What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-08-04 compared with 2021-05-05 · 322 added, 120 removed, 374 unchanged (54% of the section changed)

3 unchanged sentences

(Dollars in thousands, except share and per share amounts)

Quarter Ended March 31,

Quarter Ended June 30, Year to Date Ended June 30,

2021 2020 2021 2020

Sales $ 174,939 $ 92,560 $ 283,262 $ 191,642

3 unchanged sentences

Operating income 27,663 11,338 48,163 25,046

Interest expense, net and other ( 458 ) ( 642 )

Interest expense, net ( 1,104 ) ( 628 ) ( 1,592 ) ( 1,107 )

Other income (loss), net ( 88 ) 330 ( 58 ) 167

Income before income taxes 26,471 11,040 46,513 24,106

2 unchanged sentences

Income attributable to participating securities 150 57 299 123

Net income attributable to common shareholders and used in Earnings Per Share calculation $ 15,281 $ 9,776

Net loss attributable to noncontrolling interest ( 76 ) — ( 76 ) —

Net income attributable to MGP Ingredients, Inc.

$ 19,985 $ 8,433 $ 35,263 $ 18,209

Basic and diluted weighted average common shares 21,916,721 16,899,079 19,436,143 16,956,502

4 unchanged sentences

(Dollars in thousands)

Quarter Ended March 31,

Quarter Ended June 30, Year to Date Ended June 30,

2021 2020 2021 2020

Net income $ 20,059 $ 8,490 $ 35,486 $ 18,332

Other comprehensive income (loss), net of tax:

Other comprehensive income, net of tax:

Unrealized gain on foreign currency translation adjustment 1 — 7 —

Change in Company-sponsored post-employment benefit plan — 21 49 15

Other comprehensive income 1 21 56 15

Comprehensive income 20,060 8,511 35,542 18,347

Comprehensive loss attributable to noncontrolling interest ( 76 ) — ( 76 ) —

Comprehensive income attributable to MGP Ingredients, Inc.

$ 20,136 $ 8,511 $ 35,618 $ 18,347

See accompanying notes to unaudited condensed consolidated financial statements

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

March 31, 2021 December 31, 2020

(Unaudited) (Dollars in thousands)

June 30, 2021 December 31, 2020

Current Assets

Cash and cash equivalents $ 37,243 $ 21,662

Receivables (less allowance for credit losses, $ 100 and $ 24 at March 31, 2021, and December 31, 2020, respectively)

Receivables (less allowance for credit losses, $ 100 and $ 24 at June 30, 2021, and December 31, 2020, respectively)

79,110 56,966

6 unchanged sentences

Operating lease right-of-use assets, net 9,169 5,151

Investment in joint ventures 5,739 —

Intangible assets, net 219,872 890

Goodwill 228,243 2,738

Other assets 8,001 3,521

3 unchanged sentences

Accounts payable 37,434 30,273

Federal and state liquor taxes payable 9,175 107

Income taxes payable 1,721 704

2 unchanged sentences

Long-term debt, less current maturities 36,870 38,271

Credit agreement - revolver 230,294 —

Long-term operating lease liabilities 6,626 3,057

Deferred credits 1,394 2,196

Other noncurrent liabilities 5,117 7,094

10 unchanged sentences

authorized 40,000,000 shares;

issued 18,115,965 shares at March 31, 2021 and December 31, 2020;

and 16,940,600 and 16,915,862 shares outstanding at March 31, 2021 and December 31, 2020, respectively

issued 23,123,793 shares at June 30, 2021 and 18,115,965 shares at December 31, 2020;

and 21,961,233 and 16,915,862 shares outstanding at June 30, 2021 and December 31, 2020, respectively

Additional paid-in capital 315,062 15,503

1 unchanged sentence

Accumulated other comprehensive income 542 486

Treasury stock, at cost, 1,175,365 and 1,200,103 shares at March 31, 2021 and December 31, 2020, respectively

Treasury stock, at cost, 1,162,560 and 1,200,103 shares at June 30, 2021 and December 31, 2020, respectively

( 22,469 ) ( 23,125 )

Total stockholders’ equity 278,511 262,526

Total liabilities and stockholders’ equity $ 381,102 $ 366,575

Total MGP Ingredients, Inc.

stockholders’ equity 593,578 262,526

Noncontrolling interest ( 76 ) —

Total equity 593,502 262,526

Total liabilities and equity $ 1,014,297 $ 366,575

See accompanying notes to unaudited condensed consolidated financial statements

2 unchanged sentences

(Dollars in thousands)

Quarter Ended March 31,

Year to Date Ended June 30,

Cash Flows from Operating Activities

2 unchanged sentences

Depreciation and amortization 8,425 6,344

Loss on sale of assets — ( 9 )

Net loss attributable to noncontrolling interest ( 76 ) —

Gain on sale of assets — ( 8 )

Share-based compensation 4,767 1,801

Deferred income taxes, including change in valuation allowance ( 1,568 ) ( 99 )

Changes in operating assets and liabilities:

Unrealized gain on foreign currency 7 —

Changes in operating assets and liabilities, net of effects of acquisition:

Receivables, net 7,531 ( 13,174 )

4 unchanged sentences

Accrued expenses and other 7,987 3,126

Deferred credits ( 802 ) ( 81 )

Federal and state liquor taxes payable 716 132

Other, net ( 2,537 ) ( 72 )

2 unchanged sentences

Additions to property, plant, and equipment ( 18,336 ) ( 10,177 )

Acquisition of business — ( 2,750 )

Purchase of business, net of cash acquired ( 149,599 ) ( 2,750 )

Contributions to equity method investment ( 988 ) —

Proceeds from sale of property — 688

7 unchanged sentences

Proceeds from credit agreement - revolver 242,300 54,700

Net cash (used in) provided by financing activities ( 2,726 ) 46,997

Payments on credit agreement - revolver ( 10,306 ) ( 30,000 )

Payment on assumed debt as part of the Merger ( 87,497 ) —

Net cash provided by financing activities 138,359 14,857

Effect of exchange rate changes on cash 3 —

Increase in cash and cash equivalents 15,581 8,436

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For Quarter Ended March 31, 2021 and 2020

For Year to Date Ended June 30, 2021

(Unaudited) (Dollars in thousands)

4 unchanged sentences

income Treasury

Stock Non-controlling Interest Total

Balance, December 31, 2020

10 unchanged sentences

4 6,715 18,016 276,318 541 ( 23,083 ) — 278,511

Comprehensive income:

Net income — — — 20,059 — — ( 76 ) 19,983

Other comprehensive income — — — — 1 — — 1

Dividends and dividend equivalents of $ 0.12 per common share and per restricted stock unit, net of estimated forfeitures

— — — ( 2,653 ) — — — ( 2,653 )

Share-based compensation — — 1,538 — — — — 1,538

Stock shares awarded, forfeited or vested — — ( 705 ) — — 705 — —

Stock shares repurchased — — — — — ( 91 ) — ( 91 )

Equity consideration for Merger — — 296,213 — 296,213

Balance, June 30, 2021

$ 4 $ 6,715 $ 315,062 $ 293,724 $ 542 $ ( 22,469 ) $ ( 76 ) $ 593,502

See accompanying notes to unaudited condensed consolidated financial statements

MGP INGREDIENTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For Year to Date Ended June 30, 2020

(Unaudited) (Dollars in thousands)

Preferred Issued Common Additional

15 unchanged sentences

4 6,715 14,364 238,567 ( 252 ) ( 23,833 ) 235,565

Comprehensive income:

Net income — — — 8,490 — — 8,490

Other comprehensive loss — — — — 21 — 21

Dividends and dividend equivalents of $ 0.12 per common share and per restricted stock unit, net of estimated forfeitures

— — — ( 2,041 ) — — ( 2,041 )

Share-based compensation — — 662 — — — 662

Balance, June 30, 2020

$ 4 $ 6,715 $ 15,026 $ 245,016 $ ( 231 ) $ ( 23,833 ) $ 242,697

See accompanying notes to unaudited condensed consolidated financial statements

4 unchanged sentences

MGP Ingredients, Inc.

(“the Company,” and “MGP”) is a Kansas corporation headquartered in Atchison, Kansas and is a leading producer and supplier of premium distilled spirits and specialty wheat protein and starch food ingredients.

(“the Company,” and “MGP”) is a Kansas corporation headquartered in Atchison, Kansas and is a leading producer and supplier of premium distilled spirits, branded spirits and food ingredients.

Distilled spirits include premium bourbon and rye whiskeys and grain neutral spirits, including vodka and gin.

Our distilled spirits are either packaged and sold under our own brands to distributors, sold, directly or indirectly, to manufacturers of other branded spirits, or direct to consumer.

MGP is also a top producer of high quality industrial alcohol for use in both food and non-food applications.

The Company’s protein and starch food ingredients provide a host of functional, nutritional, and sensory benefits for a wide range of food products to serve the packaged goods industry.

The Company’s distillery products are derived from corn and other grains (including rye, barley, wheat, barley malt, and milo), and its ingredient products are derived from wheat flour.

The majority of the Company’s sales are made directly, or through distributors, to manufacturers and processors of finished packaged goods or to bakeries.

Our industrial alcohol and ingredients products are sold directly, or through distributors, to manufacturers and processors of finished packaged goods or to bakeries.

The Company’s distillery products are derived from corn and other grains (including rye, barley, wheat, barley malt, and milo), and its ingredient products are derived, primarily from wheat flour.

On April 1, 2021, the Company acquired Luxco, Inc.

and its affiliated companies (“Luxco”, or “Luxco Companies”) which is a leading branded beverage alcohol company across various categories, with a more than 60-year business heritage.

Luxco’s operations predominately involve the producing, importing, bottling and rectifying of distilled spirits.

See Note 3, Business Combination, for further details.

As a result of the merger with Luxco, during the quarter ended June 30, 2021, the Company established a new reportable segment structure that separates Branded Spirits from the Distillery Products segment.

The Ingredient Solutions segment remains unchanged.

The new segment presentation reflects how management is now operating the business and making resource allocations.

The Company now reports three operating segments:

Distillery Products, Branded Spirits and Ingredient Solutions.

Certain amounts in the 2020 consolidated financial statements have been reclassified to conform to the 2021 presentation and prior periods have been revised to reflect the new operating segment structure.

Basis of Presentation and Principles of Consolidation.

1 unchanged sentence

All significant intercompany balances and transactions have been eliminated in consolidation.

These unaudited condensed consolidated financial statements as of and for the quarter ended March 31, 2021, should be read in conjunction with the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission (“SEC”).

These unaudited condensed consolidated financial statements as of and for the quarter ended June 30, 2021, should be read in conjunction with the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission (“SEC”).

The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

2 unchanged sentences

Pursuant to the rules and regulations of the SEC, certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted.

The Company holds 60 percent interest in Dos Primos Tequila, LLC (“Dos Primos”).

The Company consolidated Dos Primos activity on the financial statements and backs out the 40 percent non-controlling interest portion on a separate line.

Use of Estimates.

3 unchanged sentences

For all of these policies, management cautions that future events rarely develop as forecast, and estimates routinely require adjustment and may require material adjustment.

Inventory includes finished goods, raw materials in the form of agricultural commodities used in the production process and certain maintenance and repair items.

Bourbon and whiskeys are normally aged in barrels for several years, following industry practice;

Inventory includes finished goods, raw materials in the form of agricultural commodities used in the production process as well as bottles, caps, and labels used in the bottling process and certain maintenance and repair items.

whiskeys are normally aged in barrels for several years, following industry practice;

all barreled bourbon and whiskey is classified as a current asset.

3 unchanged sentences

Inventory consists of the following:

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Finished goods $ 47,500 $ 16,414

8 unchanged sentences

The term between invoicing and when payment is due is not significant and the period between when the entity transfers the promised good or service to the customer and when the customer pays for that good or service is one year or less.

Excise taxes that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer are excluded from revenue.

Revenue is recognized for the sale of products at the point in time finished products are delivered to the customer in accordance with shipping terms.

This is a faithful depiction of the satisfaction of the performance obligation because, at the point control passes to the customer, the customer has legal title and the risk and rewards of ownership have transferred, and the customer has present obligation to pay.

For certain international customers, deposits are required in advance of shipment.

These deposits are reported as contract liabilities until control passes to the customer and revenue is recognized.

The Company’s Distillery Products segment routinely enters into bill and hold arrangements, whereby the Company produces and sells aged and unaged distillate to customers, and the product is barreled at the customer’s request and warehoused at a Company location for an extended period of time in accordance with directions received from the Company’s customers.

7 unchanged sentences

The performance of the service activities, as requested, is invoiced as satisfied and revenue is concurrently recognized.

Excise Taxes.

The Company is responsible for compliance with the Alcohol and Tobacco Tax and Trade Bureau

Treasury Department (the “TTB”) regulations which includes making timely and accurate excise tax payments.

The Company is subject to periodic compliance audits by the TTB.

