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Corporate
Offices
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Cray
Business Plaza
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100
Commercial St., P.O. Box 130
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Atchison,
Kansas 66002-0130
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913.367.1480
· 913.367.0192
(fax)
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www.mgpingredients.com
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April 15, 2008
Anne
Nguyen Parker
Branch
Chief
Securities
and Exchange Commission
Washington,
DC 20549-0405
Re: MGP Ingredients, Inc.
Dear
Ms. Parker:
This
is in response to your letter of March 26, 2008 in respect to our annual
report on Form 10-K for the fiscal year ended July 1, 2007 and our
quarterly report on Form 10-Q for the period ended December 31,
2007. We are keying our responses to
your comments, which we have underlined.
We hope this letter adequately addresses your questions.
Form 10-K for the year ended July 1, 2007
Revenue,
page 51
1. We note from
your revised disclosure that the amounts included in your deferred revenue
caption relate to amounts received from the USDA Grant from your response to
prior comment number 8. However, it
appears that you recognize such amounts as other operating income in your
consolidated statements of income once earned.
If this is correct, such amounts do not represent deferred revenues and
your balance sheet caption should be revised to more accurately reflect your
liability. In addition, please revise
your disclosure to clarify that amounts earned from the USDA grant are recorded
in other operating income.
We included amounts
recognized from the USDA in cost of sales to offset the related
deprecation expense that resulted from the expenditure of the USDA
funds. Following a review of such transactions, we concluded that it
would be more appropriate to recognize them in this manner.
In future filings, we will
re-title the liability related to the USDA grant as “deferred credit” and will
revise our disclosure to clarify that amounts earned from the USDA grant are
recorded in cost of sales.
Note 3. Long-term Debt
4.90% Industrial Revenue Bond Obligation, page 55
2. Your response
to prior comment number 9 states that you have the enforceable right to offset
the bonds held against the capital lease and you intend to set off. Please address the following additional
comments with respect to this transaction:
· Please explain
whether you plan to offset the asset and liability when the bonds mature or at
an earlier date. Explain whether you
have the enforceable right to set off prior to the maturation of the bonds.
Our
lease provides that if we acquire the bonds (which we have), we may present
them at any time to the Trustee for cancellation, upon which our obligation to
pay basic rent will likewise be cancelled.
We may do this at any time, but do not plan to do so prior to the
maturity date of the bonds.
· Clarify how you
determined that your liability to the lessor under the capital lease obligation
is unconditional as contemplated by paragraph 15 of FIN 39. In this respect, explain whether the lessor
has to perform under the terms of the lease in order to receive lease payments.
We
determined that the liability to the lessor under the capital lease was
unconditional because the interest rate (and therefore the related cash flow
stream) is fixed with no other factors to modify the cash flow stream. The lessor, the City of Atchison, has no
performance obligations under the lease.
· Explain whether
there will be an impact to your statement of financial position once you set
off. As part of your response, explain
whether you will reacquire the office building and technical center from the
City of Atchison, Kansas when the amounts are set off.
There
will be no impact to our statement of financial position upon set off. The dollar amounts related to the receivable
(bonds) and the liability (capital lease) are identical. Upon setoff, we will acquire title to the office building
and technical center from the City of Atchison, Kansas by surrendering the
bonds and paying the Issuer $100 plus expenses incident to surrender of the
bonds pursuant to the lease agreement.
· Explain whether
the proceeds you received from the $7 million revolving credit facility are
related to this transaction. Explain how
you have or plan to use the proceeds received from the revolving credit
facility.
The
proceeds received from the revolving credit facility are not related to this
transaction. Amounts outstanding at July 1,
2007 were used to fund working capital needs, primarily during the fourth
quarter.
We
maintain that the economic substance of the transaction does not require the
recognition of an asset or an obligation, and to do so would be misleading to
the readers of our financial statements.
Although our initial response only focused on the provisions of FIN 39,
we believe our position is further supported by the FASB Concept Statements.
To
illustrate, we provide the following overview of the transaction to be
considered in evaluating the recognition of the transactions in the financial
statements based on the guidance provided in the Concept Statements in addition
to the guidance provided by FIN 39 described above:
· We constructed our new technical innovation center
and corporate headquarter office with internally generated cash flows.
