WESTERN PLAINS ENERGY, LLC
3022 County Road 18
Oakley, Kansas 67748
(785) 672-8810
July 5, 2006
Via EDGAR
U.S. Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E.
Mail Stop 7010
Washington, D.C. 20549
Attention: John Cash, C.P.A.
Re: Western Plains Energy, LLC / SEC File No. 0-50714
Form 10-KSB for Fiscal Year Ended September 30, 2005
Forms 10-Q for Periods Ended December 31, 2005 and March 31, 2006
Dear Mr. Cash:
This letter has been prepared in response to the June 20, 2006 comment letter
prepared by you with regard to the Form 10-KSB and Forms 10-Q previously filed
with the Commission by Western Plains Energy, LLC (the "Company") that the
following information responds to each comment contained in that letter. Numbers
assigned to the comments by the staff have been retained by us.
Accordingly, the Company's responses are as follows:
Form 10-KSB for Fiscal Year Ended September 30, 2005
- ----------------------------------------------------
Controls and Procedures, page 23
Comment No. 1
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Comment will be complied with. Please be advised that future filings will state
as follows:
We maintain a system of controls and procedures designed to provide reasonable
assurance as to the reliability of the financial statements and other
disclosures included in this report. As of the year ended ___[date of end of
year]___, under the supervision and with the participation of our Chief
Executive Officer and Principal Financial Officer, management has evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures. Based on that evaluation, the Chief Executive Officer and the
Principal Financial Officer concluded that our disclosure controls and
procedures were effective to ensure: (i) that information required to be
disclosed by us in the reports that we file under the Act is recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms; and (ii) that information required to be disclosed by us
in the reports that we file under the Act is accumulated and communicated to our
management, including the Principal Executive Officer and Principal Financial
Officer, to allow timely decisions regarding required disclosure.
John Cash, C.P.A.
Securities and Exchange Commission
July 5, 2006
Page 2
Statements of Income, page F-3
Comment No. 2
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Comment will be complied with. Please be advised that future filings will not
contain the proforma statements of operations data, either on the face of our
statement of income, in the notes to our financial statements or in management's
discussion and analysis.
Statements of Cash Flows, page F-5
Comment No. 3
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Comment will be complied with. Please be advised that future filings will
reflect distributions to members as a financing activity in accordance with SFAS
95 paragraph 20(a).
Exhibit 31
Comment No. 4
- -------------
Comment will be complied with. Please be advised that future filings will
include the certifications for the Principal Executive and Financial Officers
revised in accordance with Item 601(31) of Regulation S-B as shown on EXHIBIT A
attached hereto and herein incorporated by reference.
Forms 10-Q for Periods Ended December 31, 2005 and March 31, 2006
- -----------------------------------------------------------------
Statements of Cash Flows, page F-4
Comment No. 5
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Comment complied with. Future filings will include the reconciliation from net
income to net cash flow from operating activities in accordance with SFAS 95
paragraph 28. The reconciliations for the periods ended December 31, 2005 and
March 31, 2006 are attached hereto as EXHIBIT B and herein incorporated by
reference.
Exhibit 31
Comment No. 6
- -------------
Comment will be complied with. Please be advised that future filings will
include the certifications for the Principal Executive and Financial Officers
revised in accordance with Item 601(31) of Regulation S-K as shown on EXHIBIT A
attached hereto and herein incorporated by reference.
The Company hereby acknowledges that it is responsible for the adequacy and
accuracy of the disclosure in the referenced filings. The Company understands
that staff comments or changes to disclosure in response to staff comments do
not foreclose the Commission from taking any action with respect to the filing
and it will not assert staff comments as a defense in any proceeding initiated
by the Commission or any person under the federal securities laws of the United
States.
John Cash, C.P.A.
Securities and Exchange Commission
July 5, 2006
Page 3
We appreciate your attention.
Sincerely,
WESTERN PLAINS ENERGY, LLC
/s/ Richard Sterrett
- ---------------------------
Richard Sterrett
Chief Financial Officer
cc: David Babiarz, Esq., Dufford & Brown, P.C.
