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): November 12, 2010

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 November 12, 2010, Penford Corporation issued a press release reporting its financial results for the fourth quarter and year ended August 31, 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 November 12, 2010

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)
November 12, 2010	/s/ Steven O. Cordier
	Steven O. Cordier
	Senior Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release dated November 12, 2010

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 Fourth Quarter and Fiscal 2010 Financial Results

Lower industrial starch prices penalized 2^nd half fiscal 2010 result.

Higher volumes and lower costs improved annual consolidated results.

Cash from operations increased by $21 million in FY 2010.

Debt reduced by $31 million during fiscal 2010.

The Company expects to report positive operating income in Q1 FY11 from higher ethanol returns and lower costs.

CENTENNIAL, Co., November 12, 2010 — Penford Corporation (Nasdaq: PENX), a leader in renewable ingredient systems for industrial and food applications, today reported that consolidated sales for the quarter ended August 31, 2010 were $63.0 million compared with $70.8 million a year ago. Consolidated sales for fiscal 2010 were $254.3 million compared to $255.6 million last year. Net loss from continuing operations was $3.1 million, or $0.26 per diluted share, for the quarter ended August 31, 2010 compared to net income from continuing operations of $1.3 million, or $0.12 per diluted share last year.

A table summarizing fourth quarter fiscal 2010 results from continuing operations is shown below:

Penford Corporation — Financial Highlights

(In thousands except per share data)	4Q FY10			4Q FY09			FY10			FY09
Industrial Ingredients:
Sales	$	45,633		$	52,698		$	184,016		$	186,526
Gross margin		(1,907	)		3,512			461			(9,327	)
Operating income (loss)		(5,098	)		745			(11,512	)		(11,154)	(1)
Food Ingredients:
Sales	$	17,369		$	18,059		$	70,258		$	69,030
Gross margin		5,406			5,940			22,993			21,618
Operating income		3,698			3,936			15,145			13,512
Consolidated:
Sales	$	63,002		$	70,757		$	254,274		$	255,556
Gross margin		3,499			9,452			23,454			12,291
Operating income (loss)		(2,796	)		3,183			(4,860	)		(6,449	)
Net income (loss) from continuing operations		(3,126	)		1,339			(9,629	)		(6,645)	(1)
Diluted income (loss) per share — continuing operations	$	(0.26	)	$	0.12		$	(0.84	)	$	(0.59	)
Diluted income (loss) per share — discontinued operations		—			(3.24	)		1.41			(5.21	)
Diluted income (loss) per share	$	(0.26	)	$	(3.12	)	$	0.57		$	(5.80	)
Cash provided by (used in) continuing operations							$	10,068		$	(11,180	)
Shareholder Equity / Shares Outstanding							$	7.35		$	7.04

(1) Operating loss in fiscal 2009 included $9.1 million of net insurance recoveries

Food Ingredients Results

• Food Ingredients 4^th quarter sales fell 4% from prior year. French fry processors slowed orders to balance strong 3^rd quarter shipments. Second half fiscal 2010 sales were 8% above prior year.

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• Food revenue other than coatings expanded 5% this quarter, led by double-digit growth in bakery, dairy and sauces applications.

• The pet category continues to gain momentum with annual sales increasing by 20% from the prior year.

• Unit manufacturing costs declined by 2% in the quarter. Full year unit costs were 8% lower.

• Full year volumes rose by 8%, led by 20% growth in non-coating formulations. These products now represent about 50% of the total food business mix.

Industrial Ingredients Results

• Industrial Ingredient 4^th quarter sales declined $7.1 million and operating profit decreased $5.8 million on lower prices for core industrial starches serving the paper industry. Contract renewal discussions for calendar 2011 are underway.

• Sales of Liquid Natural Additive applications grew by over 30% in the quarter.

• Average ethanol pricing was comparable to the prior year during the fourth quarter.

• Total industrial segment annual volumes grew 11%.

• Unit manufacturing costs fell by 2% in the quarter. Full year unit costs were 15% lower.

Cash and Debt

• Total debt and redeemable preferred stock were $55.6 million at year end.

• Interest expense was $7.6 million compared with $5.6 million last year.

• Cash provided by operations in fiscal 2010 was $10.1 million compared to cash used in operations of $11.2 million last year. Improvements in working capital contributed $4.7 million to cash in fiscal 2010.