· At the conclusion of the construction project and
solely to obtain a10 year property tax abatement, we entered into a transaction
with the city of Atchison, Kansas. The
city issued $7 million of industrial revenue bonds, the proceeds which we
received in exchange for
entering into a 10 year lease agreement with the city. The lease contained an option to acquire
title to the technical center and office building for $100 at the completion of
the lease term.
· Simultaneous with the issuance of the industrial
revenue bonds, we repurchased the $7 million industrial revenue bonds with the
intent to hold the bonds until maturity.
· The debt service payments made under the lease
mirrors the payments received on the industrial revenue bonds.
· The city of Atchison has no performance obligations
under the lease.
The
economic substance of this transaction is the receipt of a property tax
abatement for a 10-year period. The
legal form that the transaction took was solely to derive the benefit of the
property tax abatement.
Financial
Accounting Concepts No. 6 Elements of Financial
Statements (“CON 6”), paragraph 26 states that an asset possesses
certain essential characteristics, one of which is that “it embodies a probable
future benefit that involves a capacity, singly or in combination with other
assets, to contribute directly or indirectly to future net cash inflows”
(Statement of Financial Accounting Concepts No. 6, paragraph 26). CON 6, paragraph 35 defines a liability as a “probable
future sacrifice of economic benefits arising from present obligations of a
particular entity to transfer assets or provide services to other entities in
the future as a result of past transactions or events.”(Statement of Financial
Accounting Concepts No. 6, paragraph 35).
Because
we, through our lease payments, are the obligor on the bonds that we hold, we
concluded that they do not meet the definition of an asset since they possess
no “capacity, singly or in combination with other assets, to contribute
directly or indirectly to future net cash inflows” . Additionally, we concluded that since we do
own all of the outstanding bonds, the debt service for which is provided by our
lease payments, our lease obligation
does not meet the definition of a liability since we have no obligation to
transfer assets or provide services to other entities in the future. Accordingly, it is our conclusion that to
record the bonds as an asset and the lease obligation as a liability would be
fundamentally misleading to the user of the financial statements.
3. Please clarify
how you applied the sale-leaseback provisions of paragraphs 32 through 34 of
SFAS 13 and SFAS 98 when accounting for your sale-leaseback transaction with
City of Atchison, Kansas. In addition,
tell us which of the criteria in paragraph 7 this lease met in order to
classify the lease as capital.
The
amount of proceeds related to the bond issue was equal to all costs that we incurred
for construction of the office building and technical center. Accordingly, there was no profit to be
recognized on the sale-leaseback as transacted for purposes of facilitating the
property tax abatement. The lease has
been classified as a capital lease because the lease agreement stipulates a
bargain purchase price of $100 at conclusion of the lease.
4. Please revise
your Off Balance Sheet Obligations disclosure within your Management’s
Discussion and Analysis discussion to include the disclosure required by Item
303(a)(4)(i) of Item S-K for your industrial revenue bond obligation in
future filings.
Although
we do not believe Item 303(a)(4)(i) requires such disclosure under the
circumstances , we will revise our discussion of Off Balance Sheet Obligations
within Management’s Discussion and Analysis to include the following:
On December 28, 2006, we engaged in an
industrial revenue bond transaction with the City of Atchison, Kansas in order
to receive ten years real property tax abatement on our newly constructed
office building and technical center in Atchison, Kansas. At the time of this
transaction, the facilities were substantially completed and had been financed
with internally generated cash flow.
Pursuant to this transaction, the City issued $7.0 million principal
amount of its industrial revenue bonds to us and then used the proceeds to
purchase the office building and technical center from us. The City then leased the facilities back to
us under a capital lease the terms of which provide for the payment of basic
rent in an amount sufficient to pay principal and interest on the bonds. Our obligation to pay rent under the lease is
in the same amount and due on the same date as the City’s obligation to pay
debt service on the bonds which we hold. The lease permits us to present the
bonds at any time for cancellation, upon which our obligation to pay basic rent
would be cancelled. We do not intend to
do this until their maturity date in 2016, at which time we may elect to
purchase the facilities for $100.
Because we hold all outstanding bonds, management considers the debt
de-facto cancelled and, accordingly, no amount for our obligations under the
capital lease are reflected on our balance sheet. In connection with this transaction, we
agreed to pay the city an administrative fee of $50,000, which is payable over
10 years. If we were to present the
bonds for cancellation prior to maturity, the $50,000 fee would be accelerated.
