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Table of Contents

 

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 10-K

 


 

x        Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

 

For the fiscal year ended October 31, 2009

 

o        Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

 

Commission file number 00051277

 

GRANITE FALLS ENERGY, LLC

(Exact name of registrant as specified in its charter)

 

Minnesota

 

41-1997390

(State or other jurisdiction of
incorporation or organization)

 

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

 

 

 

15045 Highway 23 SE
Granite Falls, MN

 

56241-0216

(Address of principal executive offices)

 

(Zip Code)

 

320-564-3100

(Registrant’s telephone number, including area code)

 

Securities registered under Section 12(b) of the Exchange Act:

None

 

Securities registered under Section 12(g) of the Exchange Act:

Membership Units

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  o Yes  x No

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  o Yes  x No

 

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.  x Yes  o 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).  o Yes  o No

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

 

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.  (Check one):

 

Large accelerated filer o

Accelerated filer o

 

 

Non-accelerated filer x

Smaller Reporting Company o

(Do not check if a smaller reporting company)

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  o Yes  x No

 

As of January 22, 2010, the aggregate market value of the membership units held by non-affiliates (computed by reference to the most recent offering price of Class A membership units) was $23,812,000

 

As of January 22, 2010, there were 30,656 membership units outstanding.

 

DOCUMENTS INCORPORATED BY REFERENCE

 

The registrant has incorporated by reference into Part III of this Annual Report on Form 10-K portions of its definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the close of the fiscal year covered by this Annual Report (October 31, 2009).  This proxy statement is referred to in this report as the 2010 Proxy Statement.

 

 

 



Table of Contents

 

INDEX

 

 

Page No.

PART I

4

 

 

ITEM 1. BUSINESS

4

ITEM 1A. RISK FACTORS

20

ITEM 2. PROPERTIES

24

ITEM 3. LEGAL PROCEEDINGS

24

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

25

 

 

PART II

26

 

 

ITEM 5. MARKET FOR REGISTRANT’S MEMBERSHIP UNITS, RELATED MEMBER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

26

ITEM 6. SELECTED FINANCIAL DATA

28

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

30

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

40

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

41

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

61

ITEM 9A(T). CONTROLS AND PROCEDURES

61

ITEM 9B. OTHER INFORMATION

62

 

 

PART III

62

 

 

ITEM 10. GOVERNORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

62

ITEM 11. EXECUTIVE COMPENSATION

62

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED MEMBER MATTERS

62

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND GOVERNOR INDEPENDENCE

62

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

62

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

63

 

 

SIGNATURES

64

 

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CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS

 

This annual report contains historical information, as well as forward-looking statements that involve known and unknown risks and relate to future events, our future financial performance, or our expected future operations and actions.  In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “future,” “intend,” “could,” “hope,” “predict,” “target,” “potential,” or “continue” or the negative of these terms or other similar expressions.  These forward-looking statements are only our predictions based on current information and involve numerous assumptions, risks and uncertainties.  Our actual results or actions may differ materially from these forward-looking statements for many reasons, including the reasons described in this report.  While it is impossible to identify all such factors, factors that could cause actual results to differ materially from those estimated by us include:

 

·                  Changes in the availability and price of corn and natural gas;

 

·                  Changes in our business strategy, capital improvements or development plans;

 

·                  Results of our hedging transactions and other risk management strategies;

 

·                  Our ability to profitably operate the ethanol plant and maintain a positive spread between the selling price of our products and our raw material costs;

 

·                  Ethanol supply exceeding demand; and corresponding ethanol price reductions;

 

·                  Changes in the environmental regulations that apply to our plant operations and changes in our ability to comply with such regulations;

 

·                  Our ability to generate sufficient liquidity to fund our operations, any debt service requirements and any capital expenditures;

 

·                  Changes in plant production capacity or technical difficulties in operating the plant;

 

·                  Changes in general economic conditions or the occurrence of certain events causing an economic impact in the agriculture, oil or automobile industries;

 

·                  Lack of transport, storage and blending infrastructure preventing ethanol from reaching high demand markets;

 

·                  Changes in federal and/or state laws (including the elimination of any federal and/or state ethanol tax incentives);

 

·                  Changes and advances in ethanol production technology;

 

·                  Effects of mergers, consolidations or contractions in the ethanol industry;

 

·                  Competition from alternative fuel additives;

 

·                  The development of infrastructure related to the sale and distribution of ethanol;

 

·                  Our inelastic demand for corn, as it is the only available feedstock for our plant;

 

·                  Our ability to retain key employees and maintain labor relations; and

 

·                  Volatile commodity and financial markets.

 

The cautionary statements referred to in this section also should be considered in connection with any subsequent written or oral forward-looking statements that may be issued by us or any persons acting on our behalf.  We undertake no duty to update these forward-looking statements, even though our situation may change in the future. Furthermore, we cannot guarantee future results, events, levels of activity, performance, or achievements.  We caution you not to put undue reliance on any forward-looking statements, which speak only as of the date of this

 

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report.  You should read this report and the documents that we reference in this report and have filed as exhibits, completely and with the understanding that our actual future results may be materially different from what we currently expect.  We qualify all of our forward-looking statements by these cautionary statements.

 

AVAILABLE INFORMATION

 

Information about us is also available at our website at www.granitefallsenergy.com, under “SEC Compliance,” which includes links to reports we have filed with the Securities and Exchange Commission, including annual, quarterly and current reports. The contents of our website are not incorporated by reference in this Annual Report on Form 10-K.  The Securities and Exchange Commission also maintains an Internet site (http://www.sec.gov) through which the public can access our reports.

 

PART I.

 

ITEM 1.                  BUSINESS.

 

Business Development

 

Granite Falls Energy, LLC (“Granite Falls” or the “Company”) is a Minnesota limited liability company currently producing fuel-grade ethanol, distillers grains, and corn oil for sale. Our plant has an approximate annual production capacity of 50 million gallons, and our environmental permits allow us to produce ethanol at a rate of 49.9 million gallons of undenatured ethanol on a twelve month rolling sum basis.

 

Our operating results are largely driven by the prices at which we sell our ethanol, distillers grains, and corn oil as well as the other costs related to production. The price of ethanol has historically fluctuated with the price of petroleum-based products such as unleaded gasoline, heating oil and crude oil. The price of distillers grains has historically been influenced by the price of corn as a substitute livestock feed. We expect these price relationships to continue for the foreseeable future, although recent volatility in the commodities markets makes historical price relationships less reliable. Our largest costs of production are corn, natural gas, depreciation and manufacturing chemicals. Our cost of corn is largely impacted by geopolitical supply and demand factors and the outcome of our risk management strategies. Prices for natural gas, manufacturing chemicals and denaturant are tied directly to the overall energy sector, crude oil and unleaded gasoline.

 

As of the date of this report, we have 35 full time employees. Eight of these employees are involved primarily in management and administration. The remaining employees are involved primarily in plant operations. We do not currently anticipate any significant change in the number of employees at our plant.

 

Financial Information

 

Please refer toItem 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations for information about our revenue, profit and loss measurements and total assets and liabilities and “Item 8 - Financial Statements and Supplementary Data” for our financial statements and supplementary data.

 

Principal Products

 

The principal products we produce are ethanol, distillers grains and corn oil.

 

Ethanol

 

Ethanol is ethyl alcohol, a fuel component made primarily from corn and various other grains, which can be used as: (i) an octane enhancer in fuels; (ii) an oxygenated fuel additive for the purpose of reducing ozone and carbon monoxide vehicle emissions; and (iii) a non-petroleum-based gasoline substitute.  More than 99% of all ethanol produced in the United States is used in its primary form for blending with unleaded gasoline and other fuel products.  The principal purchasers of ethanol are generally wholesale gasoline marketers or blenders.  The principal markets for our ethanol are petroleum terminals in the continental United States.

 

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Approximately 82.5% of our revenue, net of derivative activity, was derived from the sale of ethanol during our fiscal year ended October 31, 2009.  Ethanol sales accounted for approximately 83.8% and 89.2% of our revenue, net of derivative activity, for the fiscal years ended October 31, 2008 and 2007 respectively.

 

Distillers Grains

 

A principal co-product of the ethanol production process is distillers grains, a high protein, high-energy animal feed supplement primarily marketed to the dairy, poultry and beef industries.  Distillers grains contain by-pass protein that is superior to other protein supplements such as cottonseed meal and soybean meal.  By-pass proteins are more digestible to the animal, thus generating greater lactation in milk cows and greater weight gain in beef cattle and swine.  Distillers grains can also be included in the rations of breeder hens and laying hens which can potentially contain up to 20% and 15% percent distillers grains, respectively.

 

Approximately 16% of our revenue was derived from the sale of distillers grains during our fiscal year ended October 31, 2009.  Distillers grains sales accounted for approximately 15% and 11 % of our revenue for the fiscal years ended October 31, 2008 and 2007 respectively.

 

Corn Oil

 

In May 2008 the corn oil extraction equipment we installed at our plant became operational.  We independently market our corn oil which is used primarily as a biodiesel feedstock and as a supplement for animal feed.  Corn oil sales accounted for approximately 1.5% of our revenues during our fiscal year ended October 31, 2009 and 1.1% for the fiscal year ended October 31, 2008.

 

Principal Product Markets

 

As described below in “Distribution of Principal Products”, we market and distribute all of our ethanol and all of our distillers grains shipped by rail through professional third party marketers.  Our ethanol and distillers grains marketers make all decisions with regard to where our products are marketed.  Our ethanol and distillers grains are primarily sold in the domestic market.  As distillers grains become more accepted as an animal feed substitute throughout the world, distillers grains exporting may increase.

 

We expect our ethanol and distillers grains marketers to explore all markets for our products, including export markets.  However, due to high transportation costs, and the fact that we are not located near a major international shipping port, we expect our products to continue to be marketed primarily domestically.

 

Distribution of Principal Products

 

Our ethanol plant is located near Granite Falls, Minnesota in Chippewa County.  We selected the Granite Falls site because of its accessibility to road and rail transportation and its proximity to grain supplies.  It is served by the TC&W Railway which provides connection to the Burlington Northern Santa Fe Railroad.  Our site is in close proximity to major highways that connect to major population centers such as Minneapolis, Minnesota; Chicago, Illinois; and Detroit, Michigan.

 

Ethanol Distribution

 

During our fiscal quarter ended January 31, 2009 we began using Eco-Energy, Inc. (“Eco-Energy”) as our ethanol marketer.  As of our fiscal year ended October 31, 2008, Aventine Renewable Energy, Inc. (“Aventine”) was marketing and distributing all of the ethanol we produce at the plant.  Pursuant to our Ethanol Marketing Agreement (“Aventine Agreement”) with Aventine we received the average net selling price (net of freight, transportation costs and commissions paid to Aventine) in a given month of ethanol sales by Aventine on behalf of us and the other ethanol plants with which it has marketing contracts.  Aventine was responsible for negotiating freight rates with railroads and trucking firms for the transportation of our ethanol.

 

In October 2008 we concluded that we had reasonable grounds for insecurity regarding Aventine’s ability to perform under the Aventine Agreement.  Accordingly, in both October 2008 and December 2008 we requested

 

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from Aventine adequate assurance of Aventine’s ability to perform its obligations under the Aventine Agreement.  Aventine did not provide such assurance; therefore, we terminated the Aventine Agreement on December 24, 2008.  At the time the Aventine Agreement was terminated, we had a receivable from Aventine of approximately $1,781,000.  In satisfaction of this amount, Aventine paid us $500,000 in cash, we agreed to redeem Aventine’s 500 membership units for $500,000 (as required by the Aventine Agreement), and we incurred a termination fee of the remaining $781,000 which was charged to other income (expense) in the statement of operations for the period ended January 31, 2009. In February 2009, in connection with the termination of the Aventine Agreement, we assumed four rail car leases that Aventine had in place for the transportation of our ethanol.  In April 2009 Aventine filed for bankruptcy protection.

