ATCHISON, KAS. — MGP Ingredients, Inc. sustained a loss of $42,716,000 in the second quarter ended Dec. 31, 2008, which compared with net income of $5,229,000, equal to 32c per share on the common stock, in the previous year’s second quarter, the company said Feb. 9 in a filing with the Securities and Exchange Commission. Second-quarter sales dropped to $73,242,000 from $93,995,000.

The net loss primarily was the result of higher cost of sales because of higher grain costs. A positive impact of discontinuing production of certain commodity starch and protein products at a Pekin, Ill., plant partially offset the higher cost of sales. MGPI also realized a gain of on the settlement of litigation, net of related expenses of $7.1 million in the second quarter.

Impairment and restructuring costs in the second quarter added up to $17,460,000. In October 2008 the company reported it was ceasing operations at its flour mill in Atchison. In November the company ceased protein and starch production operations at its Pekin, Ill., facility.

"We expect to see improved profitability because of these steps," MGPI said. "However, they also produce a current cost."

Second-quarter sales for Ingredient Solutions fell 10% to $22,455,000 from $24,963,000. Revenues for specialty ingredients, consisting of specialty proteins and specialty starches, increased by $615,000, or 4.8%. Decreased unit sales for vital wheat gluten primarily were related to the decision to cease gluten and starch production in Pekin.

Second-quarter sales for Distillery Products fell to $49,733,000 from $67,523,000.

For the first six months of the fiscal year, MGPI suffered a loss of $59,959,000, which compared with net income of $4,876,000, or 30c per share, in the same time period the previous year. Six-month sales fell to $172,262,000 from $181,972,000.