Note 10. Operating Segments, page 66
5. We note your
response to our prior comment 10 and your conclusion that no asset impairment
is necessary for your Ingredient or Other segments. We also note from Note 5 in your Form 10-Q
for the quarterly period ended December 31, 2007 that your Other segment
continues to incur losses. Tell us in
more detail what factors and assumptions you have considered in your future
projections of cash flows for this segment that led to your conclusion no
impairment is necessary. Please clarify
how the loss of the major customer impacted your future cash flows from this
segment. Explain how you determined that
you will be able to operate profitably from this segment without this major
customer. Clarify whether you added
additional pet products and plants based biopolymers customers which will offset
the loss the cash flows from the major customer.
As
previously reported, our last sale to our major customer occurred in the fourth
quarter of fiscal 2006. Since the beginning of fiscal 2007, sales of the Other
Segment have ranged from $1,226,000 to $1,720,000 a quarter, and averaged
$1,440,000 per quarter. In our most
recent quarter ended December 30, 2007, sales of the Other Segment were
$1,509,000, of which $1,170,000 were from our pet treat resins. Most of the recent sales improvement in our
Other Segment has come from increased sales of our biopolymers, with average
monthly sales volume for the second half of fiscal 2008 improving by nearly 150%
over the first half of fiscal 2008.
Accordingly, our impairment analysis has focused primarily on the pet
treat portion of our Other Segment.
In
March 2007, we developed a five year consolidated earnings projection for
the purpose of strategic planning. During and following the time frame that we
lost sales from our major pet treat customer, we entered into three other
supply contracts with other manufacturers of pet treats. We experienced a 27%
increase in pet treat sales primarily from these customers in the third quarter
of fiscal 2007 and, based upon these trends, we expected sales to continue to
grow. Furthermore. our plan included
assumptions about the needs of these customers in light of projected trends in
their product development, the costs of substitute products and overall sales
trends, as well as expected target volume levels included within our supply
contracts which we based our strategic plan on. We also made assumptions about
cost of sales, with the primary focus being on raw material costs, which
represent 70% of our cost of sales and are subject to a high degree of
volatility. We developed
projections
of costs of wheat, other commodities and natural gas based upon historical
trends, outside public information and guidance from outside professional
consultants. Other assumptions regarding
other items included within cost of sales were developed based upon known facts
and circumstances. We assumed that commodity prices over the first year of our
plan would approximate then existing future prices. We then assumed an average price over the
remainder of the plan of $5.40 per bushel for wheat. We assumed over the 5 year plan that natural
gas costs would approximate on average $6.49 per mcf.
We
revisited and revised our projections in June 2007, primarily to reflect
changes in commodity prices and product mix. Our revisions also took into
account expectations about future business with an existing biopolymer customer
with whom we were then negotiating for pet treat resin business. Our asset
impairment assessment at fiscal year end was based on these revised
projections. Under both sets of
projections, we anticipated that if we achieved only 10% of our plan, we would
generate sufficient cash flow by the end of 2010 to recover the cost of
property, plant and equipment invested in our Other segment. Based on our other assumptions, this level of
achievement required annual segment sales of approximately $5.8 million by the
end of fiscal 2010.
At
June 2007 we remained generally optimistic about the consumer economy as a
whole and the pet industry in particular, and did not anticipate an economic
downturn. Furthermore, we had two R&D
technicians who were spending the majority of their time on pet treat resin
development. We expected these R&D activities to produce new products that
would enhance sales in fiscal years 2009 and beyond.
Based
on our analysis, we concluded that as of July 1, 2007, the assets in our
Other Segment were not impaired.
We
reexamined our assessment as of December 31, 2007 and concluded again that
no impairment charge was necessary.
Although we had seen a fourth quarter fiscal 2007 decline in pet treat
resin sales, we had experienced 13% and 2% improvements, respectively, in pet
treat resin sales during the first and second quarters of fiscal 2008. We were
experiencing annualized sales at a rate of approximately 50% of where we had
expected to be at the time, but we were still negotiating with an existing bio
resin customer to produce pet treat resin products for them and saw no need to
change our expectations with respect to future sales of pet resins. We also noted that sales of our biopolymer
products for the second quarter of the current fiscal year had increased by 78%
over sales in the first quarter. At that point, a primary reason that our
actual results lagged our projections was significant increases in commodity
prices since July 1. In June 2007, the December futures price
for wheat, the principal raw material for our pet treat resins and biopolymers,
was $6.18 a bushel; by December 30, 2007, the spot price for wheat was
$8.59 a bushel. However, we concluded that these prices represented record
highs and that commodity prices would return to more normal levels near or
shortly after the end of fiscal 2008.
