<SEC-DOCUMENT>0000950123-11-008334.txt : 20110328
<SEC-HEADER>0000950123-11-008334.hdr.sgml : 20110328
<ACCEPTANCE-DATETIME>20110202163246
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0000950123-11-008334
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20110202

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ARGAN INC
		CENTRAL INDEX KEY:			0000100591
		STANDARD INDUSTRIAL CLASSIFICATION:	CONSTRUCTION SPECIAL TRADE CONTRACTORS [1700]
		IRS NUMBER:				131947195
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0131

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		ONE CHURCH STREET SUITE 401
		CITY:			ROCKVILLE
		STATE:			MD
		ZIP:			20850
		BUSINESS PHONE:		301 315-0027

	MAIL ADDRESS:	
		STREET 1:		ONE CHURCH STREET SUITE 401
		CITY:			ROCKVILLE
		STATE:			MD
		ZIP:			20850

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PUROFLOW INC
		DATE OF NAME CHANGE:	19920703

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	ULTRA DYNAMICS CORP
		DATE OF NAME CHANGE:	19830522
</SEC-HEADER>
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<TYPE>CORRESP
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Argan, Inc.<br>
One Church Street<BR>
Suite&nbsp;201<BR>
Rockville, MD 20850<BR>
301-315-0027<BR>
fax 301-315-0064<BR>
www.arganinc.com



<P align="left" style="font-size: 10pt">February&nbsp;2, 2011


<P align="left" style="font-size: 10pt"><U><B>VIA EDGAR</B></U>
<BR>
Securities and Exchange Commission
<BR>
Division of Corporation Finance
<BR>
100 F Street, N.E.
<BR>
Washington, D.C. 20549


<P align="left" style="font-size: 10pt">Attention: John Cash, Accounting Branch Chief

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    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Re:</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Argan, Inc., File No.&nbsp;001-31756<BR>
Form&nbsp;10-K for the Fiscal Year Ended January&nbsp;31, 2010<BR>
Forms 10-Q for the Fiscal Quarters Ended April&nbsp;30, 2010, July&nbsp;31, 2010<BR>
and October&nbsp;31, 2010</B></TD>
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<P align="left" style="font-size: 10pt">Dear Mr.&nbsp;Cash:


<P align="left" style="font-size: 10pt">We are responding to your letter dated January&nbsp;24, 2011 (the &#147;Comment Letter&#148;) regarding Form 10-K for the fiscal year
ended January&nbsp;31, 2010 and Forms 10-Q for the fiscal quarters ended April&nbsp;30, 2010, July&nbsp;31, 2010 and October&nbsp;31, 2010
of Argan, Inc. (the &#147;Company&#148;). This letter responds to the sole comment and heading used in the Comment Letter issued
by the staff (the &#147;Staff&#148;) of the Securities and Exchange Commission (the &#147;Commission&#148;).


<P align="left" style="font-size: 10pt">Since Argan, Inc. and its management are in possession of all facts related to the Company&#146;s disclosures in the
documents identified above, we acknowledge that we are responsible for the accuracy and adequacy of the disclosures
that we have made.


<P align="left" style="font-size: 10pt">In responding to the Staff&#146;s comment regarding <U>Critical Accounting Policies</U>, page 38 in the Company&#146;s Form 10-K
for the fiscal year ended January&nbsp;31, 2010, the Company and its management acknowledge the following:


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    <TD width="1%">&nbsp;</TD>
    <TD>The Company is responsible for the adequacy and accuracy of the disclosure in the filing;</TD>
</TR>

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    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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</TD>
</TR>

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    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company may 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.</TD>
</TR>


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<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt; display: none">1
</DIV>

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<P align="left" style="font-size: 10pt">The Company&#146;s response to the Comment Letter is as follows:


<P align="left" style="font-size: 10pt"><U>Form&nbsp;10-K for the Fiscal Year Ended January&nbsp;31, 2010</U>
<BR>
<U>Critical Accounting Policies, page 38</U>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To the extent that any of your reporting units have estimated fair values that are not substantially in
excess of their carrying values and goodwill for such reporting units, in the aggregate or individually, if
impaired, could materially impact your results or total shareholders&#146; equity, please identify and provide the
following disclosures for each such reporting unit in future filings:</TD>
</TR>

</TABLE>


<P>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The percentage by which fair value exceeds carrying value as of the most recent step-one test.</TD>
</TR>

</TABLE>


<P>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The amount of goodwill allocated to the unit.</TD>
</TR>

</TABLE>


<P>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A description of the material assumptions that drive estimated fair value.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A discussion of any uncertainties associated with each key assumption.</TD>
</TR>

</TABLE>


<P>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A discussion of any potential events, trends and/or circumstances that could have a negative
effect on estimated fair value.</TD>
</TR>

</TABLE>

<P align="left" style="margin-left:6%; font-size: 10pt">If you have determined that estimated fair values substantially exceed the carrying values of your
reporting units, please disclose that determination in future filings. Refer to Item&nbsp;303 of Regulation
S-K.