 

Also on December 24, 2008, we entered into an Ethanol Marketing Agreement (“Eco Agreement”) with Eco-Energy.  Pursuant to the Eco Agreement, Eco-Energy agreed to market the entire ethanol output of our ethanol plant and to arrange for the transportation of ethanol; however, we are responsible for securing all of the rail cars necessary for the transportation of ethanol by rail.  We pay Eco-Energy a certain percentage of the FOB plant price in consideration of Eco-Energy’s services.

 

Distillers Grains Distribution

 

CHS, Inc. (“CHS”) markets our distillers grains throughout the continental United States.  CHS markets all of the distillers grains that are shipped by rail from our plant.  The remainder of our distillers grains product is transported by truck and we have the discretion to designate the portion of the trucked distillers grains marketed by CHS.  Granite Falls independently markets the remainder of its distillers grains, which are shipped from the plant by truck to livestock producers, exporters and other marketers.  Our distillers grains must meet minimum quality feed trade standards.

 

Corn Oil Distribution

 

We independently market our corn oil which is used primarily as a biodiesel feedstock and as a supplement for animal feed.  Our corn oil is transported by truck to end users located primarily in the upper Midwest.

 

New Products and Services

 

We did not introduce any new services during our fiscal year ended October 31, 2009.

 

Sources and Availability of Raw Materials

 

Corn Supply

 

To produce approximately 50 million gallons of undenatured ethanol per year our ethanol plant needs approximately 18 million bushels of corn per year, or approximately 50,000 bushels per day, as the feedstock for its dry milling process.  The grain supply for our plant is obtained from the Farmers Cooperative Elevator Company, our exclusive grain procurement agent.  We will be forced to seek alternative corn suppliers if the Farmers Cooperative Elevator cannot meet our needs.

 

On September 24, 2009, we agreed to amend our grain procurement agreement with Farmers Cooperative Elevator.  The effective date of the amended grain procurement agreement is September 1, 2009. The term of the agreement was not amended and the initial 12 year term is scheduled to expire in 2017. The price of the corn purchased is based on a market price formula, plus a per bushel procurement fee.  Adjustments are made to the price for corn of inferior quality or excess moisture.  The terms of the amendment include adjustments to the amount of corn FCE is required to store at the Granite Falls plant site, the amount of corn delivered to Granite Falls by rail, the procurement fee paid by Granite Falls to Farmers Cooperative Elevator and the pricing procedures for corn purchased by Granite Falls.  Farmers Cooperative Elevator currently owns approximately two percent of our outstanding membership units.

 

On January 12, 2010, the United States Department of Agriculture (“USDA”) released its Crop Production report, which estimated the 2009 grain corn crop at 13.2 billion bushels.  The January 12, 2010 estimate of the 2009

 

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corn crop is approximately 8.7% above the USDA’s estimate of the 2008 corn crop of 12.1 billion bushels.  Corn prices reached historical highs in July 2008, but have come down sharply since that time as stronger than expected yields materialized and the global financial crisis brought down prices of most commodities generally. In addition to the fundamental reasons for the extreme volatility in the corn market, we believe speculation in the commodities markets played a significant role in driving up corn prices in 2008.  The Food and Agriculture Organization of the United Nations estimates that approximately 30 percent of the volatility in the corn market was beyond what could be accounted for by market fundamentals.  We expect continued volatility in the price of corn, which could significantly impact our cost of goods sold.

 

Although the area surrounding the plant produces a significant amount of corn and we do not anticipate encountering problems sourcing corn, a shortage of corn could develop, particularly if there were an extended drought or other production problem.  We recently experienced increased corn prices due in part to poor weather conditions that significantly delayed the harvest in the Midwest.  Poor weather can be a major factor in increasing corn prices.  If the United States were to endure an entire growing season with poor weather conditions, it could result in significant and prolonged high corn prices.  Corn prices depend on several factors, including world supply and demand and the price of other commodities.  United States production of corn can be volatile as a result of a number of factors, the most important of which are weather, current and anticipated stocks, domestic and export prices and supports and the government’s current and anticipated agricultural policy.  The price of corn was volatile during our 2009 fiscal year and we anticipate that it will continue to be volatile in the future.  Increases in the price of corn significantly increase our cost of goods sold.  If these increases in cost of goods sold are not offset by corresponding increases in the prices we receive from the sale of our products, these increases in cost of goods sold can have a significant negative impact on our financial performance.

 

The price and availability of corn are subject to fluctuations depending upon a number of factors affecting grain commodity prices in general, including crop conditions, weather, governmental programs and foreign purchases.  Ethanol producers are generally not able to compensate for increases in the cost of grain feedstock through adjustments in prices charged for their ethanol.  We can mitigate fluctuations in the corn and ethanol markets by locking in a favorable margin through the use of hedging activities and forward contracts.  We recognize that we are not always presented with an opportunity to lock in a favorable margin and that our plant’s profitability may be negatively impacted during periods of high grain prices.

 

Utilities

 

Natural Gas.  Natural gas is a significant input to our manufacturing process.  We estimate our natural gas usage at approximately 125,000 million British thermal units (“mmBTU”) per month.  We use natural gas to dry our distillers grains product to moisture contents at which it can be stored for long periods and transported greater distances.  Our dried distillers grains can then be marketed to broader livestock markets, including poultry and swine markets in the continental United States, and can be shipped to international markets.

 

We pay Center Point Energy/Minnegasco a per unit fee to move the natural gas through the pipeline and have guaranteed to move a minimum of 1,400,000 decatherm annually through December 31, 2015, which is the ending date of the agreement.

 

We also have an agreement with U.S. Energy Services, Inc.  On our behalf, U.S. Energy Services procures contracts with various natural gas vendors to supply the natural gas necessary to operate the plant. We determined that sourcing our natural gas from a variety of vendors is more cost-efficient than using an exclusive supplier.

 

Electricity.  Our plant requires a continuous supply of 4.5 megawatts of electricity.  We have an agreement with Minnesota Valley Electric Cooperative (‘MVEC”) to supply electricity to our plant.  Under this agreement, we pay MVEC a monthly base fee plus regular energy and demand charges for electricity delivered to our plant.

 

Water.  We currently obtain the water necessary to operate our plant from the Minnesota River. In addition to an intake structure in the Minnesota River and a water pipeline to the plant from the Minnesota River, we have two ground water wells that provide a redundant supply of water to our plant.  We also have a water treatment facility to pre-treat the river water we use for operations. The water pipeline and water treatment equipment became operational in February 2007 and the Minnesota River is our primary source of water.

 

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Patents, Trademarks, Licenses, Franchises and Concessions

 

We do not currently hold any patents, trademarks, franchises or concessions.  We were granted a license by ICM to use certain ethanol production technology necessary to operate our ethanol plant.  The cost of the license granted by ICM was included in the amount we paid to Fagen, Inc. to design and build our ethanol plant.

 

Seasonality of Ethanol Sales

 

We experience some seasonality of demand for our ethanol.  Since ethanol is predominantly blended with conventional gasoline for use in automobiles, ethanol demand tends to shift in relation to gasoline demand.  As a result, we experience some seasonality of demand for ethanol in the summer months related to increased driving.  In addition, we experience some increased ethanol demand during holiday seasons related to increased gasoline demand.

 

Working Capital

 

We primarily use our working capital for purchases of raw materials necessary to operate the ethanol plant.  Our primary source of working capital is income from our operations, our cash reserves and our $6,000,000 revolving line of credit with Minnwest Bank.  As a result of unfavorable conditions in the ethanol industry during the beginning of our 2009 fiscal year, we had an outstanding balance on our line of credit. We have subsequently paid our revolving line of credit down to a zero balance.

 

Dependence on One or a Few Major Customers

 

As discussed above, we have an exclusive ethanol marketing agreement with Eco-Energy and we have an agreement with CHS for the marketing of our distillers grains.  We rely on Eco-Energy and CHS for the sale and distribution of almost all of our products, except for those distillers grains that we market locally and our corn oil.  Therefore, we are highly dependent on Eco-Energy and CHS for the successful marketing of our products.  Any loss of Eco-Energy or CHS as our marketing agent for our ethanol or distillers grains could have a negative impact on our revenues.

 

Competition

 

We are in direct competition with numerous ethanol producers, many of whom have greater resources than we do.  Following the significant growth in the ethanol industry during 2005 and 2006, the ethanol industry has grown at a much slower pace.  Management attributes the rapid growth during 2005 and 2006 to a favorable spread between the price of ethanol and the cost of the raw materials used to produce ethanol during that time period.  Management believes that currently, ethanol supply capacity exceeds ethanol demand.  This has resulted in some ethanol producers reducing production of ethanol or ceasing operations altogether.  As of December 10, 2009, the Renewable Fuels Association estimated that approximately 9% of the ethanol production capacity in the United States was idled.  This is down from earlier in 2009 when the idled capacity may have been as high as 20%.  As a result of this overcapacity, the ethanol industry has become increasingly competitive.  Since ethanol is a commodity product, competition in the industry is predominantly based on price.  Larger ethanol producers may be able to realize economies of scale in their operations that we are unable to realize.  This could put us at a competitive disadvantage to other ethanol producers.  Management anticipates that without an increase in the amount of ethanol that can be blended into gasoline for use in conventional automobiles, ethanol demand may not significantly increase which may result in ethanol supply capacity exceeding ethanol demand for the foreseeable future.

 

Recently, the United States Environmental Protection Agency has been researching increasing the amount of ethanol that can be blended for use in conventional automobiles from 10% to 15%.  However, the EPA has delayed a decision until mid-2010 with respect to a 15% blend.  Management believes that increasing ethanol blends to 15% for use in conventional automobiles will increase demand for ethanol and would likely positively impact ethanol prices.  However, this will also likely result in companies building new ethanol plants or expanding their current ethanol plants.  This could lead to further overcapacity in the ethanol industry if supply capacity continues to eclipse demand.  In addition, based on comments made by the EPA, some in the ethanol industry believe the EPA is

 

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considering allowing the use of a 15% ethanol blend only for vehicles produced in the model year 2001 and later.  Many believe that such a restriction would lead to gasoline retailers deciding not to carry a 15% ethanol blend because many of their customers would not be permitted to use the 15% blend.  If this were to occur, it would significantly reduce any ethanol demand increases that could result from such a 15% blend.

 

In December 2009 the California Office of Administrative Law approved the Low Carbon Fuel Standard (LCFS) for implementation.  The LCFS is an attempt to achieve a 10 percent reduction in motor vehicles’ emissions of greenhouse gases by 2020 through the use of low-carbon fuels like hydrogen or cellulosic ethanol.  The LCFS attempts to consider the life cycle carbon content of all fuels used in California by taking indirect land use change theories into account when determining a fuel’s potential for reducing emissions of greenhouse gases.  Currently, most corn based ethanol would not meet the criteria of the LCFS which may in turn limit the demand for corn based ethanol and increase demand for ethanol derived from cellulose based feedstocks.  Renewable fuels that do not use corn as the primary feedstock may be an important competitive factor facing our company given the LCFS adopted in California.  It is also possible that the LCFS will be adopted in additional states in the future.

