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): July 7, 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 (Address of principal executive offices		80112-3932 (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 July 7, 2011, Penford Corporation issued a press release reporting its financial results for the three- and nine-month periods ended May 31, 2011. 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 5.04: Temporary Suspension of Trading Under Registrant’s Employee Benefit Plans

The recordkeeper and certain investment alternatives for the Penford Corporation Savings and Stock Ownership Plan (“Plan”) are being changed. In order to facilitate this change, there will be a period during which Plan participants and beneficiaries temporarily will be unable to direct or diversify investments in their Plan accounts or obtain a distribution from the Plan. This period will commence July 28, 2011 at 4:00 P.M. Eastern Time and is expected to end during the calendar week beginning July 31, 2011 (“Blackout Period”). Notification of the Blackout Period was provided to participants under the Plan.

On July 7, 2011, Penford Corporation sent a notice (“Notice”) to its directors and executive officers informing them that, as a result of the Plan changes and the Blackout Period, the Sarbanes-Oxley Act of 2002 prohibits them from directly or indirectly purchasing, selling or otherwise acquiring or transferring shares of Penford Corporation’s common stock or derivative securities (including stock options) acquired in connection with their service as a director or employment as an executive officer of Penford Corporation during the Blackout Period. A copy of the Notice is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

During the Blackout Period and for a period of two years after the ending date of the Blackout Period, a Penford Corporation security holder or other interested party may obtain, without charge, the actual beginning and ending dates of the Blackout Period from and may direct other inquiries about the Blackout Period to:

Mr. Christopher L. Lawlor
Vice President — Human Resources, General Counsel and Secretary
Penford Corporation
7094 S. Revere Parkway
Centennial, Colorado 80112-3932
303-649-1900

Item 9.01: Financial Statements and Exhibits

(d) Exhibits

Exhibit No.	Description
99.1	Press release dated July 7, 2011
99.2	Notice of Blackout Period to Directors and Executive Officers of Penford Corporation

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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)
July 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 July 7, 2011
99.2	Notice of Blackout Period to Directors and Executive Officers of Penford Corporation

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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 Third Quarter Fiscal 2011 Financial Results

Consolidated revenue expanded 38%; both divisions report record quarterly revenue.

Food Ingredient business reports all-time high for quarterly sales and operating income.

Expanding cash from operations provides a source for sustainable business growth.

CENTENNIAL, CO, July 7, 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 May 31, 201l increased 38% to $85.2 million from $61.9 million a year ago. Loss from continuing operations was $0.7 million, or $0.06 per diluted share, for the quarter ended May 31, 2011 compared with a loss from continuing operations of $5.8 million, or $0.49 per diluted share last year. Third quarter fiscal 2011 results reflect an increase in accounts receivable reserve of $0.6 million in the Industrial Ingredients business.

A table summarizing quarterly financial results is shown below:

Penford Corporation — Financial Highlights

(In thousands)	Q3 FY11			Q2 FY11			Q1 FY11		Q4 FY10			Q3 FY10
Industrial Ingredients:
Sales	$	61,596		$	56,591		$	53,930	$	45,633		$	42,010
Gross margin		2,609			1,458			2,904		(1,907	)		(3,847	)
Operating income (loss)		(734	)		(1,103	)		142		(5,098	)		(6,847	)
Depreciation and amortization		2,712			2,696			2,713		2,716			2,709
Food Ingredients:
Sales	$	23,637		$	17,713		$	18,336	$	17,369		$	19,899
Gross margin		7,808			5,385			6,353		5,406			7,112
Operating income		5,517			3,576			4,808		3,698			5,018
Depreciation and amortization		510			553			561		555			564
Consolidated:
Sales	$	85,233		$	74,304		$	72,266	$	63,002		$	61,909
Gross margin		10,418			6,843			9,257		3,499			3,265
Operating income (loss)		2,506			488			2,969		(2,796	)		(4,091	)
Depreciation and amortization		3,598			3,618			3,643		3,642			3,631

Food Ingredients Third Quarter Fiscal 2011 Results

• Food Ingredients reported record quarterly sales of $23.6 million, up 19% from the prior year on growth in existing accounts and from new product introductions in the companion pet and gluten-free bakery segments.

• Gross margin improved 10% on new product gains and lower unit processing costs.

• Operating income reached an all-time quarterly record of $5.5 million compared with a previous record of $5.0 million one year ago.

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Industrial Ingredients Third Quarter Fiscal 2011 Results

• Revenue increased 47% to a record $61.6 million from $42.0 million a year ago reflecting higher corn prices that were passed through to customers, additional ethanol volumes and growth of specialty starch-based additives. Industrial starch net average selling prices for calendar 2011 rose at double-digit levels from a year ago.

• Ethanol sales grew to $28.1 million from $14.6 million as spot prices for ethanol rose 65% from last year. Company results improved while industry crush margins were comparable to prior year as corn costs outpaced ethanol prices.

• Sales of specialty industrial starches grew by 33% from a year ago. This category includes the Company’s Liquid Natural Additive products and the novel technology launched in November to replace fluorochemicals in food packaging applications. The Company announced the introduction of PEN-COTE^® natural binder products last month that replace synthetic latex in coated paper and paperboard applications, including a newly available dry version.

• Segment gross margin expanded $6.5 million as increased prices, greater facility throughput rates and lower unit manufacturing costs offset higher raw material costs. Industry net corn costs more than doubled from a year ago.

• The operating loss of $0.7 million includes a $0.6 million charge to increase the accounts receivable reserve related to a paper industry customer that announced closure of its mill operations.

Consolidated Financial Third Quarter Fiscal 2011 Results

• Cash flow from operations was $1.7 million including a $4.4 million contribution to the Company’s pension plans.

