SEC Comment Letter for Golden Growers Cooperative (GGROU) (CIK 0001489874) (GGROU) — Jan 20, 2011
Golden Growers Cooperative (GGROU) (CIK 0001489874)
Date: Jan. 20, 2011 · CIK: 0001489874 · Accession: 0000000000-11-003937
AI Filing Summary & Sentiment
Reasoning
Referenced dates: December 3, 2010
Letter
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
DIVISION OF CORPORATION FINANCE
January 20, 2011
via U.S. mail and facsimile Mark Dillon, Chief Executive Officer Golden Growers Cooperative 112 Roberts Street North, Suite 111 Fargo, North Dakota 58102 Re: Golden Growers Cooperative Form 10, Amendment 4 Filed December 20, 2011 File No. 0-53957 Dear Mr. Dillon: We have reviewed your filing and have the following comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure. If you do not believe our comments apply to your facts and circumstances or do not believe an amendment is appropriate, pl ease tell us why in your response.
After reviewing any amendment to your filing and the information you provide in response to these comments, we may have additional comments.
Management’s Discussion and Analysis of Fi nancial Condition and Results of Operations, page 12
1. We note your response to comment number two of our prior letter dated December 3, 2010. Please revise your management’s discu ssion and analysis section to reflect any changes in your financial statements in connection with the accounting comment below.
Financial Statements
Notes to Financial Statements
Restatement of Previously Issued Financial Statements
2. We reviewed your analysis in response to our prior comment 3. Please provide us with additional analyses of the follo wing criteria of FASB ASC 605-45-45:
Mark Dillon Golden Growers Cooperative January 20, 2011 Page 2
• The Entity is the Primary Obligor in the Arrangement We note in your response that you be lieve you are the primary obligor as “…the Cooperative incurs the cost of remedying any non delivery”; however, on page 5 of your Form 10 you state that if your members do not deliver corn then Cargill will purch ase replacement corn and your members will be invoiced for the price of the corn. It appears from your disclosure that your members are in substance responsible for providing the corn to Cargill and paying them if such delivery is no t made. Please reconcile these two disclosures and tell us, in substance, who is the primary obligor along with supporting references to underlying agreements.
• The Entity has General Inventory risk – Before Customer Order is Placed or Upon Customer Return We note in your response that you belie ve you have general inventory risk. FASB ASC 605-45-45-5 states that general inventory risk exists when an entity takes title to a product before the product is ordered by a customer or will take title to a product if it is re turned by the customer and the customer has a right of return. Please tell us how you have general inventory risk with respect to this definition.
• The Entity Changes the Product or Performs Part of the Service We note in your response that you belie ve contractually providing the corn delivery services and facilitating your me mber’s ability to deliver corn is an indicator of reporting yo ur revenue on a gross basis. FASB 605-45-45-9 states “this indicator is evaluated from the perspective of the product or service itself such that th e selling price of that produc t or service is greater as a result of an entity’s physical change of the product or performance of the service and is not evaluated based on othe r entity attributes such as marketing skills, market coverage, distribution sy stem, or reputation”. Since you do not change the product or perform part of the service it does not appear that you meet the requirements of this indicato r of gross revenue reporting. Please advise.
• The Entity is Involved in the De termination of Product or Service Specifications We note your response that the Coopera tive has contracted with Cargill pursuant to the Grain Services Agreement to grade the corn to ensure that it meets quality requirements. We also not e your disclosure on page 4 of your Form 10 that with Method A members Ca rgill confirms the amount of corn with each member and notifies th at member with respect to quality specifications , allowances, deductions and premiu ms to be applicable to that
Mark Dillon Golden Growers Cooperative January 20, 2011 Page 3
corn. Please tell us whether you or Cargill are responsible for determining the corn quality requirements, including re ferences to supporting agreements (e.g. Section 1(a) of the Grain Services Agreement).
• The Entity Has Physical Loss Inventory Risk – After Customer Order or During Shipping We note in your response that you belie ve you have physical inventory risk. FASB ASC 605-45-45-12 states that physical inventory ri sk exists if title to the product is transferred to an entity at the shipping point and is transferred from that entity to the customer upon delivery. Since the shipping point and delivery point are the same location, it does not appear th at you meet the requirements of this indicator of gross revenue reporting. Pl ease advise. In your response, clarify when you take ownership of the corn, how long the inspection process takes and who bears the risk of loss when Cargill, acting as your agent, has possession of your members’ corn. Please reference provisions in underlying agreements to support your position.
• The Entity Has Credit Risk We note in your response that you believe you have credit risk with Cargill for the sales of corn to Cargill. We note that Cargill pays the aggregate purchase price for corn purchased and then makes individual payments for corn directly to your members. Based on the foregoing, please tell us how you have credit risk, including references to underlying agreements to support your position. In your response, clarify if you would be in a position to pay your members in advance of receiving paym ent from Cargill.
Form 10-Q/A for the Quarter Ended June 30, 2010
Form 10-Q for the Quarter Ended September 30, 2010
3. Please revise your Forms 10-Q to ad dress our comments noted above.
You may contact Jamie Ke ssel at (202) 551-3727 or Br ian Bhandari at (202) 551- 3390, if you have questions regarding the financia l statements and related matters. Please
Mark Dillon Golden Growers Cooperative January 20, 2011 Page 4
contact Susann Reilly at (202) 551-3236 or David Link at (202) 551-3356 with other questions.