Our assumptions regarding other raw material input costs, primarily
natural gas, remained unchanged from June 2007. We also note that we had settled our
litigation with a major customer and had received a settlement of $8.0
million. After deducting related
professional fees of $954,000, we realized a net gain on settlement of
litigation of $7,046,000. We excluded
this gain from the Other segment for purposes of our segment reporting for our Form 10-Q
for the quarter ended December 30, 2007 even though the settlement enabled
us to recover some of the cost of investments in our pet treat resin assets.
In
connection with the preparation of our quarterly report for the quarter ended March 31,
2008, we are again performing an assessment for impairment of our Other Segment
assets. In connection with this
assessment, we will take into account the fact that we have recently decided to
cease R&D
activities
on pet products and have reduced staffing in the pet product area. We also have noted the following:
· Two of our
existing pet customers have excess inventories resulting, we believe, from the
downturn in the economy, and we therefore expect reduced sales to them in
coming quarters. In addition, our negotiations with our existing biopolymer
customer have yielded no results.
· Customers with
whom we had contracts with at June, 2007 have not met expected target volumes
as outlined in their contracts.
· Contrary to our
expectations at December 2007, commodity prices continue to rise. At March 31, 2008, the futures prices
for wheat ranged from $9.60 to $10 a bushel, nearly twice our intial assumption
and approximately 40% higher than the actual average price paid year to date at
December 30, 2007. We have now
concluded that the current trend of rising commodity prices may continue for
the foreseeable future. We are unable to pass these increased costs on to
certain of our customers with whom we are contractually bound at prices which
are now unfavorable to us. As a result
of these commodity cost trends, we believe our customer base for these products
is migrating away from a wheat based protein resin to a less expensive corn
starch resin.
Although
we have not completed our assessment, we anticipate that the change in
circumstances will cause us to revise our estimates downward and that, as a
result, we may record an impairment loss for the quarter ended March 31,
2008, related to equipment used to produce our pet treat resins.
Item 9A. Controls and Procedures
Evaluation of Controls and Procedures, page 71
6. We note your
response to prior comment number 11 and reissue and clarify the comment. We note that your President and Chief
Financial Officer concluded your disclosure controls and procedures “were
adequately designed and operating effectively to ensure that material
information relating to the Company would be made known to them by others
within the Company.” Please revise your
future filings to clearly state whether your disclosure controls and procedures
were effective (or not effective) without limiting the definition in Exchange
Act Rules 13a-15(e) or 15d-15(e).
We
will include the following disclosure in the Evaluation of disclosure controls
and procedures under Item 4 of our Quarterly Report on Form 10-Q for the
period ended March 31, 2008. We
will make similar disclosure in future filings.
As of the end of the quarter ended [Date], our Chief Executive
Officer and Chief Financial Officer have each reviewed and evaluated the
effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Exchange Act). Based on that evaluation, the Chief
Executive Officer and Chief Financial Officer have each concluded that our current
disclosure controls and procedures are effective to ensure that information
required to be disclosed by the Company in reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commission rules and
forms, and include controls and procedures designed to ensure that information
required to be disclosed by the Company in such reports is accumulated and
communicated to the Company’s management, including the Chief Executive
Officer and Chief Financial Officer, as appropriate to allow timely decisions
regarding required disclosure.
Form 10-Q for the period ended December 31, 2007
Note 5. Operating Segments, page 8
7. We note your
response to prior comment number 13 with respect to your conclusion to
separately report your Other segment.
Please address the following additional comments:
· Further explain
how you determined that the Other Segment meets the criteria of an operating
segment pursuant to paragraph 10 of SFAS 131.
Specifically, clarify whether the operating results from this segment
are regularly reviewed by your chief operating decision maker (“CODM”) for
purposes of allocating resources to the segment and assessing performance. Please explain in detail how often your CODM
reviews the operating results of this segment.