Individual states also impose excise taxes on alcohol beverages in varying amounts.

The Company calculates its Federal and state excise tax expense based upon units shipped and on its understanding of the applicable excise tax laws .

Excise taxes that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer are excluded from revenue.

Recognition of Insurance Recoveries.

1 unchanged sentence

Insurance recoveries are not recognized until all contingencies related to the insurance claim have been resolved and settlement has been reached with the insurer.

Insurance recoveries, to the extent of costs and losses, are reported as a reduction to costs on the Consolidated Statements of Income.

Insurance recoveries, in excess of costs and losses, if any, would be reported as a separate caption in Operating income on the Consolidated Statements of Income.

Legally committed recovery amounts obtained prior to contingencies being resolved are recorded in Accrued expenses and other on the Consolidated Balance Sheets.

Insurance recoveries, to the extent of costs and losses, are reported as a reduction to costs on the Condensed Consolidated Statements of Income.

Insurance recoveries, in

excess of costs and losses, if any, would be reported as a separate caption in Operating income on the Condensed Consolidated Statements of Income.

Legally committed recovery amounts obtained prior to contingencies being resolved are recorded in Accrued expenses and other on the Condensed Consolidated Balance Sheets.

Income Taxes.

2 unchanged sentences

Earnings Per Share (“EPS”).

Basic and diluted EPS are computed using the two-class method, which is an earnings allocation formula that determines net income per share for each class of Common Stock and participating security according to

dividends declared and participation rights in undistributed earnings.

Per share amounts are computed by dividing net income attributable to common shareholders by the weighted average shares outstanding during each year during the period.

Translation of Foreign Currencies.

Assets and liabilities of Niche Drinks Co., Ltd.

(“Niche”), a wholly-owned subsidiary of the Company whose functional currency is the British pound sterling, are translated to U.S.

dollars using the exchange rate in effect at the condensed consolidated balance sheet date.

Results of operations are translated using average rates during the period.

Adjustments resulting from the translation process are included as a component of Accumulated other comprehensive income .

Business Combinations.

3 unchanged sentences

During the measurement period, which can be up to one year after the acquisition date, the Company can make adjustments to the fair value of the assets acquired and liabilities assumed, with the offset being an adjustment to goodwill.

Goodwill and Other Intangible Assets.

Goodwill and Indefinite-Lived Intangible Assets.

The Company records goodwill and other indefinite-lived intangible assets in connection with various acquisitions of businesses and allocates the goodwill and other indefinite-lived intangible assets to its respective reporting units.

The Company tests goodwill for impairment at least annually, in the fourth quarter, or on an interim basis if events and circumstances occur that would indicate it is more likely than not that the fair value of a reporting unit is less than the carrying value.

To the extent that the carrying amount exceeds fair value, an impairment of goodwill is recognized and allocated to the reporting units.

The Company evaluates goodwill for impairment at least annually, in the fourth quarter, or on an interim basis if events and circumstances occur that would indicate it is more likely than not that the fair value of a reporting unit is less than the carrying value.

To the extent that the carrying amount exceeds fair value, an impairment of goodwill is recognized.

Judgment is required in the determination of reporting units, the assignment of assets and liabilities to reporting units, including goodwill, and the determination of fair value of the reporting units.

The fair value of the reporting units was estimated using third party independent appraisals.

The Company separately evaluates indefinite-lived intangible assets for impairment.

As of March 31, 2021, the Company determined that goodwill and indefinite lived intangible assets were not impaired.

As of June 30, 2021, the Company determined that goodwill and indefinite-lived intangible assets were not impaired.

Fair Value of Financial Instruments.

11 unchanged sentences

The fair value of the Company’s debt is estimated based on current market interest rates for debt with similar maturities and credit quality.

The fair value of the Company’s debt was $ 44,364 and $ 44,548 at March 31, 2021 and December 31, 2020, respectively.

The financial statement carrying value of total debt was $ 39,876 (including unamortized loan fees) and $ 39,871 (including unamortized loan fees) at March 31, 2021 and December 31, 2020, respectively.

The fair value of the Company’s debt was $ 276,919 and $ 44,548 at June 30, 2021 and December 31, 2020, respectively.

The financial statement carrying value of total debt was $ 270,391 (including unamortized loan fees) and $ 39,871 (including unamortized loan fees) at June 30, 2021 and December 31, 2020, respectively.

These fair values are considered Level 2 under the fair value hierarchy.

Fair value disclosure for deferred compensation plan investments is included in Note 9.

Equity Method Investments.

The condensed consolidated financial statements include the results of Luxco and its affiliated companies since April 1, 2021, when the Company obtained control through the Merger.

The Company holds 50 percent interests in DGL Destiladores, S.de R.L.

(“DGL”) and Agricola LG, S.de R.L.

(“Agricola”) (combined “LMX”), which are accounted for as equity method investments since the date of acquisition.

At June 30, 2021, the investment in LMX was $ 5,739 , which is recorded in Investment in joint ventures on the Condensed Consolidated Balance Sheet.

During the quarter and year to date ended June 30, 2021, the Company recorded a $ 334 loss from our equity method investments, which is recorded in Other income (loss), net on the Condensed Consolidated Statement of Income.

Recently Adopted Accounting Standard Updates.

The Company did not adopt any new Accounting Standard Updates during the quarter ended March 31, 2021 .

The Company did not adopt any new Accounting Standard Updates during the quarter ended June 30, 2021 .

The Company generates revenues from the Distillery Products segment by the sale of products and by providing warehouse services related to the storage and aging of customer products.

The Company generates revenues from the Ingredient Solutions segment by the sale of products.

The Company generates revenues from the Branded Spirits and Ingredient Solutions segments by the sale of products.

Revenue related to sales of products is recognized at a point in time whereas revenue generated from warehouse services is recognized over time.

1 unchanged sentence

The following table presents the Company’s sales by segment and major products and services:

Quarter Ended March 31,

Quarter Ended June 30, Year to Date Ended June 30,

2021 2020 2021 2020

Distillery Products

8 unchanged sentences

Total Distillery Products 90,348 74,805 178,972 154,319

Branded Spirits

Ultra premium 10,093 320 10,574 684

Premium 6,301 47 6,383 171

Mid 17,786 — 17,786 —

Value 20,944 — 20,944 —

Other 5,302 17 5,309 17

Total Branded Spirits 60,426 384 60,996 872

Ingredient Solutions

5 unchanged sentences

Total sales $ 174,939 $ 92,560 $ 283,262 $ 191,642

Business Acquisition

On January 22, 2021, the Company entered into a definitive agreement to acquire Luxco, Inc.

and its affiliated companies (“Luxco”, or “Luxco Companies”), and subsequently completed the merger on April 1, 2021.

