PENFORD CORP

CIK:0000739608|SEC Filings

Accumulated Other Comprehensive Income (Loss) ("AOCI")

3 Months Ended

Nov. 30, 2014

Accumulated Other Comprehensive Income (Loss) ("AOCI")

5—ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (“AOCI”)

The following tables provide a summary of the changes in Accumulated other comprehensive income (loss) for the three months ended November 30, 2014 and 2013:


(In thousands)	Net Unrealized Gains (Losses) on Cash Flow Hedging Instruments, Net of Tax			Gains (Losses) on Postretirement Obligations, Net of Tax			Total Accumulated Other Comprehensive Loss
Balances at August 31, 2014	$	(2,022	)	$	(5,730	)	$	(7,752	)
Other comprehensive income, net of tax		1,703			50			1,753

Balances at November 30, 2014	$	(319	)	$	(5,680	)	$	(5,999	)


(In thousands)	Net Unrealized Gains (Losses) on Cash Flow Hedging Instruments, Net of Tax			Gains (Losses) on Postretirement Obligations, Net of Tax			Total Accumulated Other Comprehensive Loss
Balances at August 31, 2013	$	(856	)	$	(6,763	)	$	(7,619	)
Other comprehensive income, net of tax		10			93			103

Balances at November 30, 2013	$	(846	)	$	(6,670	)	$	(7,516	)

Amounts reclassified from accumulated other comprehensive income (loss) were as follows:


		Three Months Ended November 30, 2014
(In thousands)	Location of Expense (Income) Recognized in Net Earnings	Before Tax Amount		Tax			Net of Tax Amount
Pension and other postretirement benefit plans:
Amortization of actuarial loss (gain)	Cost of sales	$	58	$	(22	)	$	36
Amortization of prior service cost	Cost of sales		23		(9	)		14

Total reclassification adjustments			81		(31	)		50

Derivatives accounted for as hedges	Cost of sales		2,509		(964	)		1,545

Total reclassifications into income		$	2,590	$	(995	)	$	1,595


		Three Months Ended November 30, 2013
(In thousands)	Location of Expense (Income) Recognized in Net Earnings	Before Tax Amount		Tax			Net of Tax Amount
Pension and other postretirement benefit plans:
Amortization of actuarial loss (gain)	Cost of sales	$	89	$	(35	)	$	54
Amortization of actuarial loss (gain)	Operating/R&D expenses		42		(16	)		26
Amortization of prior service cost	Cost of sales		2		(1	)		1
Amortization of prior service cost	Operating/R&D expenses		18		(6	)		12

