Green Plains Inc.
Green Plains Renewable Energy, Inc. (Form: 10-Q, Received: 05/02/2013 17:06:50)

 

 

 

 

 

 

                                                                                                                      

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________

 

FORM 10-Q

 

Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

 

For the Quarterly Period Ended March 31, 2013

 

Commission File Number 001-32924

 

Green Plains Renewable Energy, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Iowa

84-1652107

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

 

 

450 Regency Parkway, Suite 400 , Omaha, NE 68114

(402) 884-8700

(Address of principal executive offices, including zip code)

(Registrant’s telephone number, including area code)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

S Yes   £ No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

S Yes   £ No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer                £      Accelerated filer T      Non-accelerated filer £     Smaller reporting company £

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 

 

£ Yes   S No

 

The number of shares of common stock, par value $0.001 per share, outstanding as of April 30 , 2013 was   30,115,628   shares.

 

 


 

 

TABLE OF CONTENTS

 

 

 

 

 

Page

PART I – FINANCIAL INFORMATION

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

Consolidated Balance Sheets  

2

 

 

 

 

Consolidated Statements of Operations

3

 

 

 

 

Consolidated Statements of Comprehensive Incom e

4

 

 

 

 

Consolidated Statements of Cash Flows  

5

 

 

 

 

Notes to Consolidated Financial Statements  

7

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk  

35

 

 

 

Item 4.

Controls and Procedures

37

 

 

 

 

 

 

PART II – OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

38

 

 

 

Item 1A.

Risk Factors

38

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

38

 

 

 

Item 3.

Defaults Upon Senior Securities

38

 

 

 

Item 4.

Mine Safety Disclosures

38

 

 

 

Item 5.

Other Information

38

 

 

 

Item 6.

Exhibits

39

 

 

 

Signatures  

40

 

 

 

 

1

 


 

 

GREEN PLAINS RENEWABLE ENERGY, INC. AND SUBSIDIARIES

 

  CONSOLIDATED BALANCE SHEETS

 

(in thousands, except share amounts)

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

2013

 

2012

 

(unaudited)

 

 

 

ASSETS

Current assets

 

 

 

 

 

Cash and cash equivalents

$

229,808 

 

$

254,289 

Restricted cash

 

11,824 

 

 

25,815 

Accounts receivable, net of allowances of $219 and $219, respectively

 

78,896 

 

 

80,537 

Inventories

 

165,381 

 

 

172,009 

Prepaid expenses and other

 

7,579 

 

 

12,314 

Deferred income taxes

 

3,934 

 

 

2,133 

Derivative financial instruments

 

26,244 

 

 

20,938 

Total current assets

 

523,666 

 

 

568,035 

Property and equipment, net of accumulated depreciation of

 

 

 

 

 

$177,175 and $164,445, respectively

 

697,382 

 

 

708,110 

Goodwill

 

40,877 

 

 

40,877 

Other assets

 

31,485 

 

 

32,712 

Total assets

$

1,293,410 

 

$

1,349,734 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

 

 

 

 

 

Accounts payable

$

70,732 

 

$

95,564 

Accrued and other liabilities

 

24,258 

 

 

32,475 

Unearned revenue

 

6,982 

 

 

3,617 

Short-term notes payable and other borrowings

 

158,496 

 

 

171,302 

Current maturities of long-term debt

 

78,777 

 

 

129,426 

Total current liabilities

 

339,245 

 

 

432,384 

 

 

 

 

 

 

Long-term debt

 

401,794 

 

 

362,549 

Deferred income taxes

 

59,906 

 

 

60,082 

Other liabilities

 

4,068 

 

 

4,217 

Total liabilities

 

805,013 

 

 

859,232 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

Common stock, $0.001 par value; 75,000,000 shares authorized;

 

 

 

 

 

37,316,382 and 36,903,777 shares issued, and 30,116,382

 

 

 

 

 

and 29,703,777 shares outstanding, respectively

 

37 

 

 

37 

Additional paid-in capital

 

446,472 

 

 

445,198 

Retained earnings

 

110,095 

 

 

107,540 

Accumulated other comprehensive income (loss)

 

(2,399)

 

 

3,535 

Treasury stock, 7,200,000 shares

 

(65,808)

 

 

(65,808)

Total stockholders' equity

 

488,397 

 

 

490,502 

Total liabilities and stockholders' equity

$

1,293,410 

 

$

1,349,734 

 

See accompanying notes to the consolidated financial statements.

 

 

2

 


 

 

GREEN PLAINS RENEWABLE ENERGY, INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF OPERATIONS

 

(unaudited and in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

Three Months Ended
March 31,

 

2013

 

2012

 

 

 

 

 

 

Revenues

$

765,476 

 

$

775,395 

Cost of goods sold

 

738,262 

 

 

766,625 

Gross profit

 

27,214 

 

 

8,770 

Selling, general and administrative expenses

 

14,510 

 

 

19,861 

Operating income (loss)

 

12,704 

 

 

(11,091)

Other income (expense)

 

 

 

 

 

Interest income

 

39 

 

 

39 

Interest expense

 

(8,070)

 

 

(9,067)

Other, net

 

(520)

 

 

(578)

Total other income (expense)

 

(8,551)

 

 

(9,606)

Income (loss) before income taxes

 

4,153 

 

 

(20,697)

Income tax expense (benefit)

 

1,598 

 

 

(8,001)

Net income (loss)

 

2,555 

 

 

(12,696)

Net loss attributable to noncontrolling interests

 

 -

 

 

Net income (loss) attributable to Green Plains

$

2,555 

 

$

(12,692)

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

Net income (loss) attributable to Green Plains - basic

$

0.09 

 

$

(0.39)

Net income (loss) attributable to Green Plains - diluted

$

0.08 

 

$

(0.39)

Weighted average shares outstanding:

 

 

 

 

 

Basic

 

29,933 

 

 

32,238 

Diluted

 

30,210 

 

 

32,238 

 

 

 

 

 

 

 

 

 

See accompanying notes to the consolidated financial statements.

