January 26, 2006
Daniel Knutson
Land O`Lakes, Inc.
4001 Lexington Avenue North
Arden Hills, MN 55112
Re: Land O`Lakes, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2005
Filed March 30, 2005
Response Letter Dated December 20, 2005
File No. 333-84486
Dear Mr. Knutson:
We have reviewed your Form 10-K for the Fiscal Year Ended
December 31, 2004 and response letter and have the following
comments.
We have limited our review of your filing to those issues we have
addressed in our comments. Where indicated, we think you should
revise your document in response to these comments. If you
disagree,
we will consider your explanation as to why our comment is
inapplicable or a revision is unnecessary. Please be as detailed
as
necessary in your explanation. In some of our comments, we may
ask
you to provide us with information so we may better understand
your
disclosure. After reviewing this information, we may raise
additional
comments.
Form 10-K for the Fiscal Year Ended December 31, 2004
MoArk, LLC, page 10
1. We have reviewed your response to comment 2 of our letter
dated
November 30, 2005 and understand you have accounted for the option
to
purchase the remaining 42.5% of MoArk, LLC under EITF 00-04. Tell
us
if the put and call options were issued as a single freestanding
instrument, as separate freestanding instruments, or embedded in
the
shares (minority interest). Based on the form of issuance,
reconcile
your accounting treatment at present value with that discussed in
paragraph 16 of EITF 00-04 and the provisions of EITF 00-06, if
applicable. In your response, please confirm that these
instruments
meet the scope requirements for application of EITF 00-04 versus
EITF
00-06.
Note 1. Summary of Significant Accounting Policies, page 76
Derivative Commodity Instruments, page 76
2. We note you intend to expand your disclosures related to
derivative commodity instruments in the footnotes to the financial
statements. Please provide us with a draft of the disclosure you
propose to include in future filings. Additionally, we understand
you
classify changes in fair values of your futures contracts and
interest
rate swaps in cost of sales and interest expense, respectively.
In
your expanded disclosure, please identify the line item
classification
as your current disclosure simply states these amounts are
included in
net earnings.
Note 5. Receivables Purchase Facility, page 79
3. We have reviewed your response to comment 11 of our letter
dated
November 30, 2005 and understand that your disclosure stating no
amounts are outstanding as of December 31, 2004 refers to the
amounts
outstanding at the QSPE owed to CoBank. We also understand that
you
have $362,123 and $181,320 in notes receivable from the QSPE as of
December 31, 2004 and 2003. Please tell us the amount of trade
receivables balance outstanding held by the QSPE as of December
31,
2004 and 2003. We note these trade receivables serve as the
funding
for your note receivables as no amounts are due to CoBank. In
your
response, please also identify the amount of reserves retained in
your
financial statements for potential losses on collection of the
note
receivable from the QSPE. Confirm that these reserve amounts and
the
related activity are included the disclosures in note 25 on page
93.
4. We understand you intend to expand your disclosures under
paragraph 17(f)(2) of SFAS 140 related to the securitization
facility
as discussed in your response to comment 12 of our letter dated
November 30, 2005. Paragraph 17(f)(4) of SFAS 140 states cash
flows
between the transferor and the QSPE should be disclosed. Such
cash
flows would include the identification of amounts received from
the
QSPE from new sales of trade receivables and from collections
under
current notes receivable outstanding during each period presented
in
the financial statements. We believe your proposed disclosure
should
include a discussion of all related cash flows between you and the
QSPE. Additionally, based on your response to comment 11, we
believe
you should clarify your disclosure regarding the amounts
outstanding
under the receivables purchase outstanding. Please provide us
with
the proposed disclosure you intend to include in future filings.
5. Tell us where you have classified the cash flows relating to
your
receivables purchase facility in your statements of cash flows.
Note 9. Goodwill and Other Intangible Assets, page 81
6. In your response to comment 14 of our letter dated November
30,
2005, we understand you believe the purchases of Land O` Lakes
Farmland Feed LLC should be considered on a step-by-step basis.
You
state that an analysis of the fair value of net assets acquired
was
performed to determine how to allocate the $37.1 million in
negative
goodwill from your purchase of the remaining 8% in 2004 and
concluded
it should be allocated in its entirety to reduce the goodwill
recognized in the two previous purchases in 1999 and 2001. Please
tell us to what extent the results of this analysis performed in
2004
indicated the previously recognized goodwill balance of $137.5
million
was impaired in prior periods and why such impairments were not
previously recorded.
Closing Comments
As appropriate, please amend your filing and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response. You may wish to provide us with marked copies of
the
amendment to expedite our review. Please furnish a cover letter
with
your amendment that keys your responses to our comments and
provides
any requested information. Detailed cover letters greatly
facilitate
our review. Please understand that we may have additional
comments
after reviewing your amendment and responses to our comments.
You may contact Ryan Milne at (202) 551-3688, or Shannon
Buskirk
at (202) 551-3717, if you have questions regarding comments on the
financial statements and related matters. Please contact me at
(202)
551-3684 with any other questions.
Sincerely,
April Sifford
Branch Chief
cc: Mr. Ryan Milne
Ms. Shannon Buskirk
Mr. Daniel Knutson
Land O'Lakes, Inc.
January 26, 2006
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-7010
DIVISION OF
CORPORATION FINANCE
MAIL STOP 7010