Total reclassification adjustments			151		(58	)		93

Derivatives accounted for as hedges	Cost of sales		1,980		(753	)		1,227

Total reclassifications into income		$	2,131	$	(811	)	$	1,320

Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Nov. 30, 2014	Nov. 30, 2013
Cash flows from operating activities:
Net income (loss)	$ 2,134us-gaap_NetIncomeLoss	$ 488us-gaap_NetIncomeLoss
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization	2,184	3,291
Stock-based compensation	504us-gaap_ShareBasedCompensation	249us-gaap_ShareBasedCompensation
Deferred income tax expense	645us-gaap_DeferredIncomeTaxExpenseBenefit	209us-gaap_DeferredIncomeTaxExpenseBenefit
Non-cash (gain) loss on hedging transactions	(543)	122
Excess tax benefit from stock-based compensation	(143)	(152)
Non-cash change in asset retirement obligations	(131)
Loss on operating leases	111
Gain on sale of fixed assets	(1)us-gaap_GainLossOnDispositionOfAssets
Change in assets and liabilities:
Trade accounts receivable, net	(1,485)	2,349
Other receivables	(325)	(976)
Inventories	215us-gaap_IncreaseDecreaseInInventories	1,150us-gaap_IncreaseDecreaseInInventories
Prepaid expenses	885	335
Tenant allowance reimbursement	182
(Increase) decrease in margin accounts	2,950	846
Accounts payable and accrued liabilities	813	855
Taxes payable	550penx_IncreaseDecreaseInTaxesPayable	100penx_IncreaseDecreaseInTaxesPayable
Pension and other postretirement benefit contributions	(267)	(724)
Pension and other postretirement benefit costs	272	761
Other	(462)	(229)
Net cash flow provided by operating activities	8,088	8,674
Cash flows from investing activities:
Acquisitions of property, plant and equipment, net	(2,849)	(2,047)
Acquisition of Gum Technology, net	(375)
Other	8	(272)
Net cash used in investing activities	(3,216)	(2,319)
Cash flows from financing activities:
Proceeds from revolving line of credit	6,100
Payments on revolving line of credit	(8,100)	(3,500)
Payments of long-term debt		(50)us-gaap_RepaymentsOfOtherLongTermDebt
Payment of loan fees	(147)us-gaap_PaymentsOfLoanCosts
Payments under capital lease obligations	(45)	(39)
Payments on financing arrangements	(551)us-gaap_RepaymentsOfShortTermDebt	(549)us-gaap_RepaymentsOfShortTermDebt
Excess tax benefit from stock-based compensation	143	152
Exercise of stock options	677
Increase (decrease) in cash overdraft	(2,828)	(2,393)
Net cash provided by (used in) financing activities	(4,751)	(6,379)
Increase (decrease) in cash and cash equivalents	121	(24)
Cash and cash equivalents, beginning of period	189	221
Cash and cash equivalents, end of period	$ 310	$ 197

Balance Sheet Details

3 Months Ended

Nov. 30, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Balance Sheet Details

3—BALANCE SHEET DETAILS

The components of inventory were as follows:


(In thousands)	November 30, 2014		August 31, 2014
Raw materials	$	11,202	$	10,069
Work in progress		958		1,322
Finished goods		29,919		30,360

Total inventories	$	42,079	$	41,751

The components of property, plant and equipment, net were as follows:


(In thousands)	November 30, 2014			August 31, 2014
Land and land improvements	$	12,512		$	12,512
Plant and equipment		370,606			369,224
Construction in progress		9,419			7,603

		392,537			389,339
Accumulated depreciation		(276,553	)		(274,535	)

Net property, plant and equipment	$	115,984		$	114,804

At November 30, 2014 and August 31, 2014, the Company had approximately $0.9 million and $0.5 million, respectively, of payables related to property, plant and equipment that have been excluded from acquisitions of property, plant and equipment in the condensed consolidated statements of cash flows.

Penford’s intangible assets consist of patents, customer lists and relationships, trade names and brand portfolio and non-compete agreements. Patents are being amortized over the weighted-average remaining amortization period of five years as of November 30, 2014. The fair value of customer relationships and non-compete agreements from the acquisition of Gum Technology are being amortized over their estimated useful lives of 13 years and five years, respectively. The trade names/brand portfolio of $2.7 million from the acquisition of Gum Technology has an indefinite life and is not subject to amortization. The carrying amount and accumulated amortization of intangible assets were as follows (dollars in thousands):


	November 30, 2014				August 31, 2014
	Carrying Amount		Accumulated Amortization		Carrying Amount		Accumulated Amortization
Intangible assets:
Patents and other	$	1,895	$	1,581	$	1,870	$	1,572
Customer lists and relationships		3,060		353		3,060		296
Trade names/brand portfolio		2,910		45		2,910		35
Non-compete agreements		190		71		190		108

Other intangible assets	$	8,055	$	2,050	$	8,030	$	2,011

Amortization expense related to intangible assets was $39,000 and $42,000 for the three months ended November 30, 2014 and 2013, respectively.

Components of accrued liabilities were as follows:


(In thousands)	November 30, 2014		August 31, 2014
Employee-related costs	$	4,442	$	5,271
Other accrued liabilities		4,468		4,508

Total accrued liabilities	$	8,910	$	9,779

Employee-related costs included accrued payroll, compensated absences, payroll taxes, benefits and incentives.