3

 


 

 

GREEN PLAINS RENEWABLE ENERGY, INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

(unaudited and in thousands)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
March 31,

 

2013

 

2012

 

 

 

 

 

 

Net income (loss)

$

2,555 

 

$

(12,696)

Other comprehensive income (loss), net of tax :

 

 

 

 

 

Unrealized gains (losses) on derivatives arising during period,

 

 

 

 

 

net of tax expense (benefit) of $8,502 and $(25), respectively

 

(12,637)

 

 

43 

Reclassification of realized losses on derivatives, net of tax

 

 

 

 

 

benefit of $4,509 and $1,491, respectively

 

6,703 

 

 

2,590 

Total other comprehensive income (loss), net of tax

 

(5,934)

 

 

2,633 

Comprehensive loss

 

(3,379)

 

 

(10,063)

Comprehensive loss attributable to noncontrolling interests

 

 -

 

 

Comprehensive loss attributable to Green Plains

$

(3,379)

 

$

(10,059)

 

 

See accompanying notes to the consolidated financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 


 

 

GREEN PLAINS RENEWABLE ENERGY, INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(unaudited and in thousands)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
March 31,

 

2013

 

2012

Cash flows from operating activities:

 

 

 

 

 

Net income (loss)

$

2,555 

 

$

(12,696)

Adjustments to reconcile net income (loss) to net cash

 

 

 

 

 

used by operating activities:

 

 

 

 

 

Depreciation and amortization

 

12,609 

 

 

13,158 

Amortization of debt issuance costs

 

1,055 

 

 

775 

Deferred income taxes

 

2,015 

 

 

(6,482)

Stock-based compensation expense

 

883 

 

 

1,171 

Undistributed equity in loss of affiliates

 

520 

 

 

578 

Allowance for doubtful accounts

 

 -

 

 

46 

Other

 

806 

 

 

 -

Changes in operating assets and liabilities before

 

 

 

 

 

effects of business combinations:

 

 

 

 

 

Accounts receivable

 

1,641 

 

 

13,534 

Inventories

 

6,628 

 

 

(21,477)

Derivative financial instruments

 

(15,277)

 

 

(8,264)

Prepaid expenses and other assets

 

4,735 

 

 

4,909 

Accounts payable and accrued liabilities

 

(33,050)

 

 

(80,716)

Unearned revenues

 

3,365 

 

 

2,745 

Other

 

392 

 

 

(172)

Net cash used by operating activities

 

(11,123)

 

 

(92,891)

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Purchases of property and equipment

 

(1,881)

 

 

(5,660)

Acquisition of businesses, net of cash acquired

 

 -

 

 

(1,490)

Other

 

(803)

 

 

 -

Net cash used by investing activities

 

(2,684)

 

 

(7,150)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Proceeds from the issuance of long-term debt

 

21,400 

 

 

16,000 

Payments of principal on long-term debt

 

(32,815)

 

 

(13,080)

Proceeds from short-term borrowings

 

847,650 

 

 

782,086 

Payments on short-term borrowings

 

(861,251)

 

 

(710,653)

Payments for repurchase of common stock

 

 -

 

 

(10,445)

Change in restricted cash

 

13,991 

 

 

(5,204)

Payments of loan fees

 

(40)

 

 

(292)

Other

 

391 

 

 

1,630 

Net cash provided (used) by financing activities

 

(10,674)

 

 

60,042 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

(24,481)

 

 

(39,999)

Cash and cash equivalents, beginning of period

 

254,289 

 

 

174,988 

Cash and cash equivalents, end of period

$

229,808 

 

$

134,989 

 

 

 

 

 

 

Continued on the following page

 

 

 

 

 

 

 

 

5

 


 

 

GREEN PLAINS RENEWABLE ENERGY, INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(unaudited and in thousands)

 

 

 

 

 

 

 

 

 

 

Continued from the previous page

 

 

 

 

 

 

Three Months Ended
March 31,

 

2013

 

2012

 

 

 

 

 

 

Supplemental disclosures of cash flow:

 

 

 

 

 

Cash paid for income taxes

$

1,289 

 

$

457 

Cash paid for interest

$

7,880 

 

$

7,032 

 

 

 

 

 

 

Supplemental noncash investing and financing activities:

 

 

 

 

 

Assets acquired in acquisitions and mergers

$

 -

 

$

1,590 

Less: liabilities assumed

 

 -

 

 

(100)

Net assets acquired

$

 -

 

$

1,490 

 

 

 

 

 

 

Short-term note payable issued to repurchase common stock

$

 -

 

$

27,162 

 

 

 

See accompanying notes to the consolidated financial statements.

6

 


 

 

GREEN PLAINS RENEWABLE ENERGY, INC. AND SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

(unaudited)

 

1.  BASIS OF PRESENTATION, DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

References to the Company

 

References to “Green Plains” or the “Company” in the consolidated financial statements and in these notes to the consolidated financial statements refer to Green Plains Renewable Energy, Inc., an Iowa corporation, and its subsidiaries.

 

Consolidated Financial Statements

 

The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and entities which it controls. All significant intercompany balances and transactions have been eliminated on a consolidated basis for reporting purposes. Unconsolidated entities are included in the financial statements on an equity basis. Results for the interim periods presented are not necessarily indicative of results to be expected for the entire year.

 

The accompanying unaudited consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles, or GAAP, for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The consolidated financial statements should be read in conjunction with the Company’s annual report on Form 10-K for the year ended December 31, 2012 .