Our
CODM has consisted of our chief executive officer and our chief operating
officer. Until recently, these positions were held by separate individuals but
effective March 5, 2008, our COO became our CEO. Operating results from
each of our Segments, including our Other Segment, are reviewed by our CODM
monthly for purposes of allocating resources to the segment and assessing
performance. The monthly review consists
of a regular monthly meeting involving our CEO, who is currently responsible
for our Ingredient Solutions Segment, the Executive Vice President of our
Distillery Products Segment, and the general manager of our Other segment, who
is responsible for the combined operations of pet products and
biopolymers. Additionally, the CFO, the
Corporate Controller, our platform managers (often referred to as “product
managers” in other companies) and other
members of management possessing certain expertise or knowledge attend these
meetings. Accordingly, we concluded
that the Other segment met the criteria of an operating segment pursuant to
paragraph 10 of SFAS 131 because it is a component of our business
a. through which we engage in
business activities from which we earn
revenues and incur expenses,
b. whose operating
results are regularly reviewed by our
chief operating decision maker (CEO/COO) who makes decisions about resources to
be allocated to the segment and assesses
its performance, and
c. for which
discrete financial information is available.
· Explain in
further detail how you changed your internal structure that caused you to
report the Other Segment. We understand
that you now have an individual that is given primary responsibility of the
plant based biopolymers and pet products.
Please clarify how this differs from your internal organization prior to
the restructuring. Explain whether there
were any individuals responsible for these product lines prior to the
restructuring.
Our
former Ingredients segment was managed by our COO, who subsequently has become
our CEO. As a result of the
restructuring, the general manager of our pet and biopolymer products now has
primary responsibility for managing our Other Segment.
· Your response
clarifies that you internally report results for distillery products, food
products, pet treat resins, plant based biopolymers and personal care products.
Please clarify how you determined it is
appropriate to report these five components of your enterprise into three
operating segments. In this respect, it
appears you are combining food products and personal care products into the
Ingredient segment, while the plant based biopolymers and pet products are
reported in the Other segment. Clarify
how you determined it is appropriate to aggregate your components in this
manner and how it meets the objectives and requirements of SFAS 131.
Previously
we included what we refer to as food products, personal care products, pet
products and plant based biopolymers in our Ingredients segment. As we indicated in our last response, we
began breaking out our internal reports reviewed by the CODM to show the
profitability contributions of the components of our old Ingredients segment,
and concluded that we should undertake a review of the manner in which we were
reporting our Ingredients segment. We
concluded that pet products and plant based biopolymers did not share with food
products and personal care products all of the characteristics specified in
paragraph 17 of SFAS 131. Specifically-
· Food products and personal care products primarily
consist of starches or proteins which are generally sold for human consumption
whereas pet products and plant based biopolymers are not.
· The production processes for certain of our pet
products and plant based biopolymers differ from those for food products and
personal care products in that our proteins and starches are the raw materials
for such products and we use molding technology instead of extrusion technology
to make certain of such products.
· Our customer base and our packaging and shipping
methods for pet products and plant based biopolymers include retail customers,
unlike our food products and personal care products.
In
contrast, we concluded that our food products and personal care products shared
the aggregation criteria referred to in paragraph 17. In this regard
· Both food products and personal care products primarily
consist of starches or proteins used for human consumption. Personal care
products consist of our starches and proteins that have been hydrolyzed.
· The production process for food products and
personal care products have the same starting point; as noted above, our
personal care products consist of our starches or proteins that have been
hydrolyzed.
· Our customers for food products and personal care
products are similar in that they generally further process our products.
· We ship both
food products and personal care products in bulk, as opposed to pre-packaged.
· Both food products and personal care products are
subject to FDA regulation.
We
felt it appropriate to combine pet products and plant based biopolymer products
in a single segment, which we call our Other Segment, because we had designated
a manager to be responsible for pet and plant based biopolymer products and
because reports of operating results to our CODM and Board treated these
products on a combined basis. Further,
although this has not been the case in all interim periods, we note that at
year end for the last three fiscal years the
products
in our other segment on a combined basis did not represent 10% of any of
reported revenue, reported profit or loss or combined assets.
We
believe that our aggregation of the components of our business in this manner
furthers the objectives of SFAS 131, which we understand are to help users of
our financial statements better understand our performance, better assess our
prospects for future cash flows and make more informed judgments about our
enterprise as a whole.