Business Combination

Description of the transaction .

On January 22, 2021, the Company entered into a definitive agreement to acquire Luxco, and subsequently completed the merger on April 1, 2021 (the “Merger”).

Luxco is a leading branded beverage alcohol company across various categories, with a more than 60-year business heritage.

As a result of the Luxco acquisition, MGP expects to increase its scale and market position in the branded-spirits sector and strengthen its platform for future growth of higher valued-added products.

Following the merger, the Luxco Companies became wholly-owned subsidiaries of the Company.

As a result of the Merger, MGP increased its scale and market position in the branded-spirits sector and believes it strengthened its platform for future growth of higher valued-added products.

Following the Merger, the Luxco Companies became wholly-owned subsidiaries of MGP and are included within the Branded Spirits segment.

The aggregate consideration paid by the Company in connection with the Merger was $ 237,500 in cash (less assumed indebtedness) and 5,007,833 shares of common stock of the Company, subject to adjustment for fractional shares (the “Company Shares,” and together with the cash portion, the “Merger Consideration”).

The Company Shares were valued at $ 296,213 and represent approximately 22.8 percent of the Company’s outstanding common stock immediately following the closing of the merger.

The Merger Consideration is subject to customary purchase price adjustments, including working capital, which adjustments are anticipated to be paid in cash.

The cash portion of the Merger Consideration, the repayment of assumed debt, and transaction-related expenses were financed with a $ 242,300 borrowing under the Credit Agreement which was drawn down on April 1, 2021.

For tax purposes, the transaction is structured partially as a tax-free reorganization and partially as a taxable acquisition, as defined in the Internal Revenue Code.

The Company Shares were valued at $ 296,213 and represented approximately 22.8 percent of the Company’s outstanding common stock immediately following the closing of the Merger.

The Merger Consideration is subject to customary purchase price adjustments, including working capital, a portion of which may be paid in common stock.

The preliminary Merger Consideration will increase or decrease to the extent that actual closing date working capital exceeds or is less than the contractually agreed upon working capital target.

In addition, the preliminary Merger Consideration will be increased for any acquired cash.

In connection with the closing of the Merger on April 1, 2021, the preliminary purchase price adjustments increased the cash consideration paid by approximately $ 75 and increased stock consideration by approximately $ 159 .

The cash portion of the Merger Consideration, the repayment of assumed debt, and transaction-related expenses were financed with borrowings under the Company’s existing Credit Agreement which was drawn down on April 1, 2021.

See Note 5, Corporate Borrowings, for further details.

For tax purposes, the transaction was structured partially as a tax-free reorganization and partially as a taxable acquisition, as defined in the Internal Revenue Code.

The Company anticipates the amount transferred in a tax deferred manner, under the tax-free reorganization rules, will not create additional tax basis for the Company.

The taxable component of the transaction will create additional tax basis and a corresponding future tax deduction for the Company.

The Company is currently evaluating the potential effect of this acquisition on its tax profile.

MGP does not expect the transaction to have a material effect on the Company’s estimates related to the use of the Company’s existing deferred tax assets or its estimates related to its existing unrecognized tax benefits based on the information available to date.

Due to the limited time since the acquisition date and the size and complexity of the transaction, the business combination accounting is still in progress.

The Company is currently in the process of finalizing the accounting for this transaction and expects to have preliminary allocation of the purchase consideration to the assets acquired and liabilities assumed by the end of the second quarter of 2021.

We expect that this will result in goodwill and intangibles as well as other tangibles assets such as accounts receivable, inventories and property, plant and equipment.

The major classes of liabilities assumed include accounts payable, accrued expenses and other long-term liabilities.

We are currently in the process of determining the fair values of the acquired assets and assumed liabilities with the assistance of a third party specialist.

During the quarter ended March 31, 2021, the Company has incurred $ 1,890 of transaction related costs, which are included in Selling, general and administrative expenses on the Condensed Consolidated Statements of Income.

Goodwill and Other Intangible Assets

The Merger was accounted for as a business combination in accordance with Accounting Standard Codification 805 “ASC 805”), Business Combinations, and as such, assets acquired, liabilities assumed, and consideration transferred were recorded at their estimated fair values on the acquisition date.

The fair value of the assets acquired and liabilities assumed are based upon a preliminary assessment of fair value and may change as valuations for certain tangible assets, intangible assets and contingent liabilities are finalized and the associated income tax impacts are determined.

The Company expects to finalize the purchase price allocation as soon as practicable, but no longer than one year from the acquisition date.

Purchase Price Allocation.

The following table summarizes the preliminary allocation of the consideration paid for Luxco to the preliminary estimated fair value of the assets acquired and liabilities assumed at the acquisition date, with the excess recorded to goodwill.

Consideration:

Cash, net of assumed debt $ 150,078

Value of MGP Common Stock issued at close (a)

Fair value of total consideration transferred $ 446,450

Recognized amounts of identifiable assets acquired and liabilities assumed:

Receivables 29,675

Inventory 90,854

Prepaid expenses 1,454

Property, plant and equipment, net 41,279

Investments in joint ventures 5,085

Intangible assets (b)

Other assets 4,257

Total assets 392,583

Current maturities of long-term debt (c)

Accounts payable 14,453

Federal and state liquor taxes payable 8,352

Accrued expenses and other 2,832

Other noncurrent liabilities 784

Deferred income taxes 57,720

Total liabilities 171,638

Goodwill 225,505

Total $ 446,450

(a) The Company issued 5,007,833 shares of MGP Common Stock which was valued at $ 59.15 per share on April 1, 2021.

The value of MGP Common Stock includes the preliminary working capital adjustment of $ 159 .

(b) Intangible assets acquired includes trade names with an estimated fair value of $ 178,100 and distributor relationships with an estimated fair value of $ 41,400 .

In accordance with ASC 805 assets acquired, liabilities assumed, and consideration transferred were recorded at their estimated fair values on the acquisition date.

The fair value measurements of tangible and intangible assets and liabilities were based on significant inputs not observable in the market and represent Level 3 measurements within the fair value hierarchy.

Level 3 inputs include discount rates that would be used by a market participant in valuing these assets and liabilities, projections of revenues and cash flows, distributor attrition rates, royalty rates and market comparable, among others.

The fair value of work-in-process and finished goods inventory was determined using the comparative sales method and raw materials was determined using the replacement cost method.

