %
|Abstain         |  |       | 32,146    |             |  |      |       |  
|Broker non-vote |  |       | 1,065,276 |             |  |      |       |  



| | 3. |  | Approval of amendment to 1994 Stock Option Plan
increasing the maximum amount of shares for which options may be
granted to any employee in any one fiscal year to 200,000 shares.
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                |  |       |           |             |  |      |       |  
|--------------- |  | ----- | --------- | ----------- |  | ---- | ----- | -
|                |  |       |           |             |  | % of
|                |  | Votes |           | and Against
|                |  |       |           |            
|For             |  |       | 3,853,612 |             |  |      | 70.14 | %
|Against         |  |       | 1,640,310 |             |  |      | 29.86 | %
|Abstain         |  |       | 42,446    |             |  |      |       |  
|Broker non-vote |  |       | 1,085,876 |             |  |      |       |  



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




Item 5 Other Information

Not applicable




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)                                                                                               

17



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##### Table of Contents



|        |  |                                                                                                                                                                                                                                                 
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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.
Horn, Keeley, Kunerth, and Malkoski (a representative copy of these
agreements is filed as an exhibit to Registrants Form 10-K for the
fiscal year ended August 31, 1995)*
|(10.5)  |  | Penford Corporation 1993 Non-Employee Director Restricted Stock Plan
(filed as an exhibit to Registrants Form 10-Q for the quarter ended
November 30, 1993)*                                                                                   
|(10.6)  |  | Penford Corporation 1994 Stock Option Plan as amended and restated
as of January 21, 1997 (filed on Form S-8 dated March 17, 1997)*                                                                                                             
|(10.7)  |  | Penford Corporation Stock Option Plan for Non-Employee Directors
(filed as an exhibit to Registrants Form 10-Q for the quarter ended
May 31, 1996)*                                                                                            
|(10.8)  |  | Separation Agreement dated as of July 31, 1998 between Registrant
and Penwest Pharmaceuticals Co. (filed as an exhibit to Registrants
Form 8-K dated August 31, 1998)                                                                          
|(10.9)  |  | Services Agreement dated as of July 31, 1998 between Registrant and
Penwest Pharmaceuticals Co. (filed as an exhibit to Registrants
Form 8-K dated August 31, 1998)                                                                            
|(10.10) |  | Employee Benefits Agreement dated as of July 31, 1998 between
Registrant and Penwest Pharmaceuticals Co. (filed as an exhibit to
Registrants Form 8-K dated August 31, 1998)*                                                                  
|(10.11) |  | Tax Allocation Agreement dated as of July 31, 1998 between
Registrant and Penwest Pharmaceuticals Co. (filed as an exhibit to
Registrants Form 8-K dated August 31, 1998)                                                                      
|(10.12) |  | Excipient Supply Agreement dated as of July 31, 1998 between
Registrant and Penwest Pharmaceuticals Co. (filed as an exhibit to
Registrants Form 8-K dated August 31, 1998)                                                                    
|(10.13) |  | Amended and Restated Credit Agreement dated as of November 15, 2000
among Penford Corporation and Penford Products Co. as                                                                                                                       

18



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|        |  |                                                                                                                                                                                                                                                                                                                                                                                     
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |  | 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)                                                                                                   
|(10.17) |  | First Amendment dated as of April 12, 2001 to Amended and Restated
Credit Agreement dated as of November 15, 2000 among Penford
Corporation and Penford Products Co. as borrowers, and certain
commercial lending institutions as lenders, and the Bank of Nova
Scotia, as agent for the lenders (filed as an exhibit to
Registrants Form 10-Q for the quarter ended May 31, 2001) 
|(10.18) |  | Waiver Agreement dated as of April 12, 2001 to Amended and Restated
Credit Agreement dated as of November 15, 2000 among Penford
Corporation and Penford Products Co. as borrowers, and certain
commercial lending institutions as lenders, and the Bank of Nova
Scotia, as agent for the lenders (filed as an exhibit to
Registrants Form 10-Q for the quarter ended May 31, 2001)
|(10.19) |  | Second Amendment dated as of May 31, 2001 to Amended and Restated
Credit Agreement dated as of November 15, 2000 among Penford
Corporation and Penford Products Co. as borrowers, and certain
commercial lending institutions as lenders, and the Bank of Nova
Scotia, as agent for the lenders (filed as an exhibit to
Registrants Form 10-Q for the quarter ended May 31, 2001)  
|(10.20) |  | Transition Agreement dated as of January 17, 2002 between Registrant
and Jeffrey T. Cook*                                                                                                                                                                                                                                                                                           
|*       |  | Denotes management contract or compensatory plan or arrangements                                                                                                                                                                                                                                                                                                                    



|(b) |  | There were no filings on Form 8-K in the quarter ended February 28, 2002.
|--- |  | -------------------------------------------------------------------------