• Interest expense, which includes dividends on preferred stock, was $2.4 million compared with $1.9 million last year.

• Income tax expense reflects the non-deductibility of dividends and discount accretion on preferred stock.

• Outstanding bank debt on the Company’s $60 million revolving credit facility was $22.9 million.

Conference Call

Penford will host a conference call to discuss third quarter fiscal 2011 financial and operational results today, July 7, 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 July 7, 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 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						Nine months ended
	May 31						May 31
	2011			2010			2011			2010
(In thousands except per share data)	(unaudited)						(unaudited)
Consolidated Results of Operations
Sales	$	85,233		$	61,909		$	231,802		$	191,272
Loss from continuing operations	$	(709	)	$	(5,758	)	$	(1,948	)	$	(6,503	)
Income (loss) from discontinued operations, net of tax		—			(218	)		—			16,312
Net income (loss)	$	(709	)	$	(5,976	)	$	(1,948	)	$	9,809
Loss per share, diluted — continuing operations	$	(0.06	)	$	(0.49	)	$	(0.16	)	$	(0.58	)
Income (loss) per share, diluted — discontinued operations		—			(0.02	)		—			1.43
Income (loss) per share, diluted	$	(0.06	)	$	(0.51	)	$	(0.16	)	$	0.85
Consolidated Cash Flows
Cash flow provided by (used in) continuing operations:
Operating activities	$	1,741		$	(2,054	)	$	(219	)	$	9,560
Investing activities		(2,237	)		(463	)		(5,640	)		16,437
Financing activities		432			2,517			5,771			(31,537	)
		(64	)		—			(88	)		(5,540	)
Net cash flow provided by (used in) discontinued operations		—			—			—			(270	)
Total cash used	$	(64	)	$	—		$	(88	)	$	(5,810	)

Consolidated Balance Sheets

	May 31,		August 31,
	2011		2010
	(unaudited)
Current assets	$	72,501	$	61,115
Property, plant and equipment, net		107,841		111,930
Other assets		33,711		35,363
Total assets		214,053		208,408
Current liabilities		29,237		26,000
Long-term debt		24,713		21,038
Redeemable preferred stock		37,725		34,104
Other liabilities		40,692		43,694
Shareholders’ equity		81,686		83,572
Total liabilities and equity	$	214,053	$	208,408

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Penford Corporation	Three months ended						Nine months ended
Consolidated Statements of Operations	May 31						May 31
(In thousands except per share data)	2011			2010			2011			2010
	(unaudited)						(unaudited)
Sales	$	85,233		$	61,909		$	231,802		$	191,272
Cost of sales		74,815			58,644			205,285			171,317
Gross margin		10,418			3,265			26,517			19,955
Operating expenses		6,664			6,312			17,093			18,854
Research and development expenses		1,248			1,044			3,462			3,165
Income (loss) from operations		2,506			(4,091	)		5,962			(2,064	)
Interest expense		2,380			1,904			6,953			5,324
Non-operating income (expense), net		(12	)		(2,606	)		77			(1,997	)
Income (loss) before income taxes		114			(8,601	)		(914	)		(9,385	)
Income tax expense (benefit)		823			(2,843	)		1,034			(2,882	)
Loss from continuing operations		(709	)		(5,758	)		(1,948	)		(6,503	)
Income (loss) from discontinued operations, net of tax		—			(218	)		—			16,312
Net income (loss)	$	(709	)	$	(5,976	)	$	(1,948	)	$	9,809
Weighted average common shares and equivalents outstanding, diluted		12,262			11,796			12,247			11,396
Loss per share, diluted — continuing operations	$	(0.06	)	$	(0.49	)	$	(0.16	)	$	(0.58	)
Income (loss) per share, diluted — discontinued operations		—			(0.02	)		—			1.43
Income (loss) per share, diluted	$	(0.06	)	$	(0.51	)	$	(0.16	)	$	0.85

# # #

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EX-99.2

Exhibit 99.2

To:	Directors and Executive Officers of Penford Corporation
From:	Christopher L. Lawlor
Date:	July 7, 2011
Re:	Notice of Blackout Period

     The recordkeeper and certain investment alternatives for the Penford Corporation Savings and Stock Ownership Plan (“Plan”) are being changed. In order to facilitate this change, there will be a period during which Plan participants and beneficiaries temporarily will be unable to direct or diversify investments in their Plan accounts or obtain a distribution from the Plan. This period will commence July 28, 2011 at 4:00 P.M. Eastern Time and is expected to end during the calendar week beginning July 31, 2011 (“Blackout Period”).

     The Sarbanes-Oxley Act of 2002 prohibits during this Blackout Period the direct or indirect purchase, sale or other acquisition or transfer of any Penford Corporation common stock or derivative securities (including stock options) you have acquired in connection with your service or employment as a director or executive officer of Penford Corporation. Therefore, you will be subject to a trading blackout period that also commences on July 28, 2011 at 4:00 P.M. Eastern Time and is expected to end during the calendar week beginning July 31, 2011.

     Please note that the trading restrictions implemented because of the Blackout Period are in addition to other trading restrictions under Penford Corporation’s Code of Business Conduct and Ethics as well as its Insider Trading Policy. When the Blackout Period ends, you will still be subject to Penford Corporation’s ordinary quarterly blackout period which begins on August 17, 2011 and will not lift until forty-eight hours after Penford Corporation reports its fourth quarter and fiscal year earnings to the public.

     If you have any questions regarding the Blackout Period, including its beginning or ending date, or the restrictions applicable to you as a director or executive officer, please contact me.

Mr. Christopher L. Lawlor

Vice President — Human Resources, General Counsel and Secretary

Penford Corporation

7094 S. Revere Parkway

Centennial, Colorado 80112-3932

303-649-1900

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