 

Many of the current ethanol production incentives are designed to encourage the production of renewable fuels using raw materials other than corn.  One type of ethanol production feedstock that is being explored is cellulose.  Cellulose is the main component of plant cell walls and is the most common organic compound on earth.  Cellulose is found in wood chips, corn stalks, rice straw, amongst other common plants.  Cellulosic ethanol is ethanol produced from cellulose.  Currently, cellulosic ethanol production technology is not sufficiently advanced to produce cellulosic ethanol on a commercial scale.  However, due to these new government incentives, we anticipate that commercially viable cellulosic ethanol technology will be developed in the future.  Several companies and researchers have commenced pilot projects to study the feasibility of commercially producing cellulosic ethanol.  If this technology can be profitably employed on a commercial scale, it could potentially lead to ethanol that is less expensive to produce than corn based ethanol, especially if corn prices remain high.  Cellulosic ethanol may also capture more government subsidies and assistance than corn based ethanol.  This could decrease demand for our product or result in competitive disadvantages for our ethanol production process.

 

We may also face competition from larger ethanol producers which may be able to compete more effectively than us.  At the end of 2008, VeraSun Energy, one of the largest ethanol producers in the United States at the time, filed for Chapter 11 Bankruptcy due in part to significant losses it experienced on raw material derivative positions it had in place.  VeraSun’s ethanol plants were auctioned during the Chapter 11 Bankruptcy process and a significant number of these plants were purchased by Valero Renewable Fuels which is a subsidiary of a major gasoline refining company.  The purchase by Valero represents the first major oil company that has taken a large stake in ethanol production infrastructure.  Valero now controls its own supply of ethanol that can be blended at its gasoline refineries.  Should other oil companies become involved in the ethanol industry, it may be increasingly difficult for us to compete.  While we believe that we are a lower cost producer of ethanol, increased competition in the ethanol industry may make it more difficult to operate the ethanol plant profitably.

 

According to the Renewable Fuels Association, as of December 10, 2009, the most recent data available, the ethanol industry has grown to 200 production facilities in the United States. There are approximately 9 new plants currently under construction along with approximately 5 plant expansions.  The Renewable Fuels Association currently estimates that the United States ethanol industry has capacity to produce more than 13 billion gallons of ethanol per year.  The new ethanol plants under construction along with the plant expansions under construction could push domestic production of fuel ethanol in the near future to nearly 14.5 billion gallons per year.  The largest ethanol producers include Archer Daniels Midland, Green Plains Renewable Energy, Hawkeye Energy Holdings, POET, and Valero Renewable Fuels each of which are capable of producing significantly more ethanol than we produce.  However, Hawkeye Renewables LLC filed for Chapter 11 bankruptcy on December 21, 2009.  Hawkeye Renewables owns two ethanol plants and is a subsidiary of Hawkeye Energy Holdings.  While Hawkeye Renewables plans to exit Chapter 11 bankruptcy in 60 to 90 days and does not anticipate ceasing its operations, this plan may not be realized.  If the ethanol plants owned by Hawkeye Renewables are sold, it may lead to further consolidation of the ethanol industry.

 

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The following table identifies most of the ethanol producers in the United States along with their production capacities.

 

U.S. FUEL ETHANOL BIOREFINERIES AND PRODUCTION CAPACITY

million gallons per year (mmgy)

 

Company

 

Location

 

Feedstock

 

Nameplate
Capacity (mgy)

 

Operating
Production
(mgy)

 

Under
Construction/

Expansion
Capacity (mgy)

 

Abengoa Bioenergy Corp. (Total)

 

 

 

 

 

198.0

 

168.0

 

176.0

 

Abengoa Bioenergy Corp.

 

Madison, IL

 

corn

 

 

 

 

 

 

 

Abengoa Bioenergy Corp.

 

Mt. Vernon, IN

 

corn

 

 

 

 

 

 

 

Abengoa Bioenergy Corp.

 

Colwich, KS

 

corn/milo

 

 

 

 

 

 

 

Abengoa Bioenergy Corp.

 

Ravenna, NE

 

Corn

 

 

 

 

 

 

 

Abengoa Bioenergy Corp.

 

York, NE

 

Corn

 

 

 

 

 

 

 

Abengoa Bioenergy Corp.

 

Portales, NM

 

corn

 

 

 

 

 

 

 

Absolute Energy, LLC*

 

St. Ansgar, IA

 

Corn

 

110.0

 

110.0

 

 

 

ACE Ethanol, LLC

 

Stanley, WI

 

Corn

 

41.0

 

41.0

 

 

 

Adkins Energy, LLC*

 

Lena, IL

 

Corn

 

40.0

 

40.0

 

 

 

Advanced Bioenergy, LLC

 

Fairmont, NE

 

Corn

 

100.0

 

100.0

 

 

 

Ag Energy Resources, Inc.

 

Benton, IL

 

corn

 

 

 

 

 

5.0

 

AGP*

 

Hastings, NE

 

Corn

 

52.0

 

52.0

 

 

 

Agri-Energy, LLC*

 

Luverne, MN

 

Corn

 

21.0

 

21.0

 

 

 

Al-Corn Clean Fuel*

 

Claremont, MN

 

Corn

 

42.0

 

42.0

 

 

 

Alchem Ltd. LLP

 

Grafton, ND

 

Corn

 

10.0

 

 

 

 

 

AltraBiofuels Coshocton Ethanol, LLC

 

Coshocton, OH

 

corn

 

60.0

 

 

 

 

 

AltraBiofuels Indiana, LLC

 

Cloverdale, IN

 

corn

 

92.0

 

 

 

 

 

AltraBiofuels Phoenix Bio Industries, LLC

 

Goshen, CA

 

Corn

 

31.5

 

31.5

 

 

 

Amaizing Energy, LLC*

 

Atlantic, IA

 

Corn

 

110.0

 

110.0

 

 

 

Amaizing Energy, LLC*

 

Denison, IA

 

Corn

 

55.0

 

55.0

 

 

 

Appomattox Bio Energy

 

Hopewell, VA

 

corn

 

 

 

 

 

65.0

 

Archer Daniels Midland (Total)

 

 

 

 

 

1,070.0

 

1,070.0

 

550.0

 

Archer Daniels Midland

 

Cedar Rapids, IA

 

Corn

 

 

 

 

 

 

 

Archer Daniels Midland

 

Clinton, IA

 

Corn

 

 

 

 

 

 

 

Archer Daniels Midland

 

Decatur, IL

 

Corn

 

 

 

 

 

 

 

Archer Daniels Midland

 

Peoria, IL

 

Corn

 

 

 

 

 

 

 

Archer Daniels Midland

 

Marshall, MN

 

Corn

 

 

 

 

 

 

 

Archer Daniels Midland

 

Wallhalla, ND

 

Corn/barley

 

 

 

 

 

 

 

Archer Daniels Midland

 

Columbus, NE

 

Corn

 

 

 

 

 

 

 

Arkalon Energy, LLC

 

Liberal, KS

 

Corn

 

110.0

 

110.0

 

 

 

Aventine Renewable Energy, LLC (Total)

 

 

 

 

 

207.0

 

207.0

 

 

 

Aventine Renewable Energy, LLC

 

Pekin, IL

 

Corn

 

 

 

 

 

 

 

 

10



Table of Contents

 

Aventine Renewable Energy, LLC

 

Aurora, NE

 

Corn

 

 

 

 

 

 

 

Badger State Ethanol, LLC*

 

Monroe, WI

 

Corn

 

48.0

 

48.0

 

 

 

Big River Resources Galva, LLC

 

Galva, IL

 

corn

 

100.0

 

100.0

 

 

 

Big River Resources, LLC*

 

West Burlington, IA

 

Corn

 

100.0

 

100.0

 

 

 

Big River United Energy

 

Dyersville, IA

 

corn

 

110.0

 

 

 

 

 

BioFuel Energy - Buffalo Lake Energy, LLC

 

Fairmont, MN

 

Corn

 

115.0

 

115.0

 

 

 

BioFuel Energy - Pioneer Trail Energy, LLC

 

Wood River, NE

 

Corn

 

115.0

 

115.0

 

 

 

Bional Clearfield

 

Clearfield, PA

 

Corn

 

 

 

 

 

110.0

 

Blue Flint Ethanol

 

Underwood, ND

 

Corn

 

50.0

 

50.0

 

 

 

Bonanza Energy, LLC

 

Garden City, KS

 

Corn/milo

 

55.0

 

55.0

 

 

 

Bridgeport Ethanol

 

Bridgeport, NE

 

corn

 

54.0

 

54.0

 

 

 

Bunge-Ergon Vicksburg

 

Vicksburg, MS

 

corn

 

54.0

 

54.0

 

 

 

Bushmills Ethanol, Inc.*

 

Atwater, MN

 

Corn

 

50.0

 

50.0

 

 

 

Calgren Renewable Fuels, LLC

 

Pixley, CA

 

Corn

 

55.0

 

 

 

 

 

Carbon Green Bioenergy

 

Lake Odessa, MI

 

Corn

 

50.0

 

 

 

 

 

Cardinal Ethanol

 

Union City, IN

 

Corn

 

100.0

 

100.0

 

 

 

Cargill, Inc.

 

Eddyville, IA

 

Corn

 

35.0

 

35.0

 

 

 

Cargill, Inc.

 

Blair, NE

 

Corn

 

85.0

 

85.0

 

 

 

Cascade Grain

 

Clatskanie, OR

 

Corn

 

108.0

 

 

 

 

 

Castle Rock Renewable Fuels, LLC

 

Necedah, WI

 

Corn

 

50.0

 

50.0

 

 

 

Center Ethanol Company

 

Sauget, IL

 

Corn

 

54.0

 

54.0

 

 

 

Central Indiana Ethanol, LLC

 

Marion, IN

 

Corn

 

40.0

 

40.0

 

 

 

Central MN Ethanol Coop*

 

Little Falls, MN

 

Corn

 

21.5

 

21.5

 

 

 

Chief Ethanol

 

Hastings, NE

 

Corn

 

62.0

 

62.0

 

 

 

Chippewa Valley Ethanol Co.*

 

Benson, MN

 

Corn

 

45.0

 

45.0

 

 

 

Cilion Ethanol

 

Keyes, CA

 

Corn

 

 

 

 

 

50.0

 

Clean Burn Fuels, LLC

 

Raeford, NC

 

Corn

 

 

 

 

 

60.0

 

Commonwealth Agri-Energy, LLC*

 

Hopkinsville, KY

 

Corn

 

33.0

 

33.0

 

 

 

Corn Plus, LLP*

 

Winnebago, MN

 

Corn

 

44.0

 

44.0

 

 

 

Corn, LP*

 

Goldfield, IA

 

Corn

 

60.0

 

60.0

 

 

 

Cornhusker Energy Lexington, LLC

 

Lexington, NE

 

Corn

 

40.0

 

40.0

 

 

 

Dakota Ethanol, LLC*

 

Wentworth, SD

 

Corn

 

50.0

 

50.0

 

 

 

DENCO, LLC

 

Morris, MN

 

Corn

 

24.0

 

 

 

 

 

Didion Ethanol

 

Cambria, WI

 

Corn

 

40.0

 

40.0

 

 

 

E Caruso (Goodland Energy Center)

 

Goodland, KS

 

Corn

 

 

 

 

 

20.0

 

 

11



Table of Contents

 

E Energy Adams, LLC

 

Adams, NE

 

Corn

 

50.0

 

50.0

 

 

 

E3 Biofuels

 

Mead, NE

 

corn

 

25.0

 

 

 

 

 

East Kansas Agri-Energy, LLC*

 

Garnett, KS

 

Corn

 

35.0

 

35.0

 

 

 

ESE Alcohol Inc.