 

The unaudited financial information reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented. The adjustments are of a normal recurring nature, except as otherwise noted.

 

Use of Estimates in the Preparation of Consolidated Financial Statements

 

The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Description of Business

 

Green Plains is North America’s fourth largest ethanol producer. The Company operates its business within four segments: (1) production of ethanol and distillers grains, collectively referred to as ethanol production, (2) corn oil production, (3) grain handling and storage, collectively referred to as agribusiness, and (4) marketing and logistics services for Company-produced and third-party ethanol, distillers grains, corn oil and other commodities, and the operation of blending and terminaling facilities, collectively referred to as marketing and distribution. Additionally, the Company is a partner in a joint venture that was formed to commercialize advanced photo-bioreactor technologies for the growing and harvesting of algal biomass.

 

Revenue Recognition

 

The Company recognizes revenue when all of the following criteria are satisfied: persuasive evidence of an arrangement exists; risk of loss and title transfer to the customer; the price is fixed and determinable; and collectability is reasonably assured.

 

For sales of ethanol, distillers grains and other commodities by the Company’s marketing business, revenue is recognized when title to the product and risk of loss transfer to an external customer. Revenues related to marketing operations for third parties are recorded on a gross basis as the Company takes title to the product and assumes risk of loss. Unearned revenue is reflected on the consolidated balance sheets for goods in transit for which the Company has received payment and title has not been transferred to the customer. Revenues from the Company’s biofuel terminal operations, which include ethanol transload and splash blending services, are recognized as these services are rendered.

 

7

 


 

 

The Company routinely enters into fixed-price, physical-delivery ethanol sales agreements. In certain instances, the Company intends to settle the transaction by open market purchases of ethanol rather than by delivery from its own production. These transactions are reported net as a component of revenues. Revenues also include realized gains and losses on related derivative financial instruments, ineffectiveness on cash flow hedges, and reclassifications of realized gains and losses on effective cash flow hedges from accumulated other comprehensive income (loss).

 

Sales of agricultural commodities are recognized when title to the product and risk of loss transfer to the customer, which is dependent on the agreed upon sales terms with the customer. These sales terms provide for passage of title either at the time shipment is made or at the time the commodity has been delivered to its destination and final weights, grades and settlement prices have been agreed upon with the customer. Revenues related to grain merchandising are presented gross in the statements of operations with amounts billed for shipping and handling included in revenues and also as a component of cost of goods sold.   Revenues from grain storage are recognized as services are rendered.

 

Cost of Goods Sold

 

Cost of goods sold includes costs for direct labor, materials and certain plant overhead costs. Direct labor includes all compensation and related benefits of non-management personnel involved in the operation of the Company’s ethanol plants. Grain purchasing and receiving costs, other than labor costs for grain buyers and scale operators, are also included in cost of goods sold. Direct materials consist of the costs of corn feedstock, denaturant, and process chemicals. Corn feedstock costs include unrealized gains and losses on related derivative financial instruments not designated as cash flow hedges, inbound freight charges, inspection costs and transfer costs. Corn feedstock costs also include realized gains and losses on related derivative financial instruments, ineffectiveness on cash flow hedges, and reclassifications of realized gains and losses on effective cash flow hedges from accumulated other comprehensive income (loss). Plant overhead costs primarily consist of plant utilities, plant depreciation and outbound freight charges. Shipping costs incurred directly by the Company, including railcar lease costs, are also reflected in cost of goods sold.

 

The Company uses exchange-traded futures and options contracts to minimize the effects of changes in the prices of agricultural commodities on its agribusiness segment’s grain inventories and forward purchase and sales contracts. Exchange-traded futures and options contracts are valued at quoted market prices. Grain inventories held for sale, forward purchase contracts and forward sale contracts in the agribusiness segment are valued at market prices, where available, or other market quotes adjusted for differences, primarily transportation, between the exchange-traded market and the local markets on which the terms of the contracts are based. Changes in the fair value of grain inventories held for sale, forward purchase and sale contracts, and exchange-traded futures and options contracts in the agribusiness segment, are recognized in earnings as a component of cost of goods sold. These contracts are predominantly settled in cash. The Company is exposed to loss in the event of non-performance by the counter-party to forward purchase and forward sales contracts.

 

Derivative Financial Instruments

 

To minimize the risk and the effects of the volatility of commodity price changes primarily related to corn, ethanol and natural gas, the Company uses various derivative financial instruments, including exchange-traded futures, and exchange-traded and over-the-counter options contracts. The Company monitors and manages this exposure as part of its overall risk management policy. As such, the Company seeks to reduce the potentially adverse effects that the volatility of these markets may have on its operating results. The Company may take hedging positions in these commodities as one way to mitigate risk. While the Company attempts to link its hedging activities to purchase and sales activities, there are situations in which these hedging activities can themselves result in losses.

 

By using derivatives to hedge exposures to changes in commodity prices, the Company has exposures on these derivatives to credit and market risk. The Company is exposed to credit risk that the counterparty might fail to fulfill its performance obligations under the terms of the derivative contract. The Company minimizes its credit risk by entering into transactions with high quality counterparties, limiting the amount of financial exposure it has with each counterparty and monitoring the financial condition of its counterparties. Market risk is the risk that the value of the financial instrument might be adversely affected by a change in commodity prices or interest rates. The Company manages market risk by incorporating monitoring parameters within its risk management strategy that limit the types of derivative instruments and derivative strategies the Company uses, and the degree of market risk that may be undertaken by the use of derivative instruments.

 

The Company evaluates its contracts that involve physical delivery to determine whether they may qualify for the normal purchases or normal sales exemption and are expected to be used or sold over a reasonable period in the normal course of business. Any contracts that do not meet the normal purchase or sales criteria are recorded at fair value with the change in fair value recorded in operating income unless the contracts qualify for, and the Company elects, hedge accounting treatment.