Goodwill of $ 225,505 represents the excess of the consideration transferred over the estimated fair value of assets acquired net of liabilities assumed.

No Goodwill is expected to be deductible for tax purposes.

The Intangible assets acquired includes indefinite-lived intangible assets, trade names, with an estimated fair value of $ 178,100 and definite-lived intangible assets, distributor relationships, with an estimated fair value of $ 41,400 and a useful life of 20 years.

The trade names and distributor relationships acquired by the Company have been adjusted to the estimated fair values using the relief from royalty method and multi-period earnings method, respectively.

Management and a third party valuation team performed a preliminarily valuation analysis to determine the fair value of each trade name and distributor relationship.

Operating Results .

The operating results of Luxco were consolidated with the Company’s operating results subsequent to the merger date.

During the quarter and year to date ended June 30, 2021, the Company recorded $ 59,298 of Sales and $ 6,520 of Income before income taxes, attributable to Luxco on it’s Condensed Consolidated Statement of Income.

During the quarter and year to date ended June 30, 2021, the Company has incurred $ 6,738 and $ 8,628 , respectively, of transaction related costs, which are included in Selling, general and administrative expenses on the Condensed Consolidated Statements of Income.

Pro Forma Information .

The following table summarizes the unaudited pro forma financial results for the quarter and year to date ended June 30, 2021 and 2020, as if the Merger had occurred on January 1, 2020:

Pro Forma Financial Information

Quarter Ended June 30, Year to Date Ended June 30,

2021 2020 2021 2020

Sales $ 174,939 $ 141,686 $ 349,461 $ 289,894

Net income 28,124 12,589 34,419 15,990

Basic and diluted earnings per share 1.28 0.57 1.56 0.72

The pro forma results are adjusted for items that are non-recurring in nature and directly attributable to the Merger, including the income tax effect of the adjustments.

Merger related costs incurred by the Company of $ 6,738 and $ 8,628 for the quarter and year to date ended June 30, 2021, respectively, were excluded and $ 6,738 is assumed to have been incurred on January 1, 2020.

Merger related costs incurred by Luxco of $ 3,132 were excluded from the year to date ended June 30, 2021 pro forma results.

A non-recurring expense of $ 2,529 for the quarter and year to date ended June 30, 2021 related to the fair value adjustment of finished goods inventory estimated to have been sold was removed and included in the results for the year to date ended June 30, 2020.

Other acquired tangible and intangible assets are assumed to be recorded at estimated fair value on January 1, 2020 and are amortized or depreciated over their estimated useful lives.

The summary pro forma financial information is for informational purposes only, is based on estimates and assumptions, and does not purport to represent what the Company’s consolidated results of operations actually would have been if the Merger had occurred at an earlier date, and such data does not purport to project the Company’s results of operations for any future period.

The basic and diluted shares outstanding used to calculate the pro forma net income per share amounts presented above have been adjusted to assume shares issued at the closing of the Merger were outstanding since January 1, 2020.

Goodwill and Intangible Assets

Definite-Lived Intangible Assets

The Company has a definite-lived intangible asset which was acquired as a result of the Merger.

The distributor relationships have a carrying value of $ 40,882 , net of accumulated amortization of $ 518 .

The distributor relationships have a useful life of 20 years.

The amortization expense for the quarter and year to date ended June 30, 2021 was $ 518 .

As of June 30, 2021, the expected future amortization expense related to definite-lived intangibles assets are as follows:

Remainder of 2021 $ 1,035

Thereafter 31,567

Total $ 40,882

Goodwill and Indefinite-Lived Intangible Assets

The Company records goodwill and indefinite-lived intangible assets in connection with various acquisitions of businesses and allocates the goodwill and indefinite-lived intangible assets to its respective reporting units.

Goodwill and indefinite-lived intangible assets are included in Other assets on the Condensed Consolidated Balance Sheets.

Changes in carrying amount of goodwill and indefinite-lived intangible assets by business segment were as follows:

Distillery Products (a)

Ingredient Solutions Total (a)

Changes in carrying amount of goodwill by business segment were as follows:

Distillery Products Branded Spirits Ingredient Solutions Total

Balance, December 31, 2020

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Acquisitions — 225,505 — 225,505

Balance, March 31, 2021

Balance, June 30, 2021

$ — $ 228,243 $ — $ 228,243

(a) Includes $ 890 of trade names at March 31, 2021 and December 31, 2020.

Trade names are considered indefinite-lived intangible assets.

Changes in carrying amount of trade name intangible assets by business segment were as follows:

Distillery Products Branded Spirits Ingredient Solutions Total

Balance, December 31, 2020

$ — $ 890 $ — $ 890

Acquisitions — 178,100 — 178,100

Balance, June 30, 2021

$ — $ 178,990 $ — $ 178,990

Corporate Borrowings

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Description (a)

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Credit Agreement - Revolver, 1.09 % (variable rate) due 2025

$ 232,000 $ —

Prudential Note Purchase Agreement, 3.53 % (fixed rate) due 2027

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20,000 20,000

Other long-term borrowings 216 —

Total indebtedness outstanding 272,216 40,000

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Long-term debt and Credit Agreement - Revolver $ 267,164 $ 38,271

(a) Interest rates are as of March 31, 2021.

(a) Interest rates are as of June 30, 2021.

(b) Loan fees are being amortized over the life of the Credit Agreement and Note Purchase Agreement.

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On February 14, 2020, the Company entered into a credit agreement (the “Credit Agreement”) with multiple participants led by Wells Fargo Bank, National Association (“Wells Fargo Bank”) that matures on February 14, 2025.

The Credit Agreement provides for a $ 300,000 revolving credit facility.

The Company may increase the facility from time to time by an aggregate principal amount of up to $ 100,000 provided certain conditions are satisfied and at the discretion of the lenders.

The Credit Agreement includes certain requirements and covenants, which the Company was in compliance with at March 31, 2021.

As of March 31, 2021, the Company had no outstanding borrowings under the Credit Agreement leaving $ 300,000 available.

The Credit Agreement provided for a $ 300,000 revolving credit facility.

On May 14, 2021, the Credit Agreement was amended to increase the principal amount to $ 400,000 and to increase the amount of the revolving credit facility by up to an additional $ 100,000 .

The Company incurred $ 666 new loan fees related to the Credit Agreement during 2021.

The Credit Agreement includes certain requirements and covenants, which the Company was in compliance with at June 30, 2021.

As of June 30, 2021, the Company had $ 232,000 outstanding borrowings under the Credit Agreement leaving $ 168,000 available.