 

Leoti, KS

 

Seed corn

 

1.5

 

1.5

 

 

 

Front Range Energy, LLC

 

Windsor, CO

 

Corn

 

40.0

 

40.0

 

 

 

Gateway Ethanol

 

Pratt, KS

 

Corn

 

55.0

 

 

 

 

 

Glacial Lakes Energy, LLC - Mina

 

Mina, SD

 

corn

 

107.0

 

107.0

 

 

 

Glacial Lakes Energy, LLC*

 

Watertown, SD

 

Corn

 

100.0

 

100.0

 

 

 

Global Ethanol/Midwest Grain Processors

 

Lakota, IA

 

Corn

 

98.0

 

98.0

 

 

 

Global Ethanol/Midwest Grain Processors

 

Riga, MI

 

Corn

 

57.0

 

57.0

 

 

 

Golden Cheese Company of California*

 

Corona, CA

 

Cheese whey

 

5.0

 

5.0

 

 

 

Golden Grain Energy, LLC*

 

Mason City, IA

 

Corn

 

115.0

 

115.0

 

 

 

Golden Triangle Energy, LLC*

 

Craig, MO

 

Corn

 

20.0

 

20.0

 

 

 

Grain Processing Corp.

 

Muscatine, IA

 

Corn

 

20.0

 

20.0

 

 

 

Granite Falls Energy, LLC*

 

Granite Falls, MN

 

Corn

 

52.0

 

52.0

 

 

 

Greater Ohio Ethanol, LLC

 

Lima, OH

 

Corn

 

54.0

 

 

 

 

 

Green Plains Renewable Energy

 

Shenandoah, IA

 

Corn

 

55.0

 

55.0

 

 

 

Green Plains Renewable Energy

 

Superior, IA

 

Corn

 

55.0

 

55.0

 

 

 

Green Plains Renewable Energy

 

Bluffton, IN

 

Corn

 

110.0

 

110.0

 

 

 

Green Plains Renewable Energy

 

Central City, NE

 

corn

 

100.0

 

100.0

 

 

 

Green Plains Renewable Energy

 

Ord, NE

 

Corn

 

50.0

 

50.0

 

 

 

Green Plains Renewable Energy

 

Obion, TN

 

Corn

 

110.0

 

110.0

 

 

 

Guardian Energy

 

Janesville, MN

 

corn

 

110.0

 

110.0

 

 

 

Hankinson Renewable Energy, LLC

 

Hankinson, ND

 

corn

 

110.0

 

110.0

 

 

 

Hawkeye Renewables, LLC

 

Fairbank, IA

 

Corn

 

110.0

 

110.0

 

 

 

Hawkeye Renewables, LLC

 

Iowa Falls, IA

 

Corn

 

90.0

 

90.0

 

 

 

Hawkeye Renewables, LLC

 

Menlo, IA

 

Corn

 

110.0

 

110.0

 

 

 

Hawkeye Renewables, LLC

 

Shell Rock, IA

 

Corn

 

110.0

 

110.0

 

 

 

Heartland Corn Products*

 

Winthrop, MN

 

Corn

 

100.0

 

100.0

 

 

 

Heartland Grain Fuels, LP

 

Aberdeen, SD

 

Corn

 

50.0

 

50.0

 

 

 

Heartland Grain Fuels, LP

 

Huron, SD

 

Corn

 

32.0

 

32.0

 

33.0

 

Heron Lake BioEnergy, LLC

 

Heron Lake, MN

 

Corn

 

50.0

 

50.0

 

 

 

Highwater Ethanol LLC

 

Lamberton, MN

 

Corn

 

55.0

 

55.0

 

 

 

Homeland Energy

 

New Hampton, IA

 

Corn

 

100.0

 

100.0

 

 

 

Husker Ag, LLC*

 

Plainview, NE

 

Corn

 

75.0

 

75.0

 

 

 

 

12



Table of Contents

 

Idaho Ethanol Processing

 

Caldwell, ID

 

Potato Waste

 

4.0

 

4.0

 

 

 

Illinois River Energy, LLC

 

Rochelle, IL

 

Corn

 

100.0

 

100.0

 

 

 

Iroquois Bio-Energy Company, LLC

 

Rensselaer, IN

 

corn

 

40.0

 

40.0

 

 

 

KAAPA Ethanol, LLC*

 

Minden, NE

 

Corn

 

40.0

 

40.0

 

 

 

Kansas Ethanol, LLC

 

Lyons, KS

 

Corn

 

55.0

 

55.0

 

 

 

KL Process Design Group

 

Upton, WY

 

Wood waste

 

1.5

 

1.5

 

 

 

Land O’ Lakes*

 

Melrose, MN

 

Cheese whey

 

2.6

 

2.6

 

 

 

Levelland/Hockley County Ethanol, LLC

 

Levelland, TX

 

Corn

 

40.0

 

40.0

 

 

 

Lifeline Foods, LLC

 

St. Joseph, MO

 

Corn

 

40.0

 

40.0

 

 

 

Lincolnland Agri-Energy, LLC*

 

Palestine, IL

 

Corn

 

48.0

 

48.0

 

 

 

Lincolnway Energy, LLC*

 

Nevada, IA

 

Corn

 

55.0

 

55.0

 

 

 

Little Sioux Corn Processors, LP*

 

Marcus, IA

 

Corn

 

92.0

 

92.0

 

 

 

Louis Dreyfus Commodities

 

Grand Junction, IA

 

corn

 

100.0

 

100.0

 

 

 

Louis Dreyfus Commodities

 

Norfolk, NE

 

Corn

 

45.0

 

45.0

 

 

 

Marquis Energy, LLC

 

Hennepin, IL

 

Corn

 

100.0

 

100.0

 

 

 

Marysville Ethanol, LLC

 

Marysville, MI

 

Corn

 

50.0

 

50.0

 

 

 

Merrick & Company

 

Aurora, CO

 

Waste beer

 

3.0

 

3.0

 

 

 

Mid America Agri Products/Horizon

 

Cambridge, NE

 

Corn

 

44.0

 

 

 

 

 

Mid America Agri Products/Wheatland

 

Madrid, NE

 

Corn

 

44.0

 

44.0

 

 

 

Mid-Missouri Energy, Inc.*

 

Malta Bend, MO

 

Corn

 

50.0

 

50.0

 

 

 

Midwest Renewable Energy, LLC

 

Sutherland, NE

 

Corn

 

25.0

 

25.0

 

 

 

Minnesota Energy*

 

Buffalo Lake, MN

 

Corn

 

18.0

 

18.0

 

 

 

NEDAK Ethanol

 

Atkinson, NE

 

corn

 

44.0

 

44.0

 

 

 

Nesika Energy, LLC

 

Scandia, KS

 

corn

 

10.0

 

10.0

 

 

 

New Energy Corp.

 

South Bend, IN

 

Corn

 

102.0

 

102.0

 

 

 

North Country Ethanol, LLC*

 

Rosholt, SD

 

Corn

 

20.0

 

20.0

 

 

 

NuGen Energy

 

Marion, SD

 

corn

 

110.0

 

110.0

 

 

 

One Earth Energy

 

Gibson City, IL

 

corn

 

100.0

 

100.0

 

 

 

Otter Tail Ag Enterprises

 

Fergus Falls, MN

 

Corn

 

57.5

 

57.5

 

 

 

Pacific Ethanol

 

Madera, CA

 

Corn

 

40.0

 

 

 

 

 

Pacific Ethanol

 

Stockton, CA

 

Corn

 

60.0

 

 

 

 

 

Pacific Ethanol

 

Burley, ID

 

Corn

 

50.0

 

 

 

 

 

Pacific Ethanol

 

Boardman, OR

 

Corn

 

40.0

 

40.0

 

 

 

Panda Ethanol

 

Hereford, TX

 

Corn/milo

 

 

 

 

 

115.0

 

Parallel Products

 

Rancho Cucamonga, CA

 

 

 

 

 

 

 

 

 

Parallel Products

 

Louisville, KY

 

Beverage waste

 

5.4

 

5.4

 

 

 

Patriot Renewable Fuels, LLC

 

Annawan, IL

 

Corn

 

100.0

 

100.0

 

 

 

 

13



Table of Contents

 

Penford Products

 

Cedar Rapids, IA

 

Corn

 

45.0

 

45.0

 

 

 

Pinal Energy, LLC

 

Maricopa, AZ

 

Corn

 

55.0

 

55.0

 

 

 

Pine Lake Corn Processors, LLC

 

Steamboat Rock, IA

 

corn

 

31.0

 

31.0

 

 

 

Platinum Ethanol, LLC*

 

Arthur, IA

 

Corn

 

110.0

 

110.0

 

 

 

Plymouth Ethanol, LLC*

 

Merrill, IA

 

Corn

 

50.0

 

50.0

 

 

 

POET Biorefining - Alexandria

 

Alexandria, IN

 

Corn

 

68.0

 

68.0

 

 

 

POET Biorefining - Ashton

 

Ashton, IA

 

Corn

 

56.0

 

56.0

 

 

 

POET Biorefining - Big Stone

 

Big Stone City, SD

 

Corn

 

79.0

 

79.0

 

 

 

POET Biorefining - Bingham Lake

 

Bingham Lake, MN

 

 

 

35.0

 

35.0

 

 

 

POET Biorefining - Caro

 

Caro, MI

 

Corn

 

53.0

 

53.0

 

5.0

 

POET Biorefining - Chancellor

 

Chancellor, SD

 

Corn

 

110.0

 

110.0

 

 

 

POET Biorefining - Coon Rapids

 

Coon Rapids, IA

 

Corn

 

54.0

 

54.0

 

 

 

POET Biorefining - Corning

 

Corning, IA

 

Corn

 

65.0

 

65.0

 

 

 

POET Biorefining - Emmetsburg

 

Emmetsburg, IA

 

Corn

 

55.0

 

55.0

 

 

 

POET Biorefining - Fostoria

 

Fostoria, OH

 

Corn

 

68.0

 

68.0

 

 

 

POET Biorefining - Glenville

 

Albert Lea, MN

 

Corn

 

42.0

 

42.0

 

 

 

POET Biorefining - Gowrie

 

Gowrie, IA

 

Corn

 

69.0

 

69.0

 

 

 

POET Biorefining - Hanlontown

 

Hanlontown, IA

 

Corn

 

56.0

 

56.0

 

 

 

POET Biorefining - Hudson

 

Hudson, SD

 

Corn

 

56.0

 

56.0

 

 

 

POET Biorefining - Jewell

 

Jewell, IA

 

Corn

 

69.0

 

69.0

 

 

 

POET Biorefining - Laddonia

 

Laddonia, MO

 

Corn

 

50.0

 

50.0

 

 

 

POET Biorefining - Lake Crystal

 

Lake Crystal, MN

 

Corn

 

56.0

 

56.0

 

 

 

POET Biorefining - Leipsic

 

Leipsic, OH

 

Corn

 

68.0

 

68.0

 

 

 

POET Biorefining - Macon

 

Macon, MO

 

Corn

 

46.0

 

46.0

 

 

 

POET Biorefining - Marion

 

Marion, OH

 

Corn

 

68.0

 

68.0

 

 

 

POET Biorefining - Mitchell

 

Mitchell, SD

 

Corn

 

68.0

 

68.0

 

 

 

POET Biorefining - North Manchester

 

North Manchester, IN

 

Corn

 

68.0

 

68.0

 

 

 

POET Biorefining - Portland

 

Portland, IN

 

Corn

 

68.0

 

68.0

 

 

 