8

 


 

 

 

Certain qualifying derivatives within the ethanol production segment are designated as cash flow hedges. Prior to entering into cash flow hedges, the Company evaluates the derivative instrument to ascertain its effectiveness. For cash flow hedges, any ineffectiveness is recognized in current period results, while other unrealized gains and losses are reflected in accumulated other comprehensive income until gains and losses from the underlying hedged transaction are realized. In the event that it becomes probable that a forecasted transaction will not occur, the Company would discontinue cash flow hedge treatment, which would affect earnings. These derivative financial instruments are recognized in current assets or other current liabilities at fair value.

 

At times, the Company hedges its exposures to changes in the value of inventories and designates certain qualifying derivatives as fair value hedges. The carrying amount of the hedged inventory is adjusted through current period results for changes in the fair value arising from changes in underlying prices. Any ineffectiveness is recognized in current period results to the extent that the change in the fair value of the inventory is not offset by the change in the fair value of the derivative.

 

Recent Accounting Pronouncements

 

Effective January 1, 2013, the Company adopted the amended guidance in ASC Topic 210, Balance Sheet. The amended guidance addresses disclosure of offsetting financial assets and liabilities. It requires entities to add disclosures showing both gross and net information about instruments and transactions eligible for offset in the balance sheet and instruments and transactions subject to an agreement similar to a master netting arrangement. The updated disclosures have been implemented retrospectively and do not impact the Company’s financial position or results of operations.

 

Effective January 1, 2013, the Company adopted the amended guidance in ASC Topic 220, Comprehensive Income. The amended guidance requires entities to disclose additional information about reclassification adjustments, including (1) changes in accumulated other comprehensive income by component and (2) significant items reclassified out of accumulated other comprehensive income by presenting the amount reclassified and the individual income statement line items affected. The updated disclosures have been implemented prospectively and do not impact our financial position or results of operations.   See Note 10, Stockholders’ Equity, for expanded disclosures.

 

2 .  FAIR VALUE DISCLOSURES

 

The following methods, assumptions and valuation techniques were used in estimating the fair value of the Company’s financial instruments:

 

Level 1 – unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 1 unrealized gains and losses on commodity derivatives relate to exchange-traded open trade equity and option values in the Company’s brokerage accounts.

 

Level 2 – directly or indirectly observable inputs such as quoted prices for similar assets or liabilities in active markets other than quoted prices included within Level 1; quoted prices for identical or similar assets in markets that are not active; and other inputs that are observable or can be substantially corroborated by observable market data by correlation or other means. Grain inventories held for sale in the agribusiness segment are valued at nearby futures values, plus or minus nearby basis levels.

 

Level 3 – unobservable inputs that are supported by little or no market activity and that are a significant component of the fair value of the assets or liabilities. The Company currently does not have any recurring Level 3 financial instruments.

 

There have been no changes in valuation techniques and inputs used in measuring fair value. Consistent with past practice, o n March 31, 2013, exchange-traded futures for corn were classified as Level 2 measurements to reflect the price limit set by the exchange for that day.

 

9

 


 

 

The following tables set forth the Company’s assets and liabilities by level that were accounted for the periods indicated (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements at March 31, 2013

 

Quoted Prices in Active Markets for Identical Assets

 

Significant Other Observable Inputs

 

Reclassification for Balance Sheet

 

 

 

 

(Level 1)

 

(Level 2)

 

Presentation

 

Total

Assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

229,808 

 

$

 -

 

$

 -

 

$

229,808 

Restricted cash

 

14,024 

 

 

 -

 

 

 -

 

 

14,024 

Margin deposits

 

17,038 

 

 

 -

 

 

(17,038)

 

 

 -

Inventories carried at market

 

 -

 

 

42,865 

 

 

 -

 

 

42,865 

Unrealized gains on derivatives

 

431 

 

 

22,310 

 

 

3,503 

 

 

26,244 

Total assets measured at fair value

$

261,301 

 

$

65,175 

 

$

(13,535)

 

$

312,941 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Unrealized losses on derivatives

$

13,311 

 

$

2,600 

 

$

(13,535)

 

$

2,376 

Other

 

173 

 

 

 -

 

 

 -

 

 

173 

Total liabilities measured at fair value

$

13,484 

 

$

2,600 

 

$

(13,535)

 

$

2,549 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements at December 31, 2012

 

Quoted Prices in Active Markets for Identical Assets

 

Significant Other Observable Inputs

 

Reclassification for Balance Sheet

 

 

 

 

(Level 1)

 

(Level 2)

 

Presentation

 

Total

Assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

254,289 

 

$

 -

 

$

 -

 

$

254,289 

Restricted cash

 

28,015 

 

 

 -

 

 

 -

 

 

28,015 

Margin deposits

 

12,847 

 

 

 -

 

 

(12,847)

 

 

 -

Inventories carried at market

 

 -

 

 

61,763 

 

 

 -

 

 

61,763 

Unrealized gains on derivatives

 

7,337 

 

 

3,254 

 

 

10,347 

 

 

20,938 

Total assets measured at fair value

$

302,488 

 

$

65,017 

 

$

(2,500)

 

$

365,005 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Unrealized losses on derivatives

$

2,544 

 

$

2,103 

 

$

(2,500)

 

$

2,147 

Other

 

107 

 

 

 -

 

 

 -

 

 

107 

Total liabilities measured at fair value

$

2,651 

 

$

2,103 

 

$

(2,500)

 

$

2,254 

 

The Company believes the fair value s of its debt , accounts receivable and accounts payable approximate book value,   which were  $ 639.1 million ,   $ 78.9 million and $ 70.7 million, respectively, at March 31 , 201 3   and $ 663. 3 million ,  $ 80.5 million and $ 95.6 million, respectively, at December 31, 201 2 . The Company estimates the fair value of its outstanding debt using Level 2 inputs.