The cash portion of the Merger Consideration, the repayment of assumed debt, and transaction-related expenses were financed with $ 242,300 borrowings under the Credit Agreement which was drawn down on April 1, 2021.

Note Purchase Agreements.

The Company’s Note Purchase and Private Shelf Agreement (the “Note Purchase Agreement”), as amended by the First Amendment to Private Shelf Agreement as of February 14, 2020 and the Second Amendment to Private Shelf Agreement as of September 30, 2020, with PGIM, Inc., an affiliate of Prudential Financial, Inc., and certain affiliates of PGIM, Inc., provides for the issuance of up to $ 105,000 of Senior Secured Notes and issuance of $ 20,000 of Senior Secured Notes.

The Company’s Note Purchase and Private Shelf Agreement (the “Note Purchase Agreement”), as amended by the First Amendment to Private Shelf Agreement as of February 14, 2020, the Second Amendment to Private Shelf Agreement as of September 30, 2020, the Third Amendment to Private Shelf Agreement as of January 25, 2021, and the Fourth Amendment to Private Shelf Agreement as of May 14, 2021, with PGIM, Inc., an affiliate of Prudential Financial, Inc., and certain affiliates of PGIM, Inc., provides for the issuance of up to $ 105,000 of Senior Secured Notes (or any higher amount solely to the extent PGIM, Inc.

has provided written notice to the Company of its authorization of such a higher amount) and issuance of $ 20,000 of Senior Secured Notes.

The deadline for issuing the notes under the shelf facility is August 23, 2023.

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During 2019, the Company issued $ 20,000 of additional Senior Secured Notes with a maturity date of April 30, 2029.

The Note Purchase Agreement includes certain requirements and covenants, which the Company was in compliance with at March 31, 2021.

The Note Purchase Agreement includes certain requirements and covenants, which the Company was in compliance with at June 30, 2021.

Other long-term borrowings.

As part of the Merger, the Company acquired additional long-term notes payable to certain counties in Kentucky.

The Company’s tax provision for interim periods is determined using an estimated annual effective tax rate, adjusted for discrete items arising in that quarter.

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The Company’s quarterly effective tax rate can be subject to significant change due to the effect of discrete items arising in a given quarter.

Income tax expense for the quarter ended March 31, 2021, was $ 4,615 for an effective tax rate of 23.0 percent.

The effective tax rate differed from the 21 percent federal statutory rate on pretax income, primarily due to state taxes, nondeductible transaction costs, partially offset by state and federal tax credits and the deduction applicable to income derived from export activity.

Income tax expense for the quarter ended March 31, 2020, was $ 3,224 for an effective tax rate of 24.7 percent.

The effective tax rate differed from the 21 percent federal statutory rate on pretax income, primarily due to state income taxes, estimated increase in the Company’s valuation allowance related to state income attributes, and the discrete tax impact of vested share-based awards, partially offset by federal and state credits, and the deduction applicable to income derived from export activity.

Beginning in the second quarter of 2021, the estimated annual effective tax rate includes both domestic and foreign entities acquired in the Merger.

See Note 3, Business Combination, for further details.

Income tax expense for the quarter and year to date ended June 30, 2021, was $ 6,412 and $ 11,027 , respectively, for an effective tax rate of 24.2 percent and 23.7 percent, respectively.

The effective tax rate for quarter and year to date ended June 30, 2021, differed from the 21 percent federal statutory rate on pretax income, primarily due to state taxes, income taxes on foreign subsidiaries acquired as a result of the Merger, nondeductible transaction costs, and a change in accounting estimate related to the Company’s state tax credits.

The increase in the estimated annual effective tax rate was partially offset by state and federal credits, including income taxes on foreign subsidiaries acquired as a result of the Merger, the deduction applicable to export activity, and a change related to the Company’s valuation allowance related to the ability to use certain state net operating losses carryforward.

Income tax expense for the quarter and year to date ended June 30, 2020, was $ 2,550 and $ 5,774 , respectively, for an effective tax rate of 23.1 percent and 24.0 percent, respectively.

The effective tax rate for the quarter ended June 30, 2020 differed from the 21 percent federal statutory rate on pretax income, primarily due to state income taxes, partially offset by state and federal tax credits and the deduction applicable to export activity.

The effective tax rate for the year to date ended June 30, 2020, differed from the 21 percent federal statutory rate on pretax income, primarily due to state taxes, estimated increase in the Company’s valuation allowance related to state income tax attributes, and the discrete tax impact of vested share-based awards, partially offset by federal and state credits, the deduction applicable to income derived from export activity.

Equity and EPS

The computations of basic and diluted EPS:

Quarter Ended March 31,

Quarter Ended June 30, Year to Date Ended June 30,

2021 2020 2021 2020

Net income (a)

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Income attributable to participating securities (b)

Net income attributable to common shareholders $ 15,281 $ 9,776

150 57 299 123

net loss attributable to noncontrolling interest ( 76 ) — ( 76 ) —

Net income attributable to MGP Ingredients, Inc.

$ 19,985 $ 8,433 $ 35,263 $ 18,209

Share information:

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(a) Net income attributable to all shareholders.

(b) Participating securities included 162,496 and 116,127 unvested restricted stock units (“RSUs”), at March 31, 2021 and 2020, respectively.

(c) Under the two-class method, basic and diluted weighted average common shares at March 31, 2021 and 2020 exclude unvested participating securities.

(b) Participating securities included 166,674 and 116,127 unvested restricted stock units (“RSUs”), at June 30, 2021 and 2020, respectively.

(c) Under the two-class method, basic and diluted weighted average common shares at June 30, 2021 and 2020 exclude unvested participating securities.

Share Issuance.

On April 1, 2021, as part of the consideration for the Merger, the Company issued 5,007,833 shares of common stock.

The shares issued represented approximately 22.8 percent of the Company’s outstanding stock immediately following the closing of the Merger.

Share Repurchase.

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This share repurchase program may be modified, suspended, or terminated by the Company at any time without prior notice.

The Company did no t repurchase any shares during the quarter ended March 31, 2021 and has $ 20,947 remaining under the share repurchase plan.

During the quarter ended March 31, 2020, the Company repurchased approximately 159,104 shares of MGP Common Stock for $ 4,053 .

The Company did no t repurchase any shares during the year to date ended June 30, 2021 and has $ 20,947 remaining under the share repurchase plan.

During the year to date ended June 30, 2020, the Company repurchased approximately 159,104 shares of MGP Common Stock for $ 4,053 .