In
this regard, we note that revenues related to both pet products and plant based
biopolymers are relatively immaterial at this time. By separating these products categories from
our Ingredients segment, we intended to assist users of our statements better
understand our food products business, which is the core of our starch and
protein business, and to better see what progress we might be making in
developing our emerging pet products and plant based biopolymer products
business.
Management’s Discussion and Analysis of Financial Condition and Results
of Operations
Income Taxes, page 19
8. We note during
the quarter ended December 30, 2007 you determined that your valuation
allowance related to certain state tax credit carryforwards was no longer
appropriate and was therefore removed.
Please clarify why you had originally recorded the valuation allowance
and tell us and disclose specifically what factors you considered in concluding
the allowance was no longer appropriate.
We
first established the reserve during our fiscal year ended June 30, 2005
when we became eligible for the Kansas High Performance Incentive Program
(“HPIP”). We had doubts at the time
that we could meet the training and documentation requirements for the
HPIP. Accordingly, we determined that a
valuation allowance should be recorded against the credits until they were
realized upon certification and the generation of sufficient taxable earnings.
In
preparing our 10-Q for the period ended December 30, 2007, we considered
the following factors in determining whether or not a valuation allowance was
still appropriate against HPIP credit carryovers. First, because the credits are subject to an
annual recertification process in which certain wage base and training
requirements must be met, we considered whether it was more likely than not we
could meet these requirements. Second,
because sufficient taxable income must be generated to absorb the credits in
the 10 year carryforward period of the credits, we considered whether it was
more likely than not that we would have sufficient taxable income to utilize
the carryforwards. Based on our analysis as of December 31, 2007, we
concluded it was more likely than not that the credits would be available to
us.
One
reason for the different results of our analysis at December 31, 2007 and
prior periods is that we implemented significantly improved training and
related record keeping practices during the 1st and 2nd
quarters of fiscal 2008. For example,
our corporate-wide Safety and Environmental Management System (“SEMS”) training
program, which was implemented in the second quarter of fiscal 2008, represents
an unprecedented training initiative to develop sustainable consistent
production operations. This training
initiative, combined with improved, more robust documentation practices, was
critical to the annual recertification process required by the State of Kansas
to be eligible to utilize credits generated in prior years. This was confirmed during the annual
recertification for fiscal 2008 completed at the beginning of the 3rd
quarter of fiscal 2008. Based on our new
commitment to training and improved record keeping practices, we changed our
assessment and now
believe
that it is more likely than not that we will be able to continue meeting the
training requirements of the recertification process. This represents a change in our analysis from
prior years.
In
addition, as of the close of the 2nd quarter of fiscal 2008,
we were seeing improvements in both our Ingredient Solutions Segment and our
Other Segment notwithstanding unprecedented grain prices (which comprise
approximately 70% of our cost of sales on average). Based on those improvements we were more
comfortable with concluding that there was a more likely than not chance of
realizing the benefits of the credit against future taxable earnings for the
State of Kansas during the life of the credits.
Cash Flow Information
Operating Cash Flows, page 23
9. We note the
increase in your inventories of $13 million was primarily due to increasing raw
material costs and the associated impact in finished goods. Please quantify the specific factors behind
the inventory increase, including raw material costs, product mix issues, and
any other factors contributing to the increased inventory balance.
Of
the $13.0 million change in inventory, $6.9 million was related to increased
raw material costs, $3.8 million was related to increases in volume and $2.3 million
was related to increased inventories of maintenance and supply materials. Of the combined $10.7 million change in
inventory related to price and volume, $9.1 million was in finished goods that
we were withholding from the market to wait for more favorable pricing.
During
the third quarter of fiscal 2008, we implemented improved inventory reporting
and analysis procedures that enable us to more adequately indentify inventory
trends. We will incorporate these
procedures as part of our discussion of inventory and liquidity in future
periods.
Financial Covenants, page 25
10. Please disclose if you are
currently in compliance with the covenants in your various loan and capital
lease agreements in future filings.
We
advise the staff that MGP Ingredients, Inc is in compliance with all covenants
related to loan and capital leases. We
will disclose such compliance in future filings.
Thank
you for your comments. Please call me at
913-360-5229 if you have any questions about our responses.
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Sincerely,
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MGP
Ingredients, Inc.
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By
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/s/
Robert Zonneveld
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Robert
Zonneveld
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Chief
Financial Officer
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