 

Although the Company currently does not have any recurring Level 3 financial measurements, the fair values of the tangible assets and goodwill acquired represent Level 3 measurements and were derived using a combination of the income approach, the market approach and the cost approach as considered appropriate for the specific assets being valued.

 

 

 

10

 


 

 

3.  SEGMENT INFORMATION

 

Company management reviews financial and operating performance in the following four separate operating segments: (1) production of ethanol and distillers grains, collectively referred to as ethanol production, (2) corn oil production, (3) grain handling and storage, collectively referred to as agribusiness, and (4) marketing and logistics services for Company-produced and third-party ethanol, distillers grains, corn oil and other commodities, and the operation of blending and terminaling facilities, collectively referred to as marketing and distribution. Selling, general and administrative expenses, primarily consisting of compensation of corporate employees, professional fees and overhead costs not directly related to a specific operating segment, are reflected in the table below as corporate activities.

 

During the normal course of business, the Company enters into transactions between segments. Examples of these intersegment transactions include, but are not limited to, the ethanol production segment selling ethanol to the marketing and distribution segment and the agribusiness segment selling grain to the ethanol production segment. These intersegment activities are recorded by each segment at prices approximating market and treated as if they are third-party transactions. Consequently, these transactions impact segment performance. However, revenues and corresponding costs are eliminated in consolidation and do not impact the Company’s consolidated results.

 

In December 2012, the Company sold twelve grain elevators located in northwestern Iowa and western Tennessee. The transaction involved approximately 32.6 million bushels, or 83%, of the Company’s reported agribusiness grain storage capacity and all of its agronomy and retail petroleum operations. The divested assets were reported within the Company’s agribusiness segment.

 

The following are certain financial data for the Company’s operating segments for the periods indicated (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
March 31,

 

 

2013

 

2012

Revenues:

 

 

 

 

 

 

Ethanol production:

 

 

 

 

 

 

Revenues from external customers

 

$

44,408 

 

$

45,358 

Intersegment revenues

 

 

464,651 

 

 

412,819 

Total segment revenues

 

 

509,059 

 

 

458,177 

Corn oil production:

 

 

 

 

 

 

Revenues from external customers

 

 

 -

 

 

508 

Intersegment revenues

 

 

15,699 

 

 

13,011 

Total segment revenues

 

 

15,699 

 

 

13,519 

Agribusiness:

 

 

 

 

 

 

Revenues from external customers

 

 

22,125 

 

 

72,825 

Intersegment revenues

 

 

64,919 

 

 

45,402 

Total segment revenues

 

 

87,044 

 

 

118,227 

Marketing and distribution:

 

 

 

 

 

 

Revenues from external customers

 

 

698,943 

 

 

656,704 

Intersegment revenues

 

 

1,289 

 

 

67 

Total segment revenues

 

 

700,232 

 

 

656,771 

Revenues including intersegment activity

 

 

1,312,034 

 

 

1,246,694 

Intersegment eliminations

 

 

(546,558)

 

 

(471,299)

Revenues as reported

 

$

765,476 

 

$

775,395 

 

 

 

 

11

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
March 31,

 

 

2013

 

2012

Gross profit (loss):

 

 

 

 

 

 

Ethanol production

 

$

1,230 

 

$

(10,035)

Corn oil production

 

 

7,909 

 

 

7,936 

Agribusiness

 

 

1,226 

 

 

6,246 

Marketing and distribution

 

 

17,055 

 

 

4,186 

Intersegment eliminations

 

 

(206)

 

 

437 

 

 

$

27,214 

 

$

8,770 

Operating income (loss):

 

 

 

 

 

 

Ethanol production

 

$

(2,349)

 

$

(13,880)

Corn oil production

 

 

7,810 

 

 

7,848 

Agribusiness

 

 

369 

 

 

669 

Marketing and distribution

 

 

12,986 

 

 

510 

Intersegment eliminations

 

 

(161)

 

 

471 

Corporate activities

 

 

(5,951)

 

 

(6,709)

 

 

$

12,704 

 

$

(11,091)

 

The following table sets forth revenues by product line for the periods indicated (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
March 31,

 

 

2013

 

2012

Revenues:

 

 

 

 

 

 

Ethanol

 

$

579,493 

 

$

583,535 

Distillers grains

 

 

131,548 

 

 

100,604 

Corn oil

 

 

17,096 

 

 

13,155 

Grain

 

 

26,320 

 

 

64,219 

Agronomy products

 

 

52 

 

 

7,118 

Other

 

 

10,967 

 

 

6,764 

 

 

$

765,476 

 

$

775,395 

 

 

The following are total assets for our operating segments for the periods indicated (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

 

2013

 

2012

Total assets:

 

 

 

 

 

 

Ethanol production

 

$

805,022 

 

$

831,939 

Corn oil production

 

 

22,835 

 

 

27,751 

Agribusiness

 

 

161,559 

 

 

179,930 

Marketing and distribution

 

 

203,277 

 

 

184,541 

Corporate assets

 

 

126,703 

 

 

150,797 

Intersegment eliminations

 

 

(25,986)

 

 

(25,224)

 

 

$

1,293,410 

 

$

1,349,734 

 

 

 

12

 


 

 

4.  INVENTORIES

 

Inventories are carried at the lower of cost or market, except grain held for sale, which is valued at market value. The components of inventories are as follows (in thousands):

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

2013

 

2012

Finished goods

$

65,032 

 

$

58,080 

Grain held for sale

 

42,865 

 

 

61,763 

Raw materials

 

33,481 

 

 

28,494 

Work-in-process

 

12,861 

 

 

13,326 

Supplies and parts

 

11,142 

 

 

10,346 

 

$

165,381 

 

$

172,009 

 

 

5.  GOODWILL

 

The Company did not have any changes in the total carrying amount of goodwill, which was $ 40.9 million ,   during the three months ended March 31 , 201 3 . Goodwill of $ 30.3 million is attributable to the ethanol production segment and $ 10.6 million is attributable to the marketing and distribution segment.