W. Edward Schenkein, Stark Winter Schenkein & Co. LLP
EXHIBIT A
I, __[certifying individual]__ of Western Plains Energy, LLC (the "Company"),
certify that:
1. I have reviewed this __[specify report]__ of the Company;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the Company as of, and for, the periods presented in this report;
4. The Company's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the Company and have:
a. Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
Company, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in
which this report is being prepared;
b. Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles;
c. Evaluated the effectiveness of the Company's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the Company's internal control
over financial reporting that occurred during the Company's most
recent fiscal quarter (the Company's fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably
likely to materially affect, the Company's internal control over
financial reporting; and
5. The Company's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the Company's auditors and the audit committee of the Company's board of
directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the Company's ability to record,
process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other
employees who have a significant role in the Company's internal
control over financial reporting.
Date: NAME
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TITLE
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EXHIBIT B
WESTERN PLAINS ENERGY, L.L.C.
STATEMENT OF CASH FLOW
FOR SIX MONTHS ENDED MARCH 31, 2006 AND 2005
(UNAUDITED)
2006 2005
----------- -----------
OPERATING ACTIVITIES
Net income $13,442,572 $ 5,780,894
Depreciation and amortization 2,771,360 3,249,516
Conversion of unrealized losses on grain hedging
contracts to realized loss 517,375 609,513
Changes in assets and liabilities
Accounts receivable (1,983,818) (789,105)
Accounts receivable - government subsidies 426,412 2,001,549
Inventory (385,304) (222,464)
Prepaid expenses (150,274) (98,776)
Accounts payable and accrued expenses 94,566 963,842
Accrued interest (5,348) 229,333
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 14,727,541 11,724,302
----------- -----------
INVESTING ACTIVITIES
Purchase of property, plant and equipment (430,368) (4,342,977)
(Investment) liquidation in commodities
trading accounts (206,676) 82,742
----------- -----------
NET CASH (USED IN) INVESTING ACTIVITIES (637,044) (4,260,235)
----------- -----------
FINANCING ACTIVITIES
Payments on notes payable (3,002,000) (1,830,434)
Member distributions (10,608,000) (2,856,000)
Proceeds from notes payable and line of credit -- 687,500
----------- -----------
NET CASH (USED IN) FINANCING ACTIVITIES (13,610,000) (3,998,934)
----------- -----------
NET INCREASE IN CASH 480,497 3,465,133
CASH - BEGINNING OF PERIOD 1,245,903 3,243,020
----------- -----------
CASH - END OF PERIOD $ 1,726,400 $ 6,708,153
=========== ===========
WESTERN PLAINS ENERGY, L.L.C.
STATEMENTS OF CASH FLOW
FOR THE THREE MONTHS ENDED DECEMBER 31, 2005 AND 2004
(UNAUDITED)
2005 2004
----------- -----------
OPERATING ACTIVITIES
Net income $ 5,718,721 $ 2,049,711
Depreciation and amortization 1,348,682 1,732,624
Conversion of unrealized losses on grain
hedging contracts to realized loss 414,083 702,924
Changes in assets and liabilities
Accounts receivable (249,623) (317,696)
Accounts receivable - government subsidies 436,506 1,353,059
Inventory (159,794) (33,231)
Prepaid expenses (236,587) (177,555)
Accounts payable and accrued expenses 162,678 994,412
Accrued interest 102,189 243,571
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 7,536,854 6,547,820
----------- -----------
INVESTING ACTIVITIES
Purchase of property, plant and equipment (168,606) (3,094,373)
Investment in commodities trading accounts (563,303) --
Withdrawals from commodities trading accounts 500,000 --
----------- -----------
NET CASH (USED IN) INVESTING ACTIVITIES (231,909) (3,094,373)
----------- -----------
FINANCING ACTIVITIES
Payments on notes payable (2,200,000) (2,000,000)
Member distributions (6,528,000) (2,040,000)
Proceeds from notes payable and line of credit 372,000 2,062,500
----------- -----------
NET CASH (USED IN) FINANCING ACTIVITIES (8,356,000) (1,977,500)
----------- -----------
NET INCREASE (DECREASE) IN CASH (1,051,055) 1,475,947
CASH - BEGINNING OF PERIOD 1,245,903 3,243,020
CASH - END OF PERIOD $ 194,848 $ 4,718,967
=========== ===========
WESTERN PLAINS ENERGY, L.L.C.
