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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the year ended December 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from _______________ to ________________
COMMISSION FILE NUMBER 000-23467
A. Full title of the Plan:
PENWEST PHARMACEUTICALS CO.
SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the Plan and the address
of its principal executive office:
PENWEST PHARMACEUTICALS CO.
2981 ROUTE 22
PATTERSON, NEW YORK 12563-9970
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Penwest Pharmaceuticals Co.
Savings Plan
Audited Financial Statements and Supplemental Schedule
Years ended December 31, 2000 and 1999
INDEX
Report of Independent Auditors......................................... 1
Audited Financial Statements
Statements of Net Assets Available for Benefits........................ 2
Statements of Changes in Net Assets Available for Benefits............. 3
Notes to Financial Statements.......................................... 4
Supplemental Schedule
Schedule H, line 4(i)-Schedule of Assets Held for Investment
Purposes at End of Year.............................................. 9
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Report of Independent Auditors
Board of Directors
Penwest Pharmaceuticals Co. Savings Plan
We have audited the accompanying statements of net assets available for benefits
of the Penwest Pharmaceuticals Co. Savings Plan as of December 31, 2000 and
1999, and the related statements of changes in net assets available for benefits
for the years then ended. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 2000 and 1999, and the changes in its net assets available for
benefits for the years then ended, in conformity with accounting principles
generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
held for investment purposes at end of year as of December 31, 2000, is
presented for purposes of additional analysis and is not a required part of the
financial statements but is supplementary information required by the Department
of Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This supplemental schedule is the
responsibility of the Plan's management. This supplemental schedule has been
subjected to the auditing procedures applied in our audits of the financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Ernst & Young LLP
Stamford, Connecticut
June 28, 2001
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Penwest Pharmaceuticals Co. Savings Plan
Statements of Net Assets Available for Benefits
DECEMBER 31,
--------------------------
2000 1999
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ASSETS
Investments $6,413,401 $6,602,805
Receivables:
Employer's contribution 53,881 55,393
Participants' contributions 14,121 --
Accrued income 5,271 1,024
Other receivables 11,991 --
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Total receivables 85,264 56,417
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Total assets 6,498,665 6,659,222
LIABILITIES
Fees payable 15,372 66,798
Other payables 79,661 23,043
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Total liabilities 95,033 89,841
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Net assets available for benefits $6,403,632 $6,569,381
========== ==========
See accompanying notes.
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Penwest Pharmaceuticals Co. Savings Plan
Statements of Changes in Net Assets Available for Benefits
YEAR ENDED DECEMBER 31,
--------------------------
2000 1999
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ADDITIONS
Investment income:
Net (depreciation) appreciation in fair
value of investments $ (553,659) $2,076,256
Interest and dividends 44,212 29,079
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(509,447) 2,105,335
Contributions:
Participants 415,585 561,032
Employer 238,095 213,593
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653,680 774,625
Total additions 144,233 2,879,960
DEDUCTIONS
Benefits paid directly to participants 236,959 263,730
Administrative expenses 73,023 64,719
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Total deductions 309,982 328,449
Net (decrease) increase (165,749) 2,551,511
Net assets available for benefits:
Beginning of year 6,569,381 4,017,870
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End of year $6,403,632 $6,569,381
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See accompanying notes.
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Penwest Pharmaceuticals Co. Savings Plan
Notes to Financial Statements
1. DESCRIPTION OF THE PLAN
The following description of the Penwest Pharmaceuticals Co. (the "Company" or
the "Employer") Savings Plan (the "Plan") provides only general information.
Participants should refer to the Summary Plan Description for a more complete
description of the Plan's provisions. Copies are available from the Plan's
Administrative Committee.
GENERAL
The Plan is a defined contribution plan covering all U.S. employees of the
Company who have completed three months of service, including part-time
employees. Effective January 1, 1999, the Plan was amended to provide that an
employee is eligible to participate in the Plan after attaining age 18 and
completing three months of service, as defined. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"), as
amended.
CONTRIBUTIONS
Participants may contribute from 1% up to 12% of pre-tax compensation as defined
in the Plan agreement. The Company may make quarterly employer matching
contributions as defined in the Plan agreement, in an amount equal to a
percentage of each participant's pre-tax contributions to the Plan up to 6% of
earnings. Additional amounts may be contributed at the discretion of the
Company's Board of Directors to each participant who is employed on the last day
of the Plan year.
PARTICIPANT ACCOUNTS
Individual accounts are maintained for all Plan participants. These accounts
reflect participants' contributions and related Company matching and
discretionary contributions, if any, to the Plan and allocations of earnings or
losses on the Plan's investments. Allocations are based on participant account
balances. As of the end of each Plan year, forfeitures of nonvested amounts are
first used to restore any forfeitures for returning employees who previously
worked for the Company within a five year period, and any remaining amounts are
used to reduce subsequent employer contributions.
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Penwest Pharmaceuticals Co. Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
VESTING
Participants are immediately vested in their contributions, as well as any
earnings thereon. Vesting in the Employer contribution portion of their
accounts, as well as any earnings thereon is based on years of credited service
and vest in accordance with the following schedule:
CREDITED SERVICE % VESTED
---------------- --------
Less than one year 0%
One year 25%
Two years 50%
Three years 75%
Four years or more 100%
In the event of disability, attainment of age 65, or death of a participant, the
related Employer contributions and earnings thereon become fully vested.