 

 

6.  DERIVATIVE FINANCIAL INSTRUMENTS

 

At March 31, 2013, the Company’s consolidated balance sheet reflects unrealized losses , net of tax, of $2.4 million in accumulated other comprehensive loss . The Company expects that all of the unrealized losses at March 31, 2013 will be reclassified into operating income over the next 12 months as a result of hedged transactions that are forecasted to occur. The amount ultimately realized in operating income, however, will differ as commodity prices change.  

 

Fair Values of Derivative Instruments

 

The following table provides information about the fair values of the Company’s derivative financial instruments and the line items o n the consolidated balance sheets in which the fair values are reflected (in thousands) :

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Derivatives'

 

Liability Derivatives'

 

Fair Value

 

Fair Value

 

March 31,

 

December 31,

 

March 31,

 

December 31,

 

2013

 

2012

 

2013

 

2012

Derivative financial instruments (1)

$

9,206 
(2)

$

8,091 
(3)

$

 -

 

$

 -

Accrued and other liabilities

 

 -

 

 

 -

 

 

2,376 

 

 

2,103 

Other liabilities

 

 -

 

 

 -

 

 

 -

 

 

44 

Total

$

9,206 

 

$

8,091 

 

$

2,376 

 

$

2,147 

 

(1)   Derivative financial instruments as reflected on the consolidated balance sheets include margin deposit assets of $ 17.0 million and $ 12.8 million at March 31, 2013 and December 31, 2012, respectively .

(2)   Balance at March 31, 2013 includes $ 6.4 million of net unrealized gains on derivative financial instruments designated as cash flow hedging instruments.

(3)    Balance at December 31, 2012 includes $ 2.1 million of net unrealized gains on derivative financial instruments designated as cash flow hedging instruments.

 

 

Refer to Note 2 - Fair Value Disclosures , which also contains fair value information related to derivative financial instruments.

 

13

 


 

 

Effect of Derivative Instruments on Consolidated Statements of Operations and Consolidated Statements of Stockholders’ Equity and Comprehensive Income

 

The following tables provide information about the gain or loss recognized in income and other comprehensive income on the Company’s derivative financial instruments and the line items in the financial statements in which such gains and losses are reflected (in thousands) :

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains (Losses) on Derivative Instruments Not

 

Three Months Ended
March 31,

Designated in a Hedging Relationship

 

2013

 

2012

Revenue

 

$

(11,669)

 

$

(2,885)

Cost of goods sold

 

 

11,017 

 

 

1,185 

Net decrease recognized in earnings before tax

 

$

(652)

 

$

(1,700)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain (Loss) Due to Ineffectiveness

 

Three Months Ended
March 31,

of Cash Flow Hedges

 

2013

 

2012

Revenue

 

$

(6)

 

$

Cost of goods sold

 

 

(25)

 

 

(64)

Net decrease recognized in earnings before tax

 

$

(31)

 

$

(59)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains (Losses) Reclassified from Accumulated
Other Comprehensive Income (Loss)

 

Three Months Ended
March 31,

into Net Income (Loss)

 

2013

 

2012

Revenue

 

$

(10,379)

 

$

617 

Cost of goods sold

 

 

(833)

 

 

(4,698)

Net decrease recognized in earnings before tax

 

$

(11,212)

 

$

(4,081)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective Portion of Cash Flow
Hedges Recognized in

 

Three Months Ended
March 31,

Other Comprehensive Income (Loss)

 

2013

 

2012

Commodity Contracts

 

$

(21,139)

 

$

68 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain (Loss) from Fair Value

 

Three Months Ended
March 31,

Hedges of Ethanol Inventory

 

2013

 

2012

Revenue (effect of change in inventory value)

 

$

301 

 

$

1,218 

Revenue (effect of fair value hedge)

 

 

(301)

 

 

(1,218)

Ineffectiveness recognized in earnings before tax

 

$

 -

 

$

 -

 

There were no gains or losses due to the discontinuance of cash flow hedge treatment or fair value hedge exposure during the three months ended March 31, 2013.

 

14

 


 

 

The following table summarizes the volumes of open commodity derivative positions as of March 31, 2013 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2013

 

 

Exchange Traded

 

Non-Exchange Traded

 

 

 

 

Derivative Instruments

 

Net Long & (Short) (1)

 

Long (2)

 

(Short) (2)

 

Unit of Measure

 

Commodity

Futures

 

(6,055)

 

 

 

 

 

Bushels

 

Corn and Soybeans

Futures

 

24,515 

(3)

 

 

 

 

Bushels

 

Corn

Futures

 

(10,152)

 

 

 

 

 

Gallons

 

Ethanol

Futures

 

(140,994)

(3)

 

 

 

 

Gallons

 

Ethanol

Futures

 

(1,680)
(4)

 

 

 

 

Gallons

 

Ethanol

Options

 

(12)

 

 

 

 

 

Bushels

 

Corn, Soybeans and Wheat

Options

 

(3,866)

 

 

 

 

 

Gallons

 

Ethanol

Forwards

 

 

 

6,840 

 

(1,146)

 

Bushels

 

Corn, Soybeans and Milo

Forwards

 

 

 

17,574 

 

(246,414)

 

Gallons

 

Ethanol

Forwards

 

 

 

39 

 

(112)

 

Tons

 

Distillers Grains

Forwards

 

 

 

96 

 

(52,272)

 

Pounds

 

Corn Oil

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Exchange traded futures and options are presented on a net long and (short) position basis. Options are presented on a delta-adjusted basis.