STATEMENTS OF INCOME
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2005 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
FISCAL YEAR NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2005 2004
------------ ------------
REVENUE $ 61,730,872 $ 39,485,027
COST OF SALES 43,476,560 31,893,577
------------ ------------
GROSS PROFIT 18,254,312 7,591,450
------------ ------------
EXPENSES
General and administrative expenses 1,716,228 1,003,228
Depreciation expense 5,446,248 4,851,327
Amortization expense 41,005 10,669
------------ ------------
Total expenses 7,203,481 5,865,224
------------ ------------
Income from operations 11,050,831 1,726,226
------------ ------------
Other income (expense)
Interest expense (931,710) (738,053)
Interest from industrial development
revenue bonds 1,120,000 768,746
Plant lease expense (1,120,000) (768,746)
Grant and subsidy income 2,784,476 6,380,176
Other income 105,772 25,214
------------ ------------
Total other income 1,958,538 5,667,337
------------ ------------
NET INCOME 13,009,369 7,393,563
Unrealized losses on grain contracts (31,813) (622,925)
------------ ------------
COMPREHENSIVE INCOME $ 12,977,556 $ 6,770,638
============ ============
NET INCOME PER UNIT
BASIC AND DILUTED $ 3,188.57 $ 1,812.15
============ ============
DISTRIBUTIONS PER UNIT $ 2,100 $ --
============ ============
WEIGHTED AVERAGE UNITS OUTSTANDING
BASIC AND DILUTED 4,080 4,080
============ ============
WESTERN PLAINS ENERGY, L.L.C.
STATEMENTS OF CASH FLOW
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2005 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
FISCAL YEAR NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2005 2004
------------ ------------
OPERATING ACTIVITIES
Net income $ 13,009,369 $ 7,393,563
Depreciation and amortization 5,487,768 4,861,996
Conversion of unrealized losses on grain
hedging contracts to realized losses 591,113 --
Changes in assets and liabilities
Accounts receivable (1,398,022) (2,192,845)
Accounts receivable - Government Subsidies 1,870,363 (2,361,235)
Inventory (258,578) (1,255,682)
Deposits -- (97,834)
Prepaid expenses 1,330 7,080
Loan origination and financing fees -- 14,583
Accounts payable and accrued expenses 1,610,471 293,931
Accrued interest 4,430 1,628
Accounts payable - construction -related party -- (5,231,553)
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 20,918,244 1,433,632
------------ ------------
INVESTING ACTIVITIES
Purchase of property, plant and equipment (4,640,399) (2,476,242)
Disbursements of advances on grain -- (453,600)
Receipts of advances on grain -- 453,600
Purchase of futures and options contracts 108,838 (1,050,730)
------------ ------------
NET CASH (USED FOR) INVESTING ACTIVITIES (4,531,561) (3,526,972)
------------ ------------
FINANCING ACTIVITIES
Distributions to members (8,608,800) --
Borrowings on line of credit and advances payable -- (5,000,000)
Proceeds from notes payable 687,500 9,757,634
Payment of notes payable (10,462,500) --
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES (18,383,800) 4,757,634
------------ ------------
NET INCREASE (DECREASE) IN CASH (1,997,117) 2,664,294
CASH - BEGINNING OF PERIOD 3,243,020 578,726
------------ ------------
CASH - END OF PERIOD $ 1,245,903 $ 3,243,020
============ ============
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for income taxes $ -- $ --
============ ============
Cash paid for interest $ 927,281 $ 736,425
============ ============
Non-cash Investing and Financing Activities
Investment in industrial revenue bonds $ -- $ 13,366,710
============ ============
Lease obligation $ -- $ 13,366,710
============ ============
Conversion of note payable to line of credit $ -- $ 5,000,000
============ ============