POET Biorefining - Preston

 

Preston, MN

 

Corn

 

46.0

 

46.0

 

 

 

POET Biorefining - Scotland

 

Scotland, SD

 

Corn

 

11.0

 

11.0

 

 

 

POET Biorefining- Groton

 

Groton, SD

 

Corn

 

53.0

 

53.0

 

 

 

Prairie Horizon Agri-Energy, LLC

 

Phillipsburg, KS

 

Corn

 

40.0

 

40.0

 

 

 

Quad-County Corn Processors*

 

Galva, IA

 

Corn

 

30.0

 

30.0

 

 

 

Range Fuels

 

Soperton, GA

 

wood and wood waste

 

 

 

 

 

100.0

 

 

14



Table of Contents

 

Red Trail Energy, LLC

 

Richardton, ND

 

Corn

 

50.0

 

50.0

 

 

 

Redfield Energy, LLC *

 

Redfield, SD

 

Corn

 

50.0

 

50.0

 

 

 

Reeve Agri-Energy

 

Garden City, KS

 

Corn/milo

 

12.0

 

12.0

 

 

 

Renew Energy

 

Jefferson Junction, WI

 

Corn

 

130.0

 

130.0

 

 

 

Renova Energy

 

Torrington, WY

 

Corn

 

5.0

 

5.0

 

 

 

Riverland Biofuels

 

Canton, IL

 

corn

 

37.0

 

37.0

 

 

 

Show Me Ethanol

 

Carrollton, MO

 

Corn

 

55.0

 

55.0

 

 

 

Siouxland Energy & Livestock Coop*

 

Sioux Center, IA

 

Corn

 

60.0

 

60.0

 

 

 

Siouxland Ethanol, LLC

 

Jackson, NE

 

Corn

 

50.0

 

50.0

 

 

 

Southwest Georgia Ethanol, LLC

 

Camilla, GA

 

Corn

 

100.0

 

100.0

 

 

 

Southwest Iowa Renewable Energy, LLC *

 

Council Bluffs, IA

 

Corn

 

110.0

 

110.0

 

 

 

Sterling Ethanol, LLC

 

Sterling, CO

 

Corn

 

42.0

 

42.0

 

 

 

Sunoco

 

Volney, NY

 

Corn

 

114.0

 

 

 

 

 

Tate & Lyle

 

Ft. Dodge, IA

 

Corn

 

 

 

 

 

105.0

 

Tate & Lyle

 

Loudon, TN

 

Corn

 

67.0

 

67.0

 

38.0

 

Tharaldson Ethanol

 

Casselton, ND

 

Corn

 

110.0

 

110.0

 

 

 

The Andersons Albion Ethanol LLC

 

Albion, MI

 

Corn

 

55.0

 

55.0

 

 

 

The Andersons Clymers Ethanol, LLC

 

Clymers, IN

 

Corn

 

110.0

 

110.0

 

 

 

The Andersons Marathon Ethanol, LLC

 

Greenville, OH

 

Corn

 

110.0

 

110.0

 

 

 

Trenton Agri Products, LLC

 

Trenton, NE

 

Corn

 

40.0

 

40.0

 

 

 

United Ethanol

 

Milton, WI

 

Corn

 

52.0

 

52.0

 

 

 

United WI Grain Producers, LLC*

 

Friesland, WI

 

Corn

 

49.0

 

49.0

 

 

 

Utica Energy, LLC

 

Oshkosh, WI

 

Corn

 

48.0

 

48.0

 

 

 

Valero Renewable Fuels

 

Albert City, IA

 

Corn

 

110.0

 

110.0

 

 

 

Valero Renewable Fuels

 

Charles City, IA

 

Corn

 

110.0

 

110.0

 

 

 

Valero Renewable Fuels

 

Ft. Dodge, IA

 

Corn

 

110.0

 

110.0

 

 

 

Valero Renewable Fuels

 

Hartley, IA

 

Corn

 

110.0

 

110.0

 

 

 

Valero Renewable Fuels

 

Welcome, MN

 

Corn

 

110.0

 

110.0

 

 

 

Valero Renewable Fuels

 

Albion, NE

 

corn

 

110.0

 

110.0

 

 

 

Valero Renewable Fuels

 

Aurora, SD

 

Corn

 

120.0

 

120.0

 

 

 

VeraSun Energy Corp. (Total)

 

 

 

 

 

220.0

 

 

 

 

 

VeraSun Energy Corp.

 

Linden, IN

 

Corn

 

 

 

 

 

 

 

VeraSun Energy Corp.

 

Bloomingburg, OH

 

corn

 

 

 

 

 

 

 

Verenium

 

Jennings, LA

 

Sugar Cane bagasse

 

1.5

 

1.5

 

 

 

Western New York Energy LLC

 

Shelby, NY

 

 

 

50.0

 

50.0

 

 

 

Western Plains Energy, LLC*

 

Campus, KS

 

Corn

 

45.0

 

45.0

 

 

 

 

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Western Wisconsin Renewable Energy, LLC*

 

Boyceville, WI

 

Corn

 

40.0

 

40.0

 

 

 

White Energy

 

Russell, KS

 

Milo/wheat starch

 

48.0

 

48.0

 

 

 

White Energy

 

Hereford, TX

 

Corn/Milo

 

100.0

 

100.0

 

 

 

White Energy

 

Plainview, TX

 

Corn

 

110.0

 

110.0

 

 

 

Wind Gap Farms

 

Baconton, GA

 

Brewery waste

 

0.4

 

0.4

 

 

 

Yuma Ethanol

 

Yuma, CO

 

Corn

 

40.0

 

40.0

 

 

 

TOTALS

 

 

 

 

 

13,138.4
mgy for 201 nameplate refineries

 

11,937.4
mgy for operating refineries

 

1,432.0
mgy for under construction/ expanding refineries

 

 


* locally owned

mgy = million gallons per year

 

Last updated:  December 10, 2009

Source: Renewable Fuels Association

 

Ethanol production is also expanding internationally.  Ethanol produced or processed in certain countries in Central America and the Caribbean region is eligible for tariff reduction or elimination on importation to the United States under a program known as the Caribbean Basin Initiative.  Moreover, the 54 cent per gallon ethanol tariff on imported ethanol is scheduled to expire in January 2011.  If this tariff is not renewed, foreign produced ethanol may negatively impact the market price of our product. Ethanol imported from Caribbean Basin countries may be a less expensive alternative to domestically produced ethanol and may affect our ability to sell our ethanol profitably.  Further, despite the fact that there is a significant amount of ethanol produced in the United States, ethanol produced abroad and shipped by sea may be a more favorable alternative to supply coastal cities that are located on international shipping ports.

 

Our ethanol plant also competes with producers of other gasoline additives having similar octane and oxygenate values as ethanol.  Alternative fuels, gasoline oxygenates and alternative ethanol production methods are also continually under development.  The major oil companies have significantly greater resources than we have to market other additives, to develop alternative products, and to influence legislation and public perception of ethanol.  These companies also have sufficient resources to begin production of ethanol should they choose to do so.

 

A number of automotive, industrial and power generation manufacturers are developing alternative clean power systems using fuel cells, plug-in hybrids or clean burning gaseous fuels.  Like ethanol, the emerging fuel cell industry offers a technological option to address worldwide energy costs, the long-term availability of petroleum reserves and environmental concerns.  Fuel cells have emerged as a potential alternative to certain existing power sources because of their higher efficiency, reduced noise and lower emissions. Fuel cell industry participants are currently targeting the transportation, stationary power and portable power markets in order to decrease fuel costs, lessen dependence on crude oil and reduce harmful emissions.  If the fuel cell industry continues to expand and gain broad acceptance and becomes readily available to consumers for motor vehicle use, we may not be able to compete effectively.  This additional competition could reduce the demand for ethanol, which would negatively impact our profitability.

 

Demand for ethanol may increase as a result of increased consumption of E85 fuel. E85 fuel is a blend of 85% ethanol and 15% gasoline.  According to United States Department of Energy estimates, there are currently nearly 8 million flexible fuel vehicles capable of operating on E85 in the United States.  Further, the United States Department of Energy reports that there are currently more than 1,900 retail gasoline stations supplying E85.  The number of retail E85 suppliers increases significantly each year, however, this remains a relatively small percentage of the total number of U.S. retail gasoline stations, which is approximately 170,000.  In order for E85 fuel to increase demand for ethanol, it must be available for consumers to purchase it.  As public awareness of ethanol and E85 increases along with E85’s increased availability, management anticipates some growth in demand for ethanol associated with increased E85 consumption.

 

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Many in the ethanol industry believe that while in the future higher percentage blends of ethanol such as E85 for use in flexible fuel vehicles will positively impact demand for ethanol, in the near term increasing the amount of ethanol that can be blended for use in conventional automobiles will have a greater effect on ethanol demand.  A proposal has been made to increase the amount of ethanol that can legally be blended in gasoline from 10% to 15% for use in conventional automobiles.  Management believes that this could increase annual ethanol demand by as much as 7 billion gallons per year.  However, as discussed above, there are obstacles to the full implementation of a 15% ethanol blend that need to be overcome before these demand increases can be realized.

 

Research and Development

 

We do not currently conduct any research and development activities associated with the development of new technologies for use in producing ethanol, distillers grains or corn oil.

 

Governmental Regulation and Federal Ethanol Supports

 

Federal Ethanol Supports

 

The ethanol industry is dependent on several economic incentives to produce ethanol, including federal ethanol supports.  One significant federal ethanol support is the Renewable Fuels Standard (the “RFS”).  The RFS requires that in each year, a certain amount of renewable fuels be utilized in the United States.  The RFS was increased in December 2007.  Currently, the RFS requires the use of approximately 13 billion gallons of renewable fuels for 2010, increasing to 36 billion gallons in 2022.  The new RFS also has a provision that requires the use of “advanced” renewable fuels.  These advanced renewable fuels include ethanol that is not made from corn, such as cellulosic ethanol.  The RFS is a national program that does not require that any renewable fuels be used in any particular area or state, allowing refiners to use renewable fuel blends in those areas where it is most cost-effective.

 

Recently the RFS has come under scrutiny.  Many in the ethanol industry believe that it is not possible to reach the RFS requirement in coming years without allowing higher percentage blends of ethanol to be used in conventional automobiles.  Currently, ethanol is blended with conventional gasoline for use in standard vehicles to create a blend which is 10% ethanol and 90% gasoline.  Estimates indicate that approximately 135 billion gallons of gasoline are sold in the United States each year.  Assuming that all gasoline in the United States is blended at a rate of 10% ethanol and 90% gasoline, the maximum demand for ethanol is 13.5 billion gallons per year.  This is commonly referred to as the “blending wall,” which represents a theoretical limit where more ethanol cannot be blended into the national gasoline pool.  This is a theoretical limit because it is believed that it would not be possible to blend ethanol into every gallon of gasoline that is being used in the United States and it discounts the possibility of additional ethanol used in higher percentage blends such as E85 used in flex fuel vehicles.  Many in the ethanol industry believe that we will reach this blending wall in 2010.