(2)

Non-exchange traded forwards are presented on a gross long and (short) position basis including both fixed-price and basis contracts.

(3)

Futures used for cash flow hedges.

(4)

Futures used for fair value hedges.

 

 

 

Energy trading contracts that do not involve physical delivery are presented net in revenues on the consolidated statements of operations. Revenues and cost of goods sold under such contracts are summarized in the table below for the periods indicated (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
March 31,

 

2013

 

2012

Revenue

$

1,982 

 

$

6,575 

Cost of goods sold

 

1,962 

 

 

6,485 

 

 

 

 

 

 

 

 

 

15

 


 

 

7.  DEBT

 

The principal balances of the components of long-term debt are as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

2013

 

2012

Green Plains Bluffton:

 

 

 

 

 

$70.0 million term loan

$

39,268 

 

$

41,018 

$20.0 million revolving term loan

 

20,000 

 

 

20,000 

$22.0 million revenue bond

 

16,660 

 

 

17,510 

Green Plains Central City:

 

 

 

 

 

$55.0 million term loan

 

37,280 

 

 

38,635 

$30.5 million revolving term loan

 

28,639 

 

 

28,639 

$11.0 million revolving line of credit

 

10,600 

 

 

10,600 

Equipment financing loan

 

88 

 

 

105 

Green Plains Holdings II:

 

 

 

 

 

$26.4 million term loan

 

20,414 

 

 

21,914 

$51.1 million revolving term loan

 

45,320 

 

 

45,320 

Green Plains Obion:

 

 

 

 

 

$60.0 million term loan

 

11,079 

 

 

13,479 

$37.4 million revolving term loan

 

37,400 

 

 

37,400 

Equipment financing loan

 

283 

 

 

334 

Economic development grant

 

1,313 

 

 

1,335 

Green Plains Ord:

 

 

 

 

 

$25.0 million term loan

 

17,055 

 

 

17,675 

$13.0 million revolving term loan

 

12,151 

 

 

12,151 

$5.0 million revolving line of credit

 

4,749 

 

 

4,749 

Green Plains Otter Tail:

 

 

 

 

 

$30.3 million term loan

 

21,605 

 

 

22,791 

$4.7 million revolver

 

4,675 

 

 

4,675 

$19.2 million note payable

 

19,047 

 

 

19,014 

Capital lease payable

 

23 

 

 

53 

Green Plains Shenandoah:

 

 

 

 

 

$17.0 million revolving term loan

 

17,000 

 

 

17,000 

Green Plains Superior:

 

 

 

 

 

$40.0 million term loan

 

13,875 

 

 

15,250 

$10.0 million revolving term loan

 

10,000 

 

 

10,000 

Equipment financing loan

 

72 

 

 

89 

Corporate:

 

 

 

 

 

$90.0 million convertible notes

 

90,000 

 

 

90,000 

Notes Payable

 

1,625 

 

 

1,625 

Capital Lease

 

350 

 

 

403 

Other

 

 -

 

 

211 

Total long-term debt

 

480,571 

 

 

491,975 

Less: current portion of long-term debt

 

(78,777)

 

 

(129,426)

Long-term debt

$

401,794 

 

$

362,549 

 

             Short-term notes payable and other borrowings at March 31, 2013 included working capital revolvers at Green Plains Grain and Green Plains Trade with outstanding balances of $ 110.5 million and $ 48. 0 million, respectively. Short-term notes payable and other borrowings at December 31, 2012 included working capital revolvers at Green Plains Grain and Green Plains Trade with outstanding balances of $ 105.0 million and $ 39.1 million, respectively, and a $ 27.2 million short-term note payable issued in conjunction with the March 2012 repurchase of common stock.

 

16

 


 

 

Ethanol Production Segment

 

·

Term Loans

 

o

Scheduled principal payments are as follows:

 

 

 

 

 

•  

Green Plains Bluffton

$0.3 million per month

•  

Green Plains Central City

$0.5 million per month

•  

Green Plains Holdings II

$1.5 million per quarter

•  

Green Plains Obion

$2.4 million per quarter

•  

Green Plains Ord

$0.2 million per month

•  

Green Plains Otter Tail

$0.4 million per month

•  

Green Plains Superior

$1.4 million per quarter

 

o

Final maturity dates (at the latest) are as follows:

 

 

 

 

 

•  

Green Plains Bluffton

January 31, 2015

•  

Green Plains Central City

July 1, 2016

•  

Green Plains Holdings II

July 1, 2016

•  

Green Plains Obion

May 20, 2014

•  

Green Plains Ord

July 1, 2016

•  

Green Plains Otter Tail

September 1, 2018

•  

Green Plains Superior

July 20, 2015

            

·

Revolving Term Loans The revolving term loans are generally available for advances throughout the life of the commitment, subject, in certain cases, to borrowing base restrictions. Allowable advances under the Green Plains Shenandoah loan agreement are reduced by $ 1.0 million each six-month period commencing on June 1, 2013. Allowable advances under the Green Plains Superior loan agreement are reduced by $ 2.5 million each six-month period commencing on the first day of the month beginning six months after repayment of the term loan, but in no event later than January 1, 2016. Allowable advances under the Green Plains Obion loan agreement are reduced by $ 4.7 million on a semi-annual basis commencing on March 1, 2015. Allowable advances under the Green Plains Holdings II loan agreement are reduced by $ 2.7 million on a semi-annual basis commencing on April 1, 2012 and are reduced by $ 5.7 million on a semi-annual basis commencing on October 1, 2016. Interest-only payments are due each month on all revolving term loans until the final maturity date for the Green Plains Bluffton, Green Plains Central City, Green Plains Ord, Green Plains Otter Tail, Green Plains Shenandoah, and Green Plains Superior loan agreements.

