Form 8-K PENFORD CORP For: Jan 09

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 8-K

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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 9, 2015

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Penford Corporation

(Exact name of registrant as specified in its charter)

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

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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:

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

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

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

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

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Item�2.02:

Results of Operations and Financial Condition

On January 9, 2015, Penford Corporation issued a press release reporting its financial results for its fiscal year 2015 first quarter ended November 30, 2014. 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.

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Item�9.01:

Financial Statements and Exhibits

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(d)

Exhibits

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Exhibit�No.	��	Description
99.1	��	Press release dated January 9, 2015

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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.

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	�	Penford Corporation
	�	(Registrant)
January 9, 2015	�	/s/ Steven O. Cordier
	�	Steven O. Cordier Senior Vice President and Chief Financial Officer

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EXHIBIT INDEX

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Exhibit�No.	��	Description
99.1	��	Press Release dated January 9, 2015

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Exhibit 99.1

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Contacts:	��	Ellen G. Grinde
	��	Director, Investor Relations and Communications
	��	(630) 590-0707
	��	[email protected]

PENFORD REPORTS FIRST QUARTER FISCAL 2015 FINANCIAL RESULTS

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Reported EPS improved to $0.16 from $0.04 a year ago. Excluding $0.10 per share of nonrecurring merger-related costs, EPS would have been $0.26.

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Reported operating income rose to $4.4 million from $1.6 million a year ago. Excluding merger-related costs, operating income would have been $6.4 million.

CENTENNIAL, CO, January�9, 2015 � Penford Corporation (Nasdaq: PENX), a leader in ingredient systems for food and industrial markets, today reported first quarter fiscal 2015 results.

First quarter 2015 net income was $2.1 million, up by $1.6 million over first quarter 2014. Diluted EPS for the first quarter ended November�30, 2014, as reported, increased to $0.16 from $0.04 a year ago. Adjusted diluted earnings per share, excluding nonrecurring items related to the merger (as described below), equaled $0.26.

Reported operating income rose to $4.4 million in the first quarter, an increase of $2.8 million from last year�s comparable quarter. Reported operating income includes merger-related costs, as well as increased overhead expenses for the internal controls program that were partially offset by the accrual freeze of a Company pension plan. Adjusted operating income, excluding merger-related costs, increased to $6.4 million.

First quarter 2015 consolidated sales declined to $103.6 million compared with $109.3 million in last year�s first quarter, reflecting lower corn prices that were passed through to customers, which reduced industrial starch and by-product revenues.

Penford Corporation entered into a definitive merger agreement with Ingredion Incorporated on October�14, 2014. A special shareholders meeting to approve the proposed merger has been scheduled for January�29, 2015. Under the merger agreement, Ingredion will acquire all of the outstanding shares of Penford for $19.00 in cash per share. The merger is subject to Penford shareholder and regulatory approvals, as well as other customary closing conditions.

Penford Corporation � Financial Highlights:

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(In thousands)

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Q1 FY 15

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Q4 FY 14

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Q3 FY 14

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Q2 FY 14

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Q1 FY 14

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Consolidated:

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Sales

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$

103,636

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$

109,086

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$

119,429

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$

106,107

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$

109,251

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Gross Margin

��

�

18,146

��

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�

16,561

��

��

�

14,868

��

��

�

12,169

��

��

�

10,709

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Adjusted Operating Income (excluding merger-related costs)*

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6,406

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�

5,814

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��

�

4,925

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��

�

2,911

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��

�

1,641

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Merger-related Costs

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�

(1,996

)�

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�

���

��

��

�

���

��

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�

���

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��

�

���

��

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�

�

�

�

�

�

��

�

�

�

��

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�

�

��

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Operating Income

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4,410

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�

5,814

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4,925

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�

2,911

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1,641

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Net Income

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2,134

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2,954

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3,071

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1,240

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488

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Food Ingredients:

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Sales

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$

34,162

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$

32,343

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$

35,317

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$

30,279

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$

28,651

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Gross Margin

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10,956

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9,982

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9,572

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8,813

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9,274

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Operating Income

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6,893

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5,996

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6,025

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5,794

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6,530

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Industrial Ingredients:

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Sales

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$

69,474

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$

76,744

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$

84,112

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$

75,828

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$

80,600

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Gross Margin

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7,190

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6,579

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5,296

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3,356

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1,435

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Operating Income (Loss)

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2,983

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2,659

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1,957

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14

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(2,043

)�

*Adjusted EPS and adjusted operating income are non-GAAP financial measures. See �Reconciliation of Non-GAAP Measures� later in this release.

Division highlights for the quarter are as follows:

Food Ingredients Division

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Food Ingredients revenue increased 19% to $34.2 million for the quarter on strong growth in several product segments and the acquisition of Gum Technology.

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Gross margin improved by 18% to $11.0 million with the addition of gum sales and increases in specialty starch segments.

Industrial Ingredients Division

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Industrial Ingredients reported sequential improvement for the last five quarters in gross margin and operating income. Gross margin expanded to $7.2 million, up by $5.8 million from last year�s first quarter on favorable ethanol market dynamics, the lower cost of physical corn, the growth in specialty bio-products and the reduction in depreciation expense with the increase in estimated useful lives that occurred as of May�1, 2014. Operating income increased to $3.0 million from a loss in the prior year�s first quarter.

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Quarterly revenue fell to $69.5 million, reflecting the decline in the market price of corn, which reduced pass-through revenues.