INVESTMENT OPTIONS
All of the Plan's investment programs are fully participant directed. Upon
enrollment in the Plan, a participant may direct Employer and participant
contributions among any of the five current investment options. The Penford
Corporation stock fund includes account balances transferred from the Penford
Plan in connection with the Company's former parent, Penford Corporation's
distribution to its shareholders of all of the shares of the Company's common
stock effective September 1, 1998. The Penford Corporation stock fund is not an
investment option for current or future contributions to the Plan.
PAYMENT OF BENEFITS
Upon termination, permanent disability, or death, 100% of the value of the
participant's vested account may be paid to the participant or the participant's
beneficiary in a lump sum payment.
PARTICIPANT LOANS
Participants may, in the event of financial hardship as defined in the Plan,
borrow from their fund accounts a minimum of $1,000 up to a maximum of $50,000
or 50% of their vested account balance, whichever is less. Loans bear interest
at a rate determined by the Plan's Administrative Committee.
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Penwest Pharmaceuticals Co. Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
PARTICIPANT LOANS (CONTINUED)
Interest rates on outstanding loans as of December 31, 2000 and 1999 range from
8.75% to 10.5%. Loan terms generally range from 1 to 5 years but may be
increased if the loan is used for the purchase of a primary residence. The loans
are secured by the balance in the participant's account.
EXPENSES
The Plan pays its recordkeeping and investment management expenses. The Company
pays all other expenses of the Plan.
PLAN TERMINATION
Although the Company has not expressed any intent to do so, it has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination,
participants will become 100% vested in their accounts.
2. SUMMARY OF ACCOUNTING POLICIES
INVESTMENT VALUATION
The Plan's investments are stated at fair value. Mutual funds are valued at
quoted market prices which represent the net asset values of shares held by the
Plan at year-end. Penwest Pharmaceuticals Co. and Penford Corporation common
stock are valued at the last reported sales price on the last business day of
the year. The participant loans are valued at their outstanding principal
balances, which approximate fair value.
Purchases and sales of investments are recorded on the trade dates. Interest
income is recorded on the accrual basis.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
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Penwest Pharmaceuticals Co. Savings Plan
Notes to Financial Statements (continued)
3. INVESTMENTS
Individual investments that represent 5% or more of the Plan's net assets
available for benefits are as follows:
DECEMBER 31,
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2000 1999
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Frank Russell Trust Company Funds:
Short-Term Investment Fund - 906,946 shares $ 906,946
Global Aggressive Balanced Fund - 37,794
and 37,985 shares, respectively 896,322 $ 925,241
Tactical Asset Allocation Fund - 12,851
and 12,144 shares, respectively 391,886 340,360
Global Equity Fund - 20,261 and 14,690 shares,
respectively 682,513 539,138
Penwest Pharmaceuticals Co. common stock - 207,289
and 206,477 shares, respectively 2,681,801 3,148,775
Penford Corporation common stock - 56,697 and 77,727
shares, respectively 807,932 1,340,786
During 2000 and 1999, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) (depreciated)
appreciated in value as follows:
YEAR ENDED DECEMBER 31,
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2000 1999
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Global Aggressive Balanced Fund $ (28,504) $ 132,615
Tactical Asset Allocation Fund 28,996 6,473
Global Equity Fund (57,247) 110,885
Penwest Pharmaceuticals Co. common stock (313,168) 1,757,283
Penford Corporation common stock (183,736) 69,000
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$(553,659) $2,076,256
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Penwest Pharmaceuticals Co. Savings Plan
Notes to Financial Statements (continued)
4. INCOME TAX STATUS
The Plan applied for but has not yet received a determination letter from the
Internal Revenue Service stating that the Plan is qualified under Section 401(a)
of the Internal Revenue Code (the "Code"). However, the Plan administrator and
the Plan's legal counsel believe that the Plan is qualified, and therefore, the
related trust is exempt from taxation.
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Penwest Pharmaceuticals Co. Savings Plan
Schedule H, line 4(i) - Schedule of Assets Held for Investment Purposes at End
of Year
(EIN: 91-1513032, PN: 002)
December 31, 2000
DESCRIPTION OF INVESTMENT
INCLUDING MATURITY RATE,
IDENTITY OF ISSUE, BORROWER, RATE OF INTEREST,
LESSOR, OR SIMILAR PARTY PAR OR MATURITY VALUE CURRENT VALUE
- ------------------------------------------------------------------------------------
* Frank Russell Trust Company Short Term Investment Fund
906,946 shares $ 906,946
Global Aggressive Balanced Fund
37,794 shares 896,322
Tactical Asset Allocation Fund
12,851 shares 391,886
Global Equity Fund
20,261 shares 682,513
* Penwest Pharmaceuticals Co. Penwest Pharmaceuticals Co.
common stock 207,289 shares 2,681,801
* Penford Corporation Penford Corporation
common stock 56,697 shares 807,932
* Participant Loans Interest rates ranging from 8.75% -
10.5%; maturity dates through 2015 46,001
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$6,413,401
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*Denotes party in interest to the Plan.
The cost column is not applicable as all of the Plan's investment programs are
fully participant directed.
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SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
Penwest Pharmaceuticals Co.
Savings Plan
June 29, 2001 By: /s/ Tod R. Hamachek
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Chairman of the Board and
Chief Executive Officer -
Penwest Pharmaceuticals Co.
Savings Plan Administrative Committee
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