8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 6, 2011

Penford Corporation

(Exact name of registrant as specified in its charter)

Washington (State or other jurisdiction of incorporation)	0-11488 (Commission File Number)	91-1221360 (IRS Employer Identification No.)
7094 South Revere Parkway,
Centennial, Colorado		80112-3932
(Address of principal executive offices		(Zip Code)

303-649-1900
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02: Results of Operations and Financial Condition

On January 6, 2011, Penford Corporation issued a press release reporting its financial results for the three-month period ended November 30, 2010. A copy of the Registrant’s press release containing this information is furnished as Exhibit 99.1 to this Report on Form 8-K and is incorporated herein by reference.

Item 9.01: Financial Statements and Exhibits

(d) Exhibits

Exhibit No.		Description
	99.1	Press release dated January 6, 2011

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Penford Corporation (Registrant)
January 7, 2011	/s/ Steven O. Cordier
	Steven O. Cordier
	Senior Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit No.		Description
	99.1	Press Release dated January 6, 2011

EX-99.1

Exhibit 99.1

Contacts: Steven O. Cordier
Senior Vice President and CFO
Penford Corporation
303-649-1900
steve.cordier@penx.com

Penford Reports First Quarter Fiscal 2011 Financial Results

Revenue increased 7% over prior year. Food and Industrial segments post record 1^st quarter sales.

Higher ethanol returns and cost improvements contribute to consolidated results.

Operating income improved $5.8 million sequentially from 4^th quarter 2010 and was comparable to prior year.

CENTENNIAL, Co., January 6, 2011 — Penford Corporation (Nasdaq: PENX), a leader in renewable ingredient systems for industrial and food applications, today reported that consolidated sales for the quarter ended November 30, 2010 were $72.3 million compared with $67.1 million a year ago. Net income from continuing operations was $0.3 million, or $0.03 per diluted share, for the quarter ended November 30, 2010 compared to net income from continuing operations of $1.1 million, or $0.09 per diluted share last year.

A table summarizing first quarter fiscal 2011 financial results is shown below:

Penford Corporation — Financial Highlights
(In thousands except per share data)
	Q1 FY11		Q1 FY10		4Q FY10
Industrial Ingredients:
Sales	$	53,930	$	50,308	$	45,633
Gross margin		2,904		4,986		(1,907	)
Operating income (loss)		142		2,154		(5,098	)
Food Ingredients:
Sales	$	18,336	$	16,762	$	17,369
Gross margin		6,353		5,642		5,406
Operating income		4,808		3,581		3,698
Consolidated:
Sales	$	72,266	$	67,070	$	63,002
Gross margin		9,257		10,628		3,499
Operating income (loss)		2,969		3,142		(2,796	)
Net income (loss) from continuing operations		336		1,056		(3,126	)
Diluted earnings (loss) per share — continuing operations	$	0.03	$	0.09	$	(0.26	)
Diluted earnings (loss) per share — discontinued operations		—		0.31		—
Diluted earnings (loss) per share	$	0.03	$	0.40	$	(0.26	)

Food Ingredients Results

• Food Ingredients first quarter sales expanded 9% from the prior year on volume gains and product mix improvements. Sales of non-coating applications, which contributed over 50% of first quarter revenues, expanded by 20% from last year.

• New business in dairy, pet and gluten-free bakery products contributed the majority of revenue growth.

• Gross margin improved from last year as unit raw material costs fell more than 10% and higher plant throughput reduced manufacturing costs. Operating income increased by 34% from a year ago.

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Industrial Ingredients Results

• Industrial Ingredient first quarter revenue of $53.9 million increased 7% from a year ago despite lower prices for paper starches. Sales of the Company’s specialty Liquid Natural Additive applications grew by over 10% in the quarter.

• Sales of ethanol in the first quarter of fiscal 2011 increased 37% to $24.6 million from $18.0 million a year ago on double-digit growth in both volume and average unit pricing. Ethanol sales represent 46% of the total industrial segment.

• Penford continues to introduce new applications that offer sustainable alternatives for petroleum-derived materials. The Company recently announced that is conducting trials with major producers of food packaging materials for a novel technology to replace fluorochemicals used in food wraps and other packaging applications.

• Gross margin and operating income were $2.0 million below the prior year. Depressed paper starch prices and higher costs for raw materials outpaced sales gains as well as improvements in manufacturing costs and plant efficiencies.

• Segment operating income increased $5.2 million sequentially from the fourth quarter of fiscal 2010 on improved results from ethanol operations and stronger sales of industrial starches.

Consolidated Financial Results

• Consolidated operating income of $3.0 million for the first quarter fiscal 2011 rose $5.8 million over the fourth quarter of fiscal 2010 and $7.1 million over the third quarter of fiscal 2010. Consolidated first quarter 2011 sales grew 8% and operating expenses decreased $1.3 million compared with the first quarter of fiscal 2010.