The Common Stock share activity:

Shares Outstanding

Capital Stock Preferred Common Stock

Balance, December 31, 2021 437 16,915,862

Issuance of Common Stock — 35,114

Repurchase of Common Stock (a)

Balance, March 31, 2021 437 16,940,600

Issuance of Common Stock — 5,022,122

Repurchase of Common Stock (a)

Balance, June 30, 2021 437 21,961,233

Shares Outstanding

Capital Stock Preferred Common Stock

Balance, December 31, 2020 437 17,028,125

Issuance of Common Stock — 36,545

Repurchase of Common Stock (b)

— ( 169,148 )

Balance, March 31, 2020 437 16,895,522

Issuance of Common Stock — —

Repurchase of Common Stock (a)

Balance, June 30, 2020 437 16,895,522

(a) The Common Stock repurchases were for tax withholding on equity based compensation

(b) 159,104 shares that were repurchased during the quarter ended March 31, 2020 related to the share repurchase program.

The remaining shares repurchased were related to tax withholding on equity based compensation

Commitments and Contingencies

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The Company accrues estimated costs for a contingency when management believes that a loss is probable and can be reasonably estimated.

Feed Dryer Fire.

Dryer Fire Incident.

During November 2020, the Company experienced a fire at the Atchison facility.

The fire damaged certain equipment in the facility’s feed drying operations and caused temporary loss of production time.

During the quarter ended March 31 2021, the Company received a legally binding commitment from their insurance carrier of $ 8,700 that was recorded as Receivables on the Consolidated Balance Sheet and recorded a $ 3,610 partial settlement from its insurance carrier as a reduction of Cost of sales.

Recorded within Accrued expenses and other on the Consolidated Balance Sheet is $ 5,090 related to legally committed insurance recovery amounts obtained prior to contingencies related to the insurance claim being resolved.

At June 30, 2021, the Company received a legally binding commitment from their insurance carrier of $ 11,300 that was recorded as Receivables on the Condensed Consolidated Balance Sheet.

During the quarter and year to date ended June 30, 2021, the Company recorded $ 6,230 and $ 9,840 , respectively, of partial settlement from its insurance carrier as a reduction of Cost of sales.

At June 30, 2021, recorded within Accrued expenses and other on the Condensed Consolidated Balance Sheet is $ 11,400 related to legally committed insurance recovery amounts obtained prior to contingencies related to the insurance claim being resolved.

The Company is working to construct a replacement drying system.

The Company’s insurance is expected to provide coverage of any business interruption and other losses from damage to property, plant and equipment, but there can be no assurance to the amount or timing of possible insurance recoveries if ultimately claimed by the Company.

The Company’s insurance is expected to provide coverage of any business interruption and other losses from damage to property, plant and equipment, but there can be no assurance to the

amount or timing of possible insurance recoveries if ultimately claimed by the Company.

Ransomware Cyber-Attack.

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The Company’s financial information was not affected and there is no evidence that any sensitive or confidential company, supplier, customer or employee data was improperly accessed or extracted from our network.

The Company has insurance related to this event and currently evaluating if it will seek further recovery.

The Company has insurance related to this event and is currently evaluating if it will seek further recovery.

Following the attack, MGP implemented a variety of measures to further enhance our cybersecurity protections and minimize the impact of any future attack.

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On November 3, 2020, the court entered an order providing that Defendants’ response to the Carter Complaint shall be due 14 days after a ruling on the Motion to Dismiss filed in Dorfman.

plaintiff’s state claims, and stayed the case pending the Kansas Supreme Court’s decision in Herington v.

On March 31, 2021, the Dorfman court issued a Memorandum and Order in which it granted defendants’ Motion to Dismiss plaintiff’s federal claims, dismissed those claims without prejudice, denied without prejudice defendants’ Motion to Dismiss plaintiff’s state claims, and stayed the case pending the Kansas Supreme Court’s decision in Herington v.

City of Wichita.

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On November 25, 2020, Kenneth Laury filed an action in the District Court of Shawnee County, Kansas under the caption Laury v.

MGP Ingredients., Case Number:

MGP Ingredients, Inc., Case Number:

2020-CV-000609.

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On January 8, 2021, the Company filed an answer to the Petition, denying that plaintiff has satisfied the statutory requirements for his demand.

On February 25, 2021 and March 15, 2021, the court entered Orders under which discovery is to close on May 14, 2021 and a pretrial conference is scheduled for May 18, 2021.

On May 13, 2021, the parties stipulated to the voluntary dismissal, with prejudice, of the action.

2016 Atchison Chemical Release.

A chemical release occurred at the Company’s Atchison facility on October 21, 2016, which resulted in emissions venting into the air (“the Atchison Chemical Release”).

Private plaintiffs have also initiated, and additional private plaintiffs may initiate, legal proceedings for damages resulting from the Atchison Chemical Release, but the Company is currently unable to reasonably estimate the amount of any such damages that might result.

The Company’s insurance is expected to provide coverage of any damages to private plaintiffs, subject to a deductible of $ 250 , but certain regulatory fines or penalties may not be covered and there can be no assurance to the amount or timing of possible insurance recoveries if ultimately claimed by the Company.

Private plaintiffs have initiated, and additional private plaintiffs may initiate, legal proceedings for damages resulting from the Atchison Chemical Release, but the Company is currently unable to reasonably estimate the amount of any such damages that might result.

The Company’s insurance is expected to provide coverage of any damages to private plaintiffs, subject to a deductible, but there can be no assurance to the amount or timing of possible insurance recoveries if ultimately claimed by the Company.

Employee and Non-Employee Benefit Plans

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the Employee Equity Incentive Plan of 2014 (the “2014 Plan”) and the Non-Employee Director Equity Incentive Plan (the “Directors’ Plan”).

As of March 31, 2021, 507,549 RSUs had been granted of the 1,500,000 shares approved under the 2014 Plan, and 110,505 shares had been granted of the 300,000 shares approved under the Directors’ Plan.

As of March 31, 2021, there were 170,336 unvested RSUs under the Company’s long-term incentive plans and 162,496 were participating securities (Note 7).

As of June 30, 2021, 516,861 RSUs had been granted of the 1,500,000 shares approved under the 2014 Plan, and 120,619 shares had been granted of the 300,000 shares approved under the Directors’ Plan.

As of June 30, 2021, there were 171,824 unvested RSUs under the Company’s long-term incentive plans and 166,674 were participating securities (Note 7).

Deferred Compensation Plan.

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The Company’s obligations under this plan will change in conjunction with the performance of the participants’ investments, along with contributions to and withdrawals from the plan.

Realized and unrealized gains (losses) on deferred compensation plan investments were included as a component of Interest expense, net and other on the Company’s Condensed Consolidated Statements of Income for the quarter ended March 31, 2021.