 

o

Final maturity date s (at the latest) are as follows:

 

 

 

 

 

•  

Green Plains Bluffton

January 31, 2015

•  

Green Plains Central City

July 1, 2016

•  

Green Plains Holdings II

October 1, 2018

•  

Green Plains Obion

June 1, 2018

•  

Green Plains Ord

July 1, 2016

•  

Green Plains Otter Tail

June 19, 2013

•  

Green Plains Shenandoah

March 1, 2018

•  

Green Plains Superior

July 1, 2017

 

Green Plains Bluffton also received $ 22.0 million in Subordinate Solid Waste Disposal Facility Revenue Bond funds from the City of Bluffton, Indiana. The revenue bond requires: (1) semi-annual principal and interest payments of approximately $ 1.5 million through March 1, 2019, and (2) a final principal and interest payment of $ 3.745 million on September 1, 2019. At March 31, 2013, Green Plains Bluffton had $ 2.5 million of cash that was restricted as to use for payment towards the current maturity and interest of the revenue bond. Such cash is presented as restricted cash on the consolidated balance sheet.

 

17

 


 

 

Green Plains Otter Tail also issued $ 19.2 million in senior notes under New Market Tax Credits financing . The notes bear interest at 4.75 % per annum, payable monthly , and require monthly principal payments of approximately $ 0.3 million beginning in October 2014. The notes mature on September 1, 2018 with an expected outstanding balance of $ 4.7 million upon maturity.

 

Subsidiaries within the ethanol production segment were in compliance with their debt covenants as of March 31, 2013 .

 

Agribusiness Segment

 

Green Plains Grain has a $ 195.0 million   senior secured revolving credit facility with various lenders. The revolving credit facility mature s on October 28, 2013 .

 

The revolving credit facility includes total revolving credit commitments of $ 195.0 million and an accordion feature whereby amounts available under the facility may be increased by up to $ 55.0 million of new lender commitments upon agent approval. As security for the revolving credit facility, the lender received a first priority lien on certain cash, inventory, accounts receivable and other assets owned by subsidiaries of the agribusiness segment. Advances are subject to interest charges at a rate per annum equal to the LIBOR rate for the outstanding period plus the applicable margin or a rate per annum equal to the base rate plus the applicable margin.

 

Subsidiaries within the agribusiness segment were in compliance with their debt covenants as of   March 31, 2013 .

 

Marketing and Distribution Segment

 

Green Plains Trade has a senior secured asset-based revolving credit facility pursuant to which the lender will loan up to $ 13 0.0 million   on eligible collateral. This credit facility was increased from $ 70.0 million in April 2013. The amount of eligible collateral is determine d by a calculated borrowing base value equal to the sum of   percentages of eligible receivables   and eligible inventories, less certain miscellaneous adjustments . The outstanding balance , if any, is subject to interest charges at the lender’s floating base rate plus 2.5% or LIBOR plus 3.5%. At March 31, 2013, Green Plains Trade had $ 1 1.6 million in cash that was restricted for repayment of the then outstanding loan balance . Such cash is presented in restricted cash on the consolidated balance sheets. The revolving credit facility expires on April 26 , 201 6 .  

 

Green Plains Trade was in compliance with its debt covenants as of March 31, 2013 .

 

Corporate Activities

 

In November 2010, the Company issued $ 90.0 million of 5.75 % Convertible Senior Notes due 2015. The Notes represent senior, unsecured obligations of the Company, with interest payable on May 1 and November 1 of each year. The Notes may be converted into shares of the Company’s common stock and cash in lieu of fractional shares of the common stock based on a conversion rate initially equal to 69.7788 shares of the common stock per $ 1,000 principal amount of Notes, which is equal to an initial conversion price of $ 14.33 per share. The conversion rate is subject to adjustment upon the occurrence of specified events. The Company may redeem for cash all, but not less than all, of the Notes at any time on and after November 1, 2013, if the last reported sale price of the Company’s common stock equals or exceeds 140 % of the applicable conversion price for a specified time period, at a redemption price equal to 100 % of the principal amount of the Notes, plus accrued and unpaid interest.

 

A $27.2 million note payable to a subsidiary of NTR plc, which previously was the Company’s largest shareholder, was paid in full during the first quarter of 2013.

 

Capitalized Interest

 

The Company had no capitalized interest during the three months ended March 31, 2013 .

 

Restricted Net Assets

 

At March 31, 2013 , there were approximately $ 4 24.1 million of net assets at the Company’s subsidiaries that were not available to be transferred to the parent company in the form of dividends, loans or advances due to restrictions contained in the credit facilities of these subsidiaries.

 

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In April 2013, the Green Plains Bluffton loan and the Green Plains Trade revolving credit facility were both amended. The discussion above has been updated to reflect these amendments.

 

8.  STOCK-BASED COMPENSATION

 

The Company has equity incentive plans which reserve a combined total of 3.5 million shares of common stock for issuance pursuant to their terms. The plans provide for the granting of shares of stock, including options to purchase shares of common stock, stock appreciation rights tied to the value of common stock, restricted stock , and restricted and deferred stock unit awards to eligible employees, non-employee directors and consultants. The Company measures share-based compensation grants at fair value on the grant date, adjusted for estimated forfeitures. The Company records noncash compensation expense related to equity awards in its financial statements over the requisite service period on a straight-line basis. All of the Company’s existing share-based compensation awards have been determined to be equity awards.

 

A summary of stock option activity for the three months ended March 31, 2013 is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

Weighted-Average Exercise Price