 

The RFS mandate requires that 36 billion gallons of renewable fuels be used each year by 2022 which equates to approximately 27% renewable fuels used per gallon of gasoline sold.  In order to meet the RFS mandate and expand demand for ethanol, management believes higher percentage blends of ethanol must be utilized in conventional automobiles.  Such higher percentage blends of ethanol have continued to be a contentious issue.  The EPA is currently considering allowing a blend of 15% ethanol and 85% gasoline for use in standard automobiles but the EPA has delayed making a decision on this issue until mid-2010.  Further, as discussed above, there may be additional restrictions on what vehicles may use a 15% ethanol blend which may lead to gasoline retailers refusing to carry such a blend.  Automobile manufacturers and environmental groups are lobbying against higher percentage ethanol blends.  State and federal regulations prohibit the use of higher percentage ethanol blends in conventional automobiles and vehicle manufacturers have indicated that using higher percentage blends of ethanol in conventional automobiles would void the manufacturer’s warranty.  Without increases in the allowable percentage blends of ethanol, demand for ethanol may not continue to increase and it may not be possible to meet the RFS in coming years.  This could negatively impact demand for ethanol.

 

In April 2007, the EPA adopted a final rule that fully implemented the RFS requirement.  In addition to fully implementing the RFS requirement, the rule created a credit trading program that is designed to allow the fuel refining industry as a whole to meet the RFS requirement in the most cost effective manner possible.  The credit

 

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trading program allows refiners who blend more renewable fuels than they are required to sell credits to refiners who blend less renewable fuels than they are required.  This credit trading program was designed to decrease any potential burden the RFS might place on small fuel refiners.

 

The use of ethanol as an alternative fuel source has been aided by federal tax policy.  On October 22, 2004, President Bush signed H.R. 4520, which contained the Volumetric Ethanol Excise Tax Credit (“VEETC”) and amended the federal excise tax structure effective as of January 1, 2005.  Prior to VEETC, ethanol-blended fuel was taxed at a lower rate than regular gasoline (13.2 cents on a 10% blend).  Under VEETC, the ethanol excise tax exemption has been eliminated, thereby allowing the full federal excise tax of 18.4 cents per gallon of gasoline to be collected on all gasoline and allocated to the highway trust fund.  In place of the exemption, the bill created a new volumetric ethanol excise tax credit of 5.1 cents per gallon of ethanol blended at 10%.  The VEETC is scheduled to expire on December 31, 2010.  If this tax credit is not renewed, it likely would have a negative impact on the price of ethanol.

 

On June 18, 2008, the United States Congress overrode a presidential veto to approve the Food, Conservation and Energy Act of 2008 (the “2008 Farm Bill”) and to ensure that all parts of the 2008 Farm Bill were enacted into law.  Passage of the 2008 Farm Bill reauthorizes the 2002 farm bill and adds new provisions regarding energy, conservation, rural development, crop insurance as well as other subjects.   The energy title continues the energy programs contained in the 2002 farm bill but refocuses certain provisions on the development of cellulosic ethanol technology.  The new legislation provides assistance for the production, storage and transport of cellulosic feedstocks and provides support for ethanol production from such feedstocks in the form of grants, loans and loan guarantees.  The 2008 Farm Bill also modifies the ethanol fuels tax credit from 51 cents per gallon to 45 cents per gallon beginning in 2009 and going through 2010.  Further, the bill extends the 54 cent per gallon ethanol tariff on imported ethanol for two years, to January 2011.  If this tariff is allowed to expire, imported ethanol could have a significant negative impact on ethanol prices and our profitability.

 

Effect of Governmental Regulation

 

The ethanol industry and our business depend upon continuation of the federal ethanol supports discussed above.  These incentives have supported a market for ethanol that might disappear without the incentives.  Alternatively, the incentives may be continued at lower levels.  The elimination or reduction of such federal ethanol supports would likely reduce our net income and negatively impact our future financial performance.

 

We are subject to various federal, state and local environmental laws and regulations, including those relating to the discharge of materials into the air, water and ground, the generation, storage, handling, use, transportation and disposal of hazardous materials, and the health and safety of employees.  In addition, some of these laws and regulations require our plant to operate under permits that are subject to renewal or modification.  The government’s regulation of the environment changes constantly.  It is possible that more stringent federal or state environmental rules or regulations could be adopted, which could increase our operating costs and expenses.

 

On September 22, 2009, the EPA issued the “Final Mandatory Reporting of Greenhouse Gases Rule” that became effective on January 1, 2010. This new rule requires certain facilities that emit 25,000 metric tons or more of CO2 per year to report certain greenhouse gas emissions data from that facility to the EPA on an annual basis. The first annual reports covering calendar year 2010 will need to be submitted to the EPA in 2011.  We are evaluating our obligations under this new rule in light of additional guidance to be released by the EPA.

 

Our business may be indirectly affected by environmental regulation of the agricultural industry as well.  It is also possible that federal or state environmental rules or regulations could be adopted that could have an adverse effect on the use of ethanol.  For example, changes in the environmental regulations regarding ethanol’s use due to currently unknown effects on the environment could have an adverse effect on the ethanol industry.  Furthermore, plant operations are governed by the Occupational Safety and Health Administration (OSHA).  OSHA regulations may change such that the costs of the operation of the plant may increase.  Any of these regulatory factors may result in higher costs or other materially adverse conditions affecting our operations, cash flows and financial performance.

 

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We are subject to extensive air, water and other environmental regulations and we have been required to obtain a number of environmental permits to construct and operate the plant.  As such, any changes that are made to the plant or its operations must be reviewed to determine if amended permits need to be obtained in order to implement these changes.  We received amended permits in September 2008 to allow production increase from 45 million gallons per year of undenatured ethanol to 49.9 million gallons.

 

The National Pollutant Discharge Elimination System/State Disposal System (NPDES/SDS) permit, which regulates the water treatment, water disposal and stormwater systems at the facility, requires renewal every five years.  We submitted a renewal application to the Minnesota Pollution Control Agency (“MPCA”) in October 2008. We are allowed to continue operations under our current permit requirements until the MPCA renews the water discharge permit.

 

In June 2009, we submitted an application package to the MPCA to allow the facility to operate at a production rate of 70 million gallons per year of undenatured ethanol.  This application included the possibilities of exploring/expanding our alternatives with respect to the increase of production or optimization of operations.  The renewal application for the NPDES/SDS permit was incorporated into this package for MPCA consideration.

 

The application submittal requires numerous documents covering all aspects of the facility including: Environmental Assessment Worksheet (“EAW”), air modeling, Air Permit, NPDES/SDS permit, Aboveground Storage Tank (“AST”) permit, Construction Stormwater permit, and various other support documentation.  Currently, we are working with the MPCA to answer questions and provide further information to the MPCA regarding this application.

 

The majority of the work being performed on the application involves the air modeling and water discharge from the facility.  Air modeling is a process of determining the impact the facility has on the surrounding area, community and in the region itself.  The area of concern is the particles smaller than 2.5 microns (clay dust), called fugitive emissions.  We are evaluating operational considerations for decreasing the effect of fugitive emissions.

 

The other area of discussion is the NPDES/SDS permit.  The MPCA and EPA have regulations regarding the quantity and quality of the water being discharged from the site into area water sources.  These regulations are designed to protect and improve the waters of the state.  We continue to evaluate options to modify operations to meet these regulations.  The water discharge issue is a challenging task that will require a long term plan to meet these current regulations.

 

Employees

 

We currently have thirty-five full-time employees. The following table represents the current positions within our plant, all of which are filled by persons employed by Granite Falls:

 

Position

 

Employees

 

Chief Executive Officer

 

1

 

Chief Financial Officer

 

1

 

Environmental, Health and Safety Manager

 

1

 

Plant Manager

 

1

 

Plant and Facility Maintenance Manager

 

1

 

Maintenance Technicians and Electrician

 

4

 

Administrative Maintenance Support Tech

 

1

 

Boiler Operators

 

5

 

Plant Operators

 

12

 

Lab Manager

 

1

 

Lab Assistant

 

1

 

Commodities Manager

 

1

 

Grains Operators/Material Handlers

 

2

 

Receptionist

 

1

 

Administrative Assistant/Feed

 

1

 

Assistant Controller

 

1

 

Total

 

35

 

 

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We do not expect to hire a significant number of employees in the next 12 months.

 

Financial Information about Geographic Areas

 

All of our operations are domiciled in the United States.  All of the products sold to our customers for fiscal years 2009, 2008 and 2007 were produced in the United States and all of our long-lived assets are domiciled in the United States.  We have engaged third-party professional marketers who decide where our products are marketed and we have no control over the marketing decisions made by our third-party professional marketers.  These third-party marketers may decide to sell our products in countries other than the United States.  However, we anticipate that our products will primarily be sold in the United States.

 

ITEM 1A.  RISK FACTORS.

 

You should carefully read and consider the risks and uncertainties below and the other information contained in this report.  The risks and uncertainties described below are not the only ones we may face.  The following risks, together with additional risks and uncertainties not currently known to us or that we currently deem immaterial could impair our financial condition and results of operation.

 

Risks Relating to Our Business

 

Increases in the price of corn or natural gas would reduce our profitability.  Our primary source of revenue is from the sale of ethanol, distillers grains and corn oil. Our results of operations and financial condition are significantly affected by the cost and supply of corn and natural gas. Changes in the price and supply of corn and natural gas are subject to and determined by market forces over which we have no control including weather and general economic factors.

 

Ethanol production requires substantial amounts of corn. Generally, higher corn prices will produce lower profit margins and, therefore, negatively affect our financial performance.  While our corn prices have decreased significantly from highs we experienced during the middle of our 2008 fiscal year, corn prices could significantly increase again in a short period of time.  If a period of high corn prices were to be sustained for some time, such pricing may reduce our ability to operate profitably because of the higher cost of operating our plant.  We may not be able to offset any increase in the price of corn by increasing the price of our products.  If we cannot offset increases in the price of corn, our financial performance may be negatively affected.

 

The prices for and availability of natural gas are subject to volatile market conditions.  These market conditions often are affected by factors beyond our control such as higher prices as a result of colder than average weather conditions or natural disasters, overall economic conditions and foreign and domestic governmental regulations and relations.  Significant disruptions in the supply of natural gas could impair our ability to manufacture ethanol and more significantly, distillers grains for our customers.  Furthermore, increases in natural gas prices or changes in our natural gas costs relative to natural gas costs paid by competitors may adversely affect our results of operations and financial condition.  We seek to minimize the risks from fluctuations in the prices of corn and natural gas through the use of hedging instruments.  However, these hedging transactions also involve risks to our business.  See “Risks Relating to Our Business - We engage in hedging transactions which involve risks that could harm our business.”  If we were to experience relatively higher corn and natural gas costs compared to the selling prices of our products for an extended period of time, the value of our units may be reduced.

 

Declines in the price of ethanol or distillers grains would significantly reduce our revenues. The sales prices of ethanol and distillers grains can be volatile as a result of a number of factors such as overall supply and demand, the price of gasoline and corn prices, levels of government support, and the availability and price of competing products.  We are dependent on a favorable spread between the price we receive for our ethanol and distillers grains and the price we pay for corn and natural gas.  Any lowering of ethanol and distillers grains prices, especially if it is associated with increases in corn and natural gas prices, may affect our ability to operate profitably. 

 

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We anticipate the price of ethanol and distillers grains to continue to be volatile in our 2010 fiscal year as a result of the net effect of changes in the price of gasoline and corn prices and increased ethanol supply offset by increased ethanol demand.  Declines in the prices we receive for our ethanol and distillers grains will lead to decreased revenues and may result in our inability to operate the ethanol plant profitably for an extended period of time which could decrease the value of our units.

 

We engage in hedging transactions which involve risks that could harm our business.  We are exposed to market risk from changes in commodity prices.  Exposure to commodity price risk results from our dependence on corn and natural gas in the ethanol production process.  We seek to minimize the risks from fluctuations in the prices of corn, natural gas and ethanol through the use of hedging instruments.  The effectiveness of our hedging strategies is dependent on the price of corn, natural gas and ethanol and our ability to sell sufficient products to use all of the corn and natural gas for which we have futures contracts.  Our hedging activities may not successfully reduce the risk caused by price fluctuation which may leave us vulnerable to high corn and natural gas prices, as well as low ethanol prices.

 

Our business is not diversified.  Our success depends largely on our ability to profitably operate our ethanol plant. We do not have any other lines of business or other sources of revenue if we are unable to operate our ethanol plant and manufacture ethanol and distillers grains.  If economic or political factors adversely affect the market for ethanol and distillers grains, we have no other line of business to fall back on. Our business would also be significantly harmed if the ethanol plant could not operate at full capacity for any extended period of time.

 

We depend on our management and key employees, and the loss of these relationships could negatively impact our ability to operate profitably.  We are highly dependent on our management team to operate our ethanol plant.  We may not be able to replace these individuals should they decide to cease their employment with us, or if they become unavailable for any other reason.  Any loss of these officers and key employees may prevent us from operating the ethanol plant profitably and could decrease the value of our units.

 

Changes and advances in ethanol production technology could require us to incur costs to update our plant or could otherwise hinder our ability to compete in the ethanol industry or operate profitably.  Advances and changes in the technology of ethanol production are expected to occur.  Such advances and changes may make the ethanol production technology installed in our plant less desirable or obsolete.  These advances could also allow our competitors to produce ethanol at a lower cost than we are able.  We do not believe it would be feasible to convert our ethanol plant to a new cellulosic ethanol production technology.  If we are unable to adopt or incorporate technological advances, our ethanol production methods and processes could be less efficient than our competitors, which could cause our plant to become uncompetitive or completely obsolete.  If our competitors develop, obtain or license technology that is superior to ours or that makes our technology obsolete, we may be required to incur significant costs to enhance or acquire new technology so that our ethanol production remains competitive.  Alternatively, we may be required to seek third-party licenses, which could also result in significant expenditures.  These third-party licenses may not be available or, once obtained, they may not continue to be available on commercially reasonable terms, if at all.  These costs could negatively impact our financial performance by increasing our operating costs and reducing our net income.

 

Risks Related to Ethanol Industry

 

Demand for ethanol may not continue to grow unless ethanol can be blended into gasoline in higher percentage blends for conventional automobiles.  Currently, ethanol is blended with conventional gasoline for use in standard (non-flex fuel) vehicles to create a blend which is 10% ethanol and 90% conventional gasoline.  Estimates indicate that approximately 135 billion gallons of gasoline are sold in the United States each year.  Assuming that all gasoline in the United States is blended at a rate of 10% ethanol and 90% gasoline, the maximum demand for ethanol is 13.5 billion gallons.  This is commonly referred to as the “blending wall,” which represents a theoretical limit where more ethanol cannot be blended into the national gasoline pool.  Many in the ethanol industry believe that the ethanol industry will reach this blending wall 2010.  In order to expand demand for ethanol, higher percentage blends of ethanol must be utilized in conventional automobiles.  Such higher percentage blends of ethanol have recently become a contentious issue.  Automobile manufacturers and environmental groups have fought against higher percentage ethanol blends.  Currently, state and federal regulations prohibit the use of higher

 

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percentage ethanol blends in conventional automobiles and vehicle manufacturers have stated that using higher percentage ethanol blends in conventional vehicles would void the manufacturer’s warranty.  Recently, the EPA was expected to make a ruling on using higher percentage blends of ethanol such as E15, however, the EPA deferred making a decision on this issue until mid-2010.  Further, some believe the EPA is considering only approving a 15% ethanol blend for vehicles produced in model year 2001 and later.  This may lead to gasoline retailers refusing to carry a 15% ethanol blend even if it is approved.  Without an increase in the allowable percentage blends of ethanol, demand for ethanol may not continue to increase which could decrease the selling price of ethanol and could result in our inability to operate the ethanol plant profitably which could reduce or eliminate the value of our units.

 

Technology advances in the commercialization of cellulosic ethanol may decrease demand for corn based ethanol which may negatively affect our profitability.  The current trend in ethanol production research is to develop an efficient method of producing ethanol from cellulose-based biomass, such as agricultural waste, forest residue, municipal solid waste, and energy crops. This trend is driven by the fact that cellulose-based biomass is generally cheaper than corn, and producing ethanol from cellulose-based biomass would create opportunities to produce ethanol in areas which are unable to grow corn.  The Energy Independence and Security Act of 2007 and the 2008 Farm Bill offer a strong incentive to develop commercial scale cellulosic ethanol.  The RFS requires that 16 billion gallons per year of advanced bio-fuels be consumed in the United States by 2022.  Additionally, state and federal grants have been awarded to several companies who are seeking to develop commercial-scale cellulosic ethanol plants.  We expect this will encourage innovation that may lead to commercially viable cellulosic ethanol plants in the near future.  If an efficient method of producing ethanol from cellulose-based biomass is developed, we may not be able to compete effectively. If we are unable to produce ethanol as cost-effectively as cellulose-based producers, our ability to generate revenue and our financial condition will be negatively impacted.

 

New plants under construction or decreases in the demand for ethanol may result in excess production capacity in our industry.  The supply of domestically produced ethanol is at an all-time high.  According to the Renewable Fuels Association, as of December 10, 2009, there are 200 ethanol plants in the United States with capacity to produce more than 13 billion gallons of ethanol per year.  In addition, there are approximately 9 new ethanol plants under construction and approximately 5 plant expansions underway which together are estimated to increase ethanol production capacity by more than 1.4 billion gallons per year.  Excess ethanol production capacity may have an adverse impact on our results of operations, cash flows and general financial condition.  According to the Renewable Fuels Association, approximately 9% of the ethanol production capacity in the United States was idled as of December 10, 2009, the most recent available data.  During the early part of 2009 when the ethanol industry was experiencing unfavorable operating conditions, as much as 20% of the ethanol production in the United States may have been idled.  Further, demand for ethanol may not increase past approximately 13 billion gallons of ethanol due to the blending wall unless higher percentage blends of ethanol are approved by the EPA.  If the demand for ethanol does not grow at the same pace as increases in supply, we expect the selling price of ethanol to decline.  If excess capacity in the ethanol industry continues to occur, the market price of ethanol may decline to a level that is inadequate to generate sufficient cash flow to cover our costs.  This could negatively affect our profitability.

 

Decreasing gasoline prices may negatively impact the selling price of ethanol which could reduce our ability to operate profitably.  The price of ethanol tends to change partially in relation to the price of gasoline.  Decreases in the price of ethanol reduce our revenue.  Our profitability depends on a favorable spread between our corn and natural gas costs and the price we receive for our ethanol.  If ethanol prices fall during times when corn and/or natural gas prices are high, we may not be able to operate our ethanol plant profitably.

 

We operate in an intensely competitive industry and compete with larger, better financed entities which could impact our ability to operate profitably.  There is significant competition among ethanol producers.  There are numerous producer-owned and privately-owned ethanol plants planned and operating throughout the Midwest and elsewhere in the United States.  We also face competition from outside of the United States.  The passage of the Energy Policy Act of 2005 included a renewable fuels mandate.  The RFS was increased in December 2007 to 36 billion gallons by 2022.  Further, some states have passed renewable fuel mandates.  All of these increases in ethanol demand have encouraged companies to enter the ethanol industry.  The largest ethanol producers include Archer Daniels Midland, Green Plains Renewable Energy, Hawkeye Energy Holdings, POET, and Valero Renewable Fuels, all of which are each capable of producing significantly more ethanol than we produce.  Further, many believe that there will be consolidation occurring in the ethanol industry in the near future which will likely lead to a few companies who control a significant portion of the ethanol production market.  We may not be able to

 

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compete with these larger entities.  These larger ethanol producers may be able to affect the ethanol market in ways that are not beneficial to us which could negatively impact our financial performance.

 

Competition from the advancement of alternative fuels may lessen the demand for ethanol.  Alternative fuels, gasoline oxygenates and ethanol production methods are continually under development. A number of automotive, industrial and power generation manufacturers are developing alternative clean power systems using fuel cells, plug-in hybrids or clean burning gaseous fuels. Like ethanol, these emerging technologies offer an option to address worldwide energy costs, the long-term availability of petroleum reserves and environmental concerns. Fuel cells have emerged as a potential alternative to certain existing power sources because of their higher efficiency, reduced noise and lower emissions. Fuel cell industry participants are currently targeting the transportation, stationary power and portable power markets in order to decrease fuel costs, lessen dependence on crude oil and reduce harmful emissions. If these alternative technologies continue to expand and gain broad acceptance and become readily available to consumers for motor vehicle use, we may not be able to compete effectively. This additional competition could reduce the demand for ethanol, resulting in lower ethanol prices that might adversely affect our results of operations and financial condition.

 

Consumer resistance to the use of ethanol based on the belief that ethanol is expensive, adds to air pollution, harms engines and/or takes more energy to produce than it contributes may affect the demand for ethanol.  Certain individuals believe that the use of ethanol will have a negative impact on gasoline prices at the pump. Many also believe that ethanol adds to air pollution and harms car and truck engines. Still other consumers believe that the process of producing ethanol actually uses more fossil energy, such as oil and natural gas, than the amount of energy that is produced. These consumer beliefs could potentially be wide-spread and may be increasing as a result of recent efforts to increase the allowable percentage of ethanol that may be blended for use in conventional automobiles.  If consumers choose not to buy ethanol based on these beliefs, it would affect the demand for the ethanol we produce which could negatively affect our profitability and financial condition.

 

Risks Related to Regulation and Governmental Action

 

Government incentives for ethanol production, including federal tax incentives, may be eliminated in the future, which could hinder our ability to operate at a profit.  The ethanol industry is assisted by various federal ethanol production and tax incentives, including the RFS set forth in the Energy Policy Act of 2005 and increased by the Energy Independence and Security Act of 2007.  The RFS helps support a market for ethanol that might disappear without this incentive; as such, waiver of the RFS minimum levels of renewable fuels included in gasoline could negatively impact our results of operations.

 

In addition, the elimination or reduction of tax incentives to the ethanol industry, such as the Volumetric Ethanol Excise Tax Credit (“VEETC”) available to gasoline refiners and blenders, could also reduce the market demand for ethanol, which could reduce prices and our revenues by making it more costly or difficult for us to produce and sell ethanol. If the federal tax incentives are eliminated or sharply curtailed, we believe that decreased demand for ethanol will result, which could negatively impact our ability to operate profitably.

 

Also, elimination of the tariffs that protect the United States ethanol industry could lead to the importation of ethanol producers in other countries, especially in areas of the United States that are easily accessible by international shipping ports.  While the 2008 Farm Bill extended the tariff on imported ethanol through 2011, this tariff could be repealed earlier which could lead to increased ethanol supplies and decreased ethanol prices.

 

Changes in environmental regulations or violations of the regulations could be expensive and reduce our profitability.  We are subject to extensive air, water supply, water discharge and other environmental laws and regulations.  In addition, some of these laws require our plant to operate under a number of environmental permits which must be renewed from time to time. These laws, regulations and permits can often require expensive pollution control equipment or operation changes to limit actual or potential impacts to the environment.  A violation of these laws and regulations or permit conditions can result in substantial fines, damages, criminal sanctions, permit revocations, permit non-renewals, capital expenditures and/or plant shutdowns.  In the future, we may be subject to legal actions brought by environmental advocacy groups and other parties for actual or alleged violations of environmental laws or our permits.  Additionally, any changes in environmental laws and regulations, both at the federal and state level, could require us to spend considerable resources in order to comply with future

 

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environmental regulations. The expense of compliance could be significant enough to reduce our profitability and negatively affect our financial condition.