For quarter ended March 31, 2021, the Company had a gain on deferred compensation plan investments of $ 30 .

For quarter ended March 31, 2020, the Company had a loss on deferred compensation plan investments of $ 164 .

Realized and unrealized gains (losses) on deferred compensation plan investments were included as a component of Other income (loss), net on the Company’s Condensed Consolidated Statements of Income for the quarter and year to date ended June 30, 2021.

For quarter and year to date ended June 30, 2021, the Company had a gain on deferred compensation plan investments of $ 246 and $ 276 , respectively.

For quarter and year to date ended June 30, 2020, the Company had a gain on deferred compensation plan investments of $ 331 and $ 167 , respectively.

Plan investments are classified as Level 1 in the fair value hierarchy since the investments trade with sufficient frequency and volume to enable the Company to obtain pricing information on an ongoing basis.

2 unchanged sentences

STI plan deferral were deposited, at the time of payment, into the EDC Plan by the Company and allocated by participants among Company-determined investment options.

At March 31, 2021 and December 31, 2020, the EDC Plan investments were $ 3,299 and $ 2,007 , respectively, which were recorded in Other assets on the Company’s Condensed Consolidated Balance Sheets.

The EDC Plan current liabilities were $ 483 at March 31, 2021 and were included in Accrued expenses and other on the Company’s Condensed Consolidated Balance Sheet.

The EDC Plan non-current liabilities were $ 2,890 and $ 3,140 at March 31, 2021 and December 31, 2020, respectively, and were included in Other noncurrent liabilities on the Company’s Condensed Consolidated Balance Sheets.

At June 30, 2021 and December 31, 2020, the EDC Plan investments were $ 3,558 and $ 2,007 , respectively, which were recorded in Other assets on the Company’s Condensed Consolidated Balance Sheets.

The EDC Plan current liabilities were $ 897 at June 30, 2021 and were included in Accrued expenses and other on the Company’s Condensed Consolidated Balance Sheet.

The EDC Plan non-current liabilities were $ 2,924 and $ 3,140 at June 30, 2021 and December 31, 2020, respectively, and were included in Other noncurrent liabilities on the Company’s Condensed Consolidated Balance Sheets.

Operating Segments

At March 31, 2021 and 2020, the Company had two segments:

Distillery Products and Ingredient Solutions.

As discussed in Note 1, the Company established a new reportable segment structure as a result of the Merger and prior periods have been revised to reflect the new operating segments.

At June 30, 2021, the Company had three segments:

Distillery Products, Branded Spirits, and Ingredient Solutions.

The Distillery Products segment consists of food grade alcohol and distillery co-products, such as distillers feed (commonly called dried distillers grain in the industry) and fuel grade alcohol.

The Distillery Products segment also includes warehouse services, including barrel put away, storage, retrieval, and blending services.

The Branded Spirits segment consists of producing, importing, bottling and rectifying of distilled spirits.

Ingredient Solutions segment consists of specialty starches and proteins and commodity starches and proteins.

1 unchanged sentence

Non-direct selling, general and administrative expenses, interest expense, other special charges, and other general miscellaneous expenses are excluded from segment operations and are classified as Corporate.

Receivables, inventories, and equipment have been identified with the segments to which they relate.

Receivables, inventories, property, plant and equipment, leases, goodwill and intangible assets have been identified with the segments to which they relate.

All other assets are considered as Corporate.

Quarter Ended March 31,

Quarter Ended June 30, Year to Date Ended June 30,

2021 2020 2021 2020

Sales to Customers

Distillery Products $ 90,348 $ 74,805 $ 178,972 $ 154,319

Branded Spirits 60,426 384 60,996 872

Ingredient Solutions 24,165 17,371 43,294 36,451

1 unchanged sentence

Distillery Products $ 31,985 $ 15,854 $ 60,230 $ 33,913

Branded Spirits 18,434 148 18,520 338

Ingredient Solutions 6,408 4,700 10,376 9,662

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Distillery Products $ 2,652 $ 2,417 $ 5,205 $ 4,808

Branded Spirits 1,709 30 1,738 40

Ingredient Solutions 481 469 956 922

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Distillery Products $ 31,315 $ 15,364 $ 58,178 $ 32,732

Branded Spirits 7,113 ( 930 ) 5,889 $ ( 2,065 )

Ingredient Solutions 5,735 4,099 8,907 8,313

2 unchanged sentences

The following table allocates assets to each segment as of:

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Identifiable Assets

Distillery Products $ 285,451 $ 281,721

Branded Spirits 644,763 6,348

Ingredient Solutions 41,324 41,276

2 unchanged sentences

Subsequent Events

Business Combination.

On April 1, 2021, the Company completed the acquisition of Luxco.

Luxco is a leading branded beverage alcohol company across various categories.

See Note 3, Business Acquisition for further details.

As a result of the acquisition of Luxco, the Company will report the Luxco brands in a new reporting segment:

Branded Spirits.

Beginning in the second quarter 2021, the Company will report three operating segments;

Distillery Products, Branded Spirits and Ingredient Solutions.

On May 3, 2021, the Company’s Board of Directors declared a quarterly dividend payable to stockholders of record as of May 21, 2021, of the Company’s Common Stock, and a dividend equivalent payable to holders of certain RSUs as of May 21, 2021, of $ 0.12 per share and per unit, payable on June 4, 2021.

On August 2, 2021, the Company’s Board of Directors declared a quarterly dividend payable to stockholders of record as of August 20, 2021, of the Company’s Common Stock, and a dividend equivalent payable to holders of certain RSUs as of August 20, 2021, of $ 0.12 per share and per unit, payable on September 3, 2021.

Note Purchase Agreements.

On July 29, 2021, PGIM, Inc.

(“Prudential”) provided the Company notice pursuant to Section 1.2 of the Note Purchase and Private Shelf Agreement dated as of August 23, 2017 (as amended by the First Amendment to Note Purchase and Private Shelf Agreement dated as of February 14, 2020, the Second Amendment to Note Purchase and Private Shelf Agreement dated as of September 30, 2020, the Third Amendment to Note Purchase and Private Shelf Agreement dated as of January 25, 2021, and the Fourth Amendment to Note Purchase and Private Shelf Agreement dated as of May 14, 2021, the “Note Agreement”) that Prudential has authorized an increase in the amount of the senior promissory notes that may be issued under the uncommitted shelf facility under the Note Agreement from $ 105,000 to $ 140,000 , effective as of July 29, 2021.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements