Penford Corporation (Nasdaq: PENX), a leader in ingredient systems for industrial and food applications, announced today that its management and Audit Committee had determined that the Company’s financial statements for fiscal years 2012, 2011 and 2010 and for the first two fiscal quarters of 2013 should be restated to make necessary accounting corrections.
Additional details concerning this determination appear in a Current Report on Form 8-K filed today by the Company with the Securities and Exchange Commission.
These restatements will reflect the correction in the accounting treatment for proceeds received from the sale of certain by-products generated by the Company’s industrial starch processing operations based in Cedar Rapids, IA. Such by-products include corn gluten meal, corn germ that is sold to a third party to be refined into corn oil, as well as materials that are primarily sold as or used in animal feed.
In prior reporting periods, the Company recorded the proceeds from the sale of these by-products as a reduction of the cost of sales. The Company had previously disclosed the amounts of its by-products sales in prior reporting periods, including fiscal years 2012, 2011 and 2010, as well as its accounting treatment for such sales. After several months of consultation and review with the staff of the Securities and Exchange Commission, the Company concluded that the proceeds from the sale of by-products should be classified as sales rather than as a reduction of cost of sales in its consolidated statements of operations.The restatements affect the amounts previously reported for the Company’s consolidated sales and cost of sales and the sales of the Company’s Industrial Ingredients segment. The impact of the restatements will be to increase the Company’s consolidated and Industrial Ingredients segment sales and cost of sales by $71.8 million, $58.3 million and $40.2 million for the years ended August 31, 2012, 2011 and 2010, respectively; $23.2 million and $17.4 million for the quarters ended November 30, 2012 and 2011, respectively; $21.0 million and $44.2 million for the three- and six-month periods ended February 28, 2013, respectively; and $17.3 million and $34.7 million for the three- and six-month periods ended February 29, 2012. The restatements do not affect the Company’s previously reported consolidated gross margin, income (loss) from operations, net income (loss) or earnings (loss) per share or any items reported in the consolidated balance sheets or the consolidated statements of comprehensive income (loss), cash flows or stockholders’ equity. About Penford Corporation Penford Corporation (NASDAQ: PENX – www.penford.com) develops, manufactures and markets a broad range of specialty ingredients derived from natural sources that are used in food and industrial applications. Products include food ingredients, pet and animal products, sustainable bioproducts to replace petroleum-based chemicals, starches for paper and packaging products, and biofuels. Penford has seven manufacturing and/or research locations in the United States.