<P align="left" style="margin-left:6%; font-size: 10pt"><B><I>Response</I></B>


<P>
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    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company reviews for impairment, at least annually, the carrying values of goodwill and other purchased
intangible assets deemed to have an indefinite life. The annual review performance date is November 1. The
Company does test for impairment of goodwill and other intangible assets with indefinite lives more frequently
if events or changes in circumstances indicate that an asset value might be impaired. As prescribed by current
accounting guidance, management determines whether goodwill has been impaired or not using a two-step process
of analysis. The first step of the Company&#146;s goodwill impairment testing process is to identify a potential
impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill.</TD>
</TR>

</TABLE>


<P>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>At November&nbsp;1, 2009, the Company&#146;s consolidated balance sheet included a goodwill balance of approximately
$18.4&nbsp;million, the entirety of which was established in connection with the Company&#146;s acquisition of Gemma
Power Systems, LLC and its affiliated companies (&#147;Gemma&#148;) in December&nbsp;2006. Gemma represents the Company&#146;s
power industry services segment.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Management utilized the assistance of a professional appraisal firm in the determination of the fair value of
Gemma. A variety of alternative valuation approaches were considered. As a result of the analysis, management
concluded that the market multiple valuation and the discounted cash flow analysis approaches were the most
appropriate valuation techniques for this exercise.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the market multiple valuation, a fair value estimate for Gemma was determined based on an evaluation of
the market values of a selected number of reasonably similar publicly traded companies. A separate estimate
was determined using a discounted cash flow analysis. Projected cash flows for Gemma were developed based on
Gemma&#146;s historical financial performance, a short-term projection of operating results based on the existing
backlog of current business and the assumed addition of certain identified future projects, and published
projected growth rates for the power construction industry. The projected cash flow amounts were discounted to
present value based on rates of return which were determined considering prevalent rates of return, business
risks for the industry and risks specifically related to Gemma. A 50/50 weighting was applied to the results
of the market multiple valuation and the discounted cash flow analysis of fair value in order to arrive at an
average amount considered the fair value of Gemma as of November&nbsp;1, 2009.</TD>
</TR>
</TABLE>

<P align="center" style="font-size: 10pt">-2-
 <P align="center" style="font-size: 10pt">&nbsp;
<P align="center" style="font-size: 10pt; display: none">2
</DIV>

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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
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    <TD width="1%">&nbsp;</TD>
    <TD>As a result of this valuation, management concluded that the fair value of the equity of Gemma was $229.2
million as of November&nbsp;1, 2009. This value exceeded the carrying value of Gemma of $65.2&nbsp;million by $164.0
million, or 252%. As the fair value of this reporting unit exceeded its carrying amount, the goodwill of Gemma
was deemed not to be impaired, and the performance of step two of the impairment assessment process was not
performed. As the Company&#146;s management considered this excess amount to be substantially in excess of the
carrying value of Gemma, the detailed disclosures described above were not included in the filing.</TD>
</TR>

</TABLE>

<P align="left" style="margin-left:6%; font-size: 10pt">In future filings, the Company will disclose that the estimated fair value of Gemma substantially exceeds its
carrying value for as long as this condition exists. If the results of future impairment assessment testing
indicate that the excess fair value is not substantial, the Company will provide the expanded disclosures described above.

<P align="left" style="font-size: 10pt">If you have any further comments or questions regarding our response, please do not hesitate to contact me by phone at
(301)&nbsp;315-0027 or by fax at (301)&nbsp;315-0064.

<P align="left" style="font-size: 10pt">Sincerely,

<P align="left" style="font-size: 10pt"><U>/s/ Arthur F. Trudel</U><BR>
Arthur F. Trudel<BR>
Senior Vice President, Chief Financial Officer<BR>

<P align="center" style="font-size: 10pt">-3-

<P align="center" style="font-size: 10pt">&nbsp;
<P align="center" style="font-size: 10pt; display: none">3

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