• Interest expense, which includes dividends on preferred stock, was $2.3 million compared with $1.8 million last year.

• The effective tax rate for the first quarter was 57%. Dividends on the Company’s preferred stock, which are recorded as interest expense, are not deductible for federal income tax purposes.

Cash and Debt

• Cash provided by operations in the first quarter of 2011 was $4.7 million.

• Bank loan facility debt outstanding was reduced by $2.0 to $16.9 million at November 30, 2010.

Conference Call

Penford will host a conference call to discuss fiscal 2011 financial and operational results today, January 6, 2011 at 9:00 a.m. Mountain time (11:00 a.m. Eastern time). Access information for the call and web-cast can be found at www.penx.com. To participate in the call on January 6, 2011, please phone 1-877-407-9205 at 8:50 a.m. Mountain Time. A replay will be available at www.penx.com.

About Penford Corporation

Penford Corporation develops, manufactures and markets specialty, natural-based ingredient systems for a variety of industrial and food applications. Penford has five manufacturing and/or research locations in the United States.

     The statements contained in this release that are not historical facts are forward-looking statements that represent management’s beliefs and assumptions based on currently available information. Forward-looking statements can be identified by the use of words such as “believes,” “may,” “will,” “looks,” “should,” “could,” “anticipates,” “expects,” or comparable terminology or by discussions of strategies or trends. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it cannot give any assurances that these expectations will prove to be correct. Such statements by their nature involve substantial risks and uncertainties that could significantly affect expected results. Actual future results could differ materially from those described in such forward-looking statements, and the Company does not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Among the factors that could cause actual results to differ materially

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are the risks and uncertainties discussed in this release and those described from time to time in other filings with the Securities and Exchange Commission which include, but are not limited to: 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 and availability; the Company’s inability to comply with the terms of instruments governing the Company’s debt; the effects of the current economic recession as well as other changes in general economic conditions or developments with respect to specific industries or customers affecting demand for the Company’s products, including unfavorable shifts in product mix; unanticipated costs, expenses or third party claims; interest rate, chemical and energy cost volatility; changes in returns on pension plan assets and/or assumptions used for determining employee benefit expense and obligations; unforeseen developments in the industries in which Penford operates; and other factors described in the “Risk Factors” section in reports filed by the Company with the Securities and Exchange Commission.

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CHARTS TO FOLLOW

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Penford Corporation
Financial Highlights	Three months ended
(In thousands except per share data)	November 30
	2010			2009
	(unaudited)
Consolidated Results
Sales	$	72,266		$	67,070
Income from continuing operations	$	336		$	1,056
Income from discontinued operations, net of tax		—			3,482
Net income	$	336		$	4,538
Earnings per share, diluted — continuing operations	$	0.03		$	0.09
Earnings per share, diluted — discontinued operations		—			0.31
Earnings per share, diluted	$	0.03		$	0.40
Cash Flows
Cash flow provided by (used in) continuing operations:
Operating activities	$	4,667		$	11,820
Investing activities		(1,685	)		7,936
Financing activities		(2,981	)		(5,919	)
		1			13,837
Net cash flow provided by discontinued operations		—			5,870
Total cash provided	$	1		$	19,707

Balance Sheets

	November 30,		August 31,
	2010		2010
	(unaudited)
Current assets	$	61,015	$	61,115
Property, plant and equipment, net		110,353		111,930
Other assets		34,864		35,363
Total assets		206,232		208,408
Current liabilities		25,916		26,000
Long-term debt		18,935		21,038
Redeemable preferred stock		35,288		34,104
Other liabilities		43,973		43,694
Shareholders’ equity		82,120		83,572
Total liabilities and equity	$	206,232	$	208,408

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Penford Corporation
Consolidated Statements of Operations	Three months ended
(In thousands except per share data)	November 30
	2010		2009
	(unaudited)
Sales	$	72,266	$	67,070
Cost of sales		63,009		56,442
Gross margin		9,257		10,628
Operating expenses		5,194		6,488
Research and development expenses		1,094		998
Income from operations		2,969		3,142
Interest expense		2,270		1,798
Other non-operating income, net		89		636
Income from continuing operations before income		788		1,980
taxes
Income tax expense		452		924
Income from continuing operations		336		1,056
Income from discontinued operations, net of tax		—		3,482
Net income	$	336	$	4,538
Weighted average common shares and equivalents outstanding, diluted		12,339		11,266
Earnings per share, diluted — continuing operations	$	0.03	$	0.09
Earnings per share, diluted — discontinued operations		—		0.31
Earnings per share, diluted	$	0.03	$	0.40

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