Outlook

• Conditions for industrial starch markets are improving, as paper industry demand strengthens modestly and supplier capacity utilization rates remain high.

• Ethanol economics have improved significantly since the 4^th quarter, and provide an attractive return in the current market dynamics.

• Cost containment programs will continue to improve the Company’s competitive position.

• Product development work and customer trial activity in both food ingredients and industrial specialty products remains strong into the new fiscal year.

Conference Call

Penford will host a conference call to discuss fiscal 2010 financial and operational results today, November 12, 2010 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 November 12, 2010, 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;

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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						Year ended
	August 31						August 31
(In thousands except per share data)	2010			2009			2010			2009
	(unaudited)
Consolidated Results
Sales	$	63,002		$	70,757		$	254,274		$	255,556
Income (loss) from continuing operations		(3,126	)		1,339			(9,629	)		(6,645	)
Income (loss) from discontinued operations, net of tax		—			(36,165	)		16,312			(58,142	)
Net income (loss)	$	(3,126	)	$	(34,826	)	$	6,683		$	(64,787	)
Income (loss) per share, diluted — continuing operations	$	(0.26	)	$	0.12		$	(0.84	)	$	(0.59	)
Income (loss) per share, diluted — discontinued operations		—			(3.24	)		1.41			(5.21	)
Income (loss) per share, diluted	$	(0.26	)	$	(3.12	)	$	0.57		$	(5.80	)
Cash Flows
Cash flow provided by (used in) continuing operations:
Operating activities	$	509		$	9,100		$	10,068		$	(11,180	)
Investing activities		(1,706	)		(1,802	)		14,732			(1,797	)
Financing activities		1,149			(3,334	)		(30,388	)		18,517
		(48	)		3,964			(5,588	)		5,540
Net cash flow provided (used in) by discontinued operations		—			(282	)		(271	)		100
Total cash provided (used)	$	(48	)	$	3,682		$	(5,859	)	$	5,640

Balance Sheets

	August 31,		August 31,
	2010		2009
Current assets	$	61,115	$	68,336
Current assets of discontinued operations		—		38,486
Property, plant and equipment, net		111,930		119,049
Other assets		35,363		28,147
Non-current assets of discontinued operations		—		4,227
Total assets		208,408		258,245
Current liabilities		26,000		44,958
Current liabilities of discontinued operations		—		16,028
Long-term debt		21,038		71,141
Redeemable preferred stock		34,104		—
Other liabilities		43,694		43,908
Non-current liabilities of discontinued operations		—		2,851
Shareholders’ equity		83,572		79,359
Total liabilities and equity	$	208,408	$	258,245

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Penford Corporation
Consolidated Statements of Operations

	Three months ended						Year ended
	August 31						August 31
(In thousands except per share data)	2010			2009			2010			2009
	(unaudited)
Sales	$	63,002		$	70,757		$	254,274		$	255,556
Cost of sales		59,503			61,305			230,820			243,265
Gross margin		3,499			9,452			23,454			12,291
Operating expenses		5,090			5,289			23,943			23,501
Research and development expenses		1,205			980			4,371			4,348
Flood related costs, net of insurance recoveries		—			—			—			(9,109	)
Income (loss) from operations		(2,796	)		3,183			(4,860	)		(6,449	)
Non-operating income (expense), net		76			451			(1,921	)		1,915
Interest expense		2,226			1,709			7,550			5,557
Income (loss) before income taxes		(4,946	)		1,925			(14,331	)		(10,091	)
Income tax expense (benefit)		(1,820	)		586			(4,702	)		(3,446	)
Income (loss) from continuing operations		(3,126	)		1,339			(9,629	)		(6,645	)
Income (loss) from discontinued operations, net of tax		—			(36,165	)		16,312			(58,142	)
Net income (loss)	$	(3,126	)	$	(34,826	)	$	6,683		$	(64,787	)
Weighted average common shares and equivalents outstanding, diluted		12,209			11,176			11,601			11,170
Income (loss) per share, diluted — continuing operations	$	(0.26	)	$	0.12		$	(0.84	)	$	(0.59	)
Income (loss) per share, diluted — discontinued operations		—			(3.24	)		1.41			(5.21	)
Income (loss) per share, diluted	$	(0.26	)	$	(3.12	)	$	0.57		$	(5.80	)
Dividends declared per common share	$	—		$	—		$	—		$	0.12

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