Sincerely, John Reynolds
A s s i s t a n t D i r e c t o r
Office of Beverages, Apparel and Health Care Services
cc: Kimberly A. Lowe, Esq. Facsimile: (612) 492-7077
Show Raw Text
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
DIVISION OF
CORPORATION FINANCE
January 20, 2011
via U.S. mail and facsimile
Mark Dillon, Chief Executive Officer
Golden Growers Cooperative 112 Roberts Street North, Suite 111 Fargo, North Dakota 58102
Re: Golden Growers Cooperative
Form 10, Amendment 4 Filed December 20, 2011 File No. 0-53957
Dear Mr. Dillon:
We have reviewed your filing and have the following comments. In some of our
comments, we may ask you to provide us with information so we may better understand your
disclosure.
If you do not believe our comments apply to your facts and circumstances or do not
believe an amendment is appropriate, pl ease tell us why in your response.
After reviewing any amendment to your filing and the information you provide in
response to these comments, we may have additional comments.
Management’s Discussion and Analysis of Fi nancial Condition and Results of Operations,
page 12
1. We note your response to comment number two of our prior letter dated December 3,
2010. Please revise your management’s discu ssion and analysis section to reflect any
changes in your financial statements in connection with the accounting comment below.
Financial Statements
Notes to Financial Statements
Restatement of Previously Issued Financial Statements
2. We reviewed your analysis in response to our prior comment 3. Please provide us
with additional analyses of the follo wing criteria of FASB ASC 605-45-45:
Mark Dillon
Golden Growers Cooperative January 20, 2011 Page 2
• The Entity is the Primary Obligor in the Arrangement
We note in your response that you be lieve you are the primary obligor as
“…the Cooperative incurs the cost of remedying any non delivery”; however,
on page 5 of your Form 10 you state that if your members do not deliver corn
then Cargill will purch ase replacement corn and your members will be
invoiced for the price of the corn. It appears from your disclosure that your
members are in substance responsible for providing the corn to Cargill and
paying them if such delivery is no t made. Please reconcile these two
disclosures and tell us, in substance, who is the primary obligor along with
supporting references to underlying agreements.
• The Entity has General Inventory risk – Before Customer Order is Placed or
Upon Customer Return We note in your response that you belie ve you have general inventory risk.
FASB ASC 605-45-45-5 states that general inventory risk exists when an
entity takes title to a product before the product is ordered
by a customer or
will take title to a product if it is re turned by the customer and the customer
has a right of return. Please tell us how you have general inventory risk with
respect to this definition.
• The Entity Changes the Product or Performs Part of the Service We note in your response that you belie ve contractually providing the corn
delivery services and facilitating your me mber’s ability to deliver corn is an
indicator of reporting yo ur revenue on a gross basis. FASB 605-45-45-9
states “this indicator is evaluated from the perspective of the product or
service itself such that th e selling price of that produc t or service is greater as
a result of an entity’s physical change of the product or performance of the
service and is not evaluated based on othe r entity attributes such as marketing
skills, market coverage, distribution sy stem, or reputation”. Since you do not
change the product or perform part of the service it does not appear that you
meet the requirements of this indicato r of gross revenue reporting. Please
advise.
• The Entity is Involved in the De termination of Product or Service
Specifications
We note your response that the Coopera tive has contracted with Cargill
pursuant to the Grain Services Agreement to grade the corn to ensure that it
meets quality requirements. We also not e your disclosure on page 4 of your
Form 10 that with Method A members Ca rgill confirms the amount of corn
with each member and notifies th at member with respect to quality
specifications , allowances, deductions and premiu ms to be applicable to that
Mark Dillon
Golden Growers Cooperative January 20, 2011 Page 3
corn. Please tell us whether you or Cargill are responsible for determining the
corn quality requirements, including re ferences to supporting agreements (e.g.
Section 1(a) of the Grain Services Agreement).
• The Entity Has Physical Loss Inventory Risk – After Customer Order or
During Shipping We note in your response that you belie ve you have physical inventory risk.
FASB ASC 605-45-45-12 states that physical inventory ri sk exists if title to
the product is transferred to an entity at the shipping point and is transferred
from that entity to the customer upon delivery. Since the shipping point and
delivery point are the same location, it does not appear th at you meet the
requirements of this indicator of gross revenue reporting. Pl ease advise. In
your response, clarify when you take ownership of the corn, how long the
inspection process takes and who bears the risk of loss when Cargill, acting as
your agent, has possession of your members’ corn. Please reference
provisions in underlying agreements to support your position.
• The Entity Has Credit Risk
We note in your response that you believe you have credit risk with Cargill for
the sales of corn to Cargill. We note that Cargill pays the aggregate purchase price for corn purchased and then makes individual payments for corn directly
to your members. Based on the foregoing, please tell us how you have credit risk, including references to underlying agreements to support your position.
In your response, clarify if you would be in a position to pay your members in
advance of receiving paym ent from Cargill.
Form 10-Q/A for the Quarter Ended June 30, 2010
Form 10-Q for the Quarter Ended September 30, 2010
3. Please revise your Forms 10-Q to ad dress our comments noted above.
You may contact Jamie Ke ssel at (202) 551-3727 or Br ian Bhandari at (202) 551-
3390, if you have questions regarding the financia l statements and related matters. Please
Mark Dillon
Golden Growers Cooperative January 20, 2011 Page 4
contact Susann Reilly at (202) 551-3236 or David Link at (202) 551-3356 with other
questions.
Sincerely, John Reynolds
A s s i s t a n t D i r e c t o r
Office of Beverages, Apparel and Health Care Services
cc: Kimberly A. Lowe, Esq. Facsimile: (612) 492-7077