19



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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 12, 2002 |  | /s/ Jacqueline L. Davidson                                                 
|               |  |                                                                            
|Date           |  | Jacqueline L. Davidson
Vice President of Finance
(Chief Accounting Officer)



20



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##### Table of Contents






Exhibit Index

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





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##### Table of Contents



|        |  |                                                                                                                                                                                                                                                 
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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.
Horn, Keeley, Kunerth, and Malkoski (a representative copy of these
agreements is filed as an exhibit to Registrants Form 10-K for the
fiscal year ended August 31, 1995)*
|(10.5)  |  | Penford Corporation 1993 Non-Employee Director Restricted Stock Plan
(filed as an exhibit to Registrants Form 10-Q for the quarter ended
November 30, 1993)*                                                                                   
|(10.6)  |  | Penford Corporation 1994 Stock Option Plan as amended and restated
as of January 21, 1997 (filed on Form S-8 dated March 17, 1997)*                                                                                                             
|(10.7)  |  | Penford Corporation Stock Option Plan for Non-Employee Directors
(filed as an exhibit to Registrants Form 10-Q for the quarter ended
May 31, 1996)*                                                                                            
|(10.8)  |  | Separation Agreement dated as of July 31, 1998 between Registrant
and Penwest Pharmaceuticals Co. (filed as an exhibit to Registrants
Form 8-K dated August 31, 1998)                                                                          
|(10.9)  |  | Services Agreement dated as of July 31, 1998 between Registrant and
Penwest Pharmaceuticals Co. (filed as an exhibit to Registrants
Form 8-K dated August 31, 1998)                                                                            
|(10.10) |  | Employee Benefits Agreement dated as of July 31, 1998 between
Registrant and Penwest Pharmaceuticals Co. (filed as an exhibit to
Registrants Form 8-K dated August 31, 1998)*                                                                  
|(10.11) |  | Tax Allocation Agreement dated as of July 31, 1998 between
Registrant and Penwest Pharmaceuticals Co. (filed as an exhibit to
Registrants Form 8-K dated August 31, 1998)                                                                      
|(10.12) |  | Excipient Supply Agreement dated as of July 31, 1998 between
Registrant and Penwest Pharmaceuticals Co. (filed as an exhibit to
Registrants Form 8-K dated August 31, 1998)                                                                    
|(10.13) |  | Amended and Restated Credit Agreement dated as of November 15, 2000
among Penford Corporation and Penford Products Co. as                                                                                                                       





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##### Table of Contents



|        |  |                                                                                                                                                                                                                                                                                                                                                                                     
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |  | 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)                                                                                                   
|(10.17) |  | First Amendment dated as of April 12, 2001 to Amended and Restated
Credit Agreement dated as of November 15, 2000 among Penford
Corporation and Penford Products Co. as borrowers, and certain
commercial lending institutions as lenders, and the Bank of Nova
Scotia, as agent for the lenders (filed as an exhibit to
Registrants Form 10-Q for the quarter ended May 31, 2001) 
|(10.18) |  | Waiver Agreement dated as of April 12, 2001 to Amended and Restated
Credit Agreement dated as of November 15, 2000 among Penford
Corporation and Penford Products Co. as borrowers, and certain
commercial lending institutions as lenders, and the Bank of Nova
Scotia, as agent for the lenders (filed as an exhibit to
Registrants Form 10-Q for the quarter ended May 31, 2001)
|(10.19) |  | Second Amendment dated as of May 31, 2001 to Amended and Restated
Credit Agreement dated as of November 15, 2000 among Penford
Corporation and Penford Products Co. as borrowers, and certain
commercial lending institutions as lenders, and the Bank of Nova
Scotia, as agent for the lenders (filed as an exhibit to
Registrants Form 10-Q for the quarter ended May 31, 2001)  
|(10.20) |  | Transition Agreement dated as of January 17, 2002 between Registrant
and Jeffrey T. Cook*                                                                                                                                                                                                                                                                                           
|*       |  | Denotes management contract or compensatory plan or arrangements