As a result of the announcement of the definitive merger agreement with Ingredion Incorporated, Penford Corporation will not host a conference call to discuss the results of fiscal first quarter 2015.

About Penford Corporation

Penford Corporation develops, manufactures and markets specialty ingredient systems for a variety of food and industrial products. Penford operates six manufacturing facilities and three research and development centers 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: factors relating to the proposed merger with Ingredion Incorporated; 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; changes in general economic conditions or developments with respect to specific industries or customers affecting demand for the Company�s products, including changes in government rules or incentives affecting ethanol consumption, unfavorable shifts in product mix; unanticipated costs, expenses or third party claims; impairment of the Company�s long-lived assets that could result in a noncash charge to reported earnings; 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 with the Securities and Exchange Commission.

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TABLES TO FOLLOW

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Penford Corporation

Financial Highlights

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�	��	Three Months Ended November�30,						�
(In thousands, except per share data)	��	2014		�	�	2013		�
Consolidated Results (unaudited)								�� ��
Sales	��	$	103,636	��	�	$	109,251	��
Income from operations	��	$	4,410	��	�	$	1,641	��
Net income	��	$	2,134	��	�	$	488	��
Earnings per share, diluted	��	$	0.16	��	�	$	0.04	��
Cash Flows (unaudited)								�� ��
Cash flow provided by (used in):	��				�
Operating activities	��	$	8,088	��	�	$	8,674	��
Investing activities	��	�	(3,216	)�	�	�	(2,319	)�
Financing activities	��	�	(4,751	)�	�	�	(6,379	)�
	��	�	�	�	�	�	�	�
Increase (decrease) in cash	��	$	121	��	�	$	(24	)�
	��	�	�	�	�	�	�	�
Balance Sheets (unaudited)								�� ��
�	��	November�30,		�	�	August�31,		�
�	��	2014		�	�	2014		�
Current assets	��	$	98,781	��	�	$	98,444	��
Property, plant and equipment, net	��	�	115,984	��	�	�	114,804	��
Other assets	��	�	26,674	��	�	�	25,942	��
	��	�	�	�	�	�	�	�
Total assets	��	$	241,439	��	�	$	239,190	��
	��	�	�	�	�	�	�	�
Current liabilities	��	$	36,753	��	�	$	39,015	��
Long-term debt	��	�	74,623	��	�	�	76,665	��
Other liabilities	��	�	32,857	��	�	�	31,377	��
Shareholders� equity	��	�	97,206	��	�	�	92,133	��
	��	�	�	�	�	�	�	�
Total liabilities and equity	��	$	241,439	��	�	$	239,190	��
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Penford Corporation

Consolidated Statements of Income (Loss)

(unaudited)

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�	��	Three Months Ended November�30,						�
(In thousands, except per share data)	��	2014		�	�	2013		�
Sales	��	$	103,636	��	�	$	109,251	��
Cost of sales	��	�	85,490	��	�	�	98,542	��
	��	�	�	�	�	�	�	�
Gross margin	��	�	18,146	��	�	�	10,709	��
Operating expenses	��	�	12,108	��	�	�	7,801	��
Research and development expenses	��	�	1,628	��	�	�	1,267	��
	��	�	�	�	�	�	�	�
Income from operations	��	�	4,410	��	�	�	1,641	��
Interest expense	��	�	(904	)�	�	�	(813	)�
Other non-operating (expense) income, net	��	�	(72	)�	�	�	8	��
	��	�	�	�	�	�	�	�
Income before income taxes	��	�	3,434	��	�	�	836	��
Income tax expense	��	�	1,300	��	�	�	348	��
	��	�	�	�	�	�	�	�
Net income	��	$	2,134	��	�	$	488	��
	��	�	�	�	�	�	�	�
Weighted-average common shares and equivalents outstanding, diluted	��	�	13,040	��	�	�	12,841	��
Earnings per common share, diluted	��	$	0.16	��	�	$	0.04	��

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Penford Corporation

Reconciliation of Non-GAAP Measures

To supplement the segment and consolidated financial results prepared in accordance with accounting principles generally accepted in the United States (�GAAP�), the Company utilizes certain non-GAAP financial measures. The Company�s results include pre-tax merger-related costs of $2.0 million ($1.2 million after-tax, or $0.10 per share). The Company believes that these non-GAAP measures are valuable to investors and management in measuring the Company�s operating performance. These non-GAAP measures are not a substitute for, or an alternative to, the corresponding measures calculated in accordance with GAAP.

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Three months Ended November�30, 2014

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�

��

Reported

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Merger-related

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�

Adjusted

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�

��

2014

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Costs

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�

2014

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Operating income (loss)

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$

4,410

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�

$

(1,996

)�

�

$

6,406

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Interest expense

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�

(904

)�

�

�

���

��

�

�

(904

)�

Other non-operating expense

��

�

(72

)�

�

�

���

��

�

�

(72

)�

��

�

�

�

�

�

�

�

�

�

�

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Income (loss) before income taxes

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�

3,434

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�

(1,996

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�

5,430

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Income taxes expense (benefit)

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�

1,300

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�

�

(756

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�

�

2,056

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�

�

�

�

�

�

�

�

�

Net income (loss)

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$

2,134

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$

(1,240

)�

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$

3,374

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�

�

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�

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�

Earnings (loss) per share, diluted

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$

0.16

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�

$

(0.10

)�

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$

0.26

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�

�

�

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