 

Carbon dioxide may be regulated in the future by the EPA as an air pollutant requiring us to obtain additional permits and install additional environmental mitigation equipment, which could adversely affect our financial performanceIn 2007, the Supreme Court decided a case in which it ruled that carbon dioxide is an air pollutant under the Clean Air Act for the purposes of motor vehicle emissions.  The Supreme Court directed the EPA to regulate carbon dioxide from vehicle emissions as a pollutant under the Clean Air Act.  Similar lawsuits have been filed seeking to require the EPA to regulate carbon dioxide emissions from stationary sources such as our ethanol plant under the Clean Air Act. Our plant produces a significant amount of carbon dioxide that we currently vent into the atmosphere.  While there are currently no regulations applicable to us concerning carbon dioxide, if the EPA or the State of Minnesota were to regulate carbon dioxide emissions by plants such as ours, we may have to apply for additional permits or we may be required to install carbon dioxide mitigation equipment or take other as yet unknown steps to comply with these potential regulations.  Compliance with any future regulation of carbon dioxide, if it occurs, could be costly and may prevent us from operating the ethanol plant profitably which could decrease or eliminate the value of our units.

 

ITEM 2.  PROPERTIES.

 

Our ethanol plant is located on a 56-acre site located approximately three miles east of Granite Falls, Minnesota in Chippewa County at the junction of Highways 212 and 23.  The plant’s address is 15045 Highway 23 SE, Granite Falls, Minnesota.  We produce all of our ethanol, distillers grains and corn oil at this site.  The ethanol plant has capacity to produce approximately 50 million gallons of ethanol per year.  The ethanol plant consists of the following buildings and equipment:

 

·                  A river water intake structure in the Minnesota River and a water pipeline to the plant from the Minnesota River to provide our primary water supply and two groundwater wells that provide a redundant water supply;

·                  A Cold Lime Softening Water Treatment System for pre-treating the plant’s water supply;

·                  A processing building, which contains processing equipment, laboratories, control room, maintenance area and offices;

·                  A grain receiving and shipping building, which contains corn storage silos, distillers grains storage and associated equipment;

·                  A fermentation area comprised principally of four fermentation tanks;

·                  Corn oil extraction equipment;

·                  A mechanical building, which contains the boiler, thermal oxidizer and distillers grains dryers; and

·                  An administrative building, along with furniture and fixtures, office equipment and computer and telephone systems.

 

The site also contains improvements such as rail tracks and a rail spur, landscaping, drainage systems and paved access roads.  Our plant was placed in service in November 2005 and is in excellent condition and is capable of functioning at 100 percent of its production capacity.

 

All of our tangible and intangible property, real and personal, serves as the collateral for our $6,000,000 revolving line of credit with Minnwest Bank M.V. of Marshall, Minnesota as well as our EDA loans.  Our revolving line of credit and our EDA loans are discussed in more detail under “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Indebtedness”.

 

ITEM 3.  LEGAL PROCEEDINGS.

 

Operating and Management Agreement Dispute

 

Commencing August 8, 2005, Glacial Lakes Energy, LLC (“Glacial Lakes”) began management of plant operations in anticipation of plant start-up pursuant to the terms of an operating and management agreement entered into on July 9, 2004. Under the operating and management agreement between Granite Falls and Glacial Lakes,

 

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Granite Falls was to pay Glacial Lakes $35,000 per month plus an annual payment equal to 3% of the plant’s net income from operations for an initial term of five years. The December 2006 resignation of Glacial Lakes’ key management personnel from their positions as executive officers of Granite Falls effectively terminated the operating and management agreement. In January 2007, Granite Falls formally recognized the termination of the operating and management agreement.

 

On May 21, 2007, Glacial Lakes made a demand for binding arbitration under the Commercial Arbitration Rules of the American Arbitration Association in Yellow Medicine County, Minnesota to resolve a dispute over an operating and management agreement between the two entities. Glacial Lakes claimed that Granite Falls wrongfully terminated the agreement and demanded damages for lost revenues and lost profits of approximately $5,300,000.  On December 17, 2007, Granite Falls filed an answering statement and counterclaim in response to Glacial Lakes’ demand for arbitration.

 

On August 1, 2008, Granite Falls and Glacial Lakes executed a settlement agreement and mutual release. Granite Falls agreed to pay Glacial Lakes $1,825,000. Of this amount, $1,143,290 had been expensed prior to fiscal year 2008, accordingly, $681,710 was charged to operations during the year ended October 31, 2008. We paid the $1,825,000 on August 1, 2008. In addition to this payment, we have agreed to pay Glacial Lakes a contingent amount of 2% of our net income, as defined per the agreement, for each of the fiscal years ending October 31, 2008 and 2009 and 1.5% of our net income, as defined per the agreement, for the fiscal year ending October 31, 2010. As of October 31, 2009, the Company had accrued $14,000 for amounts due under this agreement.

 

Appointment Rights Dispute

 

On February 4, 2009, Glacial Lakes filed a lawsuit in Minnesota district court against Granite Falls and seven of its governors, including Ken Berg, Paul Enstad, Scott Dubbelde, Myron Peterson, Rodney Wilkison, Shannon Johnson and Julie Oftedahl-Volstad. The complaint filed by Glacial Lakes asked the court to review and determine the effect of a contract Glacial Lakes entered into with Fagen, Inc. (“Fagen”). On December 4, 2008, Glacial Lakes entered into a Membership Unit Purchase Agreement (the “Purchase Agreement”) with Fagen. The Purchase Agreement related to the conditional sale by Glacial Lakes to Fagen of 2,000 membership units that Glacial Lakes holds in Granite Falls in exchange for $2,000,000, which was paid at the time the Purchase Agreement was executed.

 

The transaction was conditional only upon Glacial Lakes’ right to sell its entire membership interest in Granite Falls, approximately 20% of the outstanding membership units, to a third party purchaser within seven months of the date the Purchase Agreement was executed. During the time between the date the Purchase Agreement was executed and the date the seven month condition expired, Fagen had the right to any distributions declared by Granite Falls. The Granite Falls Board of Governors considered the conditional transaction and believed that such a transaction met the definition of a “Transfer” under the terms of Fifth Amended and Restated Operating and Member Control Agreement. On January 13, 2009, the Granite Falls Board of Governors adopted a resolution recognizing and approving the private transfer of 2,000 membership units from Glacial Lakes to Fagen. In response to this resolution Glacial Lakes filed its lawsuit claiming breach of contract, breach of fiduciary duties and seeking an injunction preventing the Granite Falls Board of Governors from approving the private transfer of 2,000 membership units from Glacial Lakes to Fagen.

 

On September 3, 2009, the Minnesota district court administrator dismissed the lawsuit with prejudice and without costs or disbursements to any party.

 

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

 

None.

 

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PART II

 

ITEM 5.  MARKET FOR REGISTRANT’S MEMBERSHIP UNITS, RELATED MEMBER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

 

There is no public trading market for our units.

 

However, we have established through Alerus Securities a Unit Trading Bulletin Board, a private online matching service, in order to facilitate trading among our members.  The Unit Trading Bulletin Board has been designed to comply with federal tax laws and IRS regulations establishing a “qualified matching service,” as well as state and federal securities laws.  Our Unit Trading Bulletin Board consists of an electronic bulletin board that provides a list of interested buyers with a list of interested sellers, along with their non-firm price quotes.  The Unit Trading Bulletin Board does not automatically affect matches between potential sellers and buyers and it is the sole responsibility of sellers and buyers to contact each other to make a determination as to whether an agreement to transfer units may be reached.  We do not become involved in any purchase or sale negotiations arising from our Unit Trading Bulletin Board and have no role in effecting the transactions beyond approval, as required under our member control agreement, and the issuance of new certificates.  We do not give advice regarding the merits or shortcomings of any particular transaction.  We do not receive, transfer or hold funds or securities as an incident of operating the Unit Trading Bulletin Board.  We do not receive any compensation for creating or maintaining the Unit Trading Bulletin Board.  In advertising our qualified matching service, we do not characterize Granite Falls as being a broker or dealer or an exchange.  We do not use the Unit Trading Bulletin Board to offer to buy or sell securities other than in compliance with the securities laws, including any applicable registration requirements.

 

There are detailed timelines that must be followed under the Unit Trading Bulletin Board Rules and Procedures with respect to offers and sales of membership units.  All transactions must comply with the Unit Trading Bulletin Board Rules, our member control agreement, and are subject to approval by our board of governors.

 

As of October 31, 2009, there were approximately 980 holders of record of our membership units.

 

The following table contains historical information by fiscal quarter for the past two fiscal years regarding the actual unit transactions that were completed by our unit-holders during the periods specified.  We believe this most accurately represents the current trading value of the Company’s units.  The information was compiled by reviewing the completed unit transfers that occurred on our qualified matching service bulletin board during the quarters indicated.

 

Completed Unit Transactions

 

Fiscal Quarter

 

Low Per
Unit Price

 

High Per
Unit Price

 

2008 1st

 

$

2,400

 

$

3,000

 

2008 2nd

 

$

2,100

 

$

2,400

 

2008 3rd

 

$

2,000

 

$

2,200

 

2008 4th

 

$

1,500

 

$

1,500

 

2009 1st

 

$

1,050

 

$

1,251

 

2009 2nd

 

$

1,000

 

$

1,000

 

2009 3rd

 

$

975

 

$

1,050

 

2009 4th

 

$

850

 

$

1,000

 

 

As a limited liability company, we are required to restrict the transfers of our membership units in order to preserve our partnership tax status.  Our membership units may not be traded on any established securities market or readily trade on a secondary market (or the substantial equivalent thereof).  All transfers are subject to a determination that the transfer will not cause Granite Falls to be deemed a publicly traded partnership.

 

DISTRIBUTIONS

 

Distributions by the Company to our unit holders are in proportion to the number of units held by each unit holder.  A unit holder’s distribution is determined by dividing the number of units owned by such unit holder by the

 

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total number of units outstanding.  Our board of governors has complete discretion over the timing and amount of distributions to our unit holders, however, our member control agreement requires the board of governors to endeavor to make cash distributions at such times and in such amounts as will permit our unit holders to satisfy their income tax liability related to owning our units in a timely fashion.  Our expectations with respect to our ability to make future distributions are discussed in greater detail in “MANAGEMENT’S DISCUSSION AND ANALYSIS.”   We did not declare any distributions to our members in our fiscal year ended October 31, 2009 or our fiscal year ended October 31, 2008.

 

Below is a table representing the distributions made by us since our inception.  As discussed above, we did not make any distributions during our 2009 fiscal year.  Our typical member has realized a return on their original investment in Granite Falls Energy of approximately 77% over our 4-year period of operations.

 

Date Declared

 

Total
Distribution

 

Distribution
Per Unit

 

Distributed to Members of
Record as of:

 

November 19, 2009

 

$

4,598,400

 

$

150

 

December 1, 2009

 

 

 

 

 

 

 

 

 

October 19, 2007

 

$

6,231,200

 

$

200

 

November 30, 2007

 

 

 

 

 

 

 

 

 

March 15, 2007

 

$

3,115,600

 

$

100

 

April 2, 2007

 

 

 

 

 

 

 

 

 

July 10, 2006

 

$

9,999,830

 

$

320

 

July 31, 2006

 

 

 

 

 

 

 

 

 

Totals

 

$

23,945,030

 

$

770

 

 

 

 

PERFORMANCE GRAPH

 

The following graph shows a comparison of cumulative total member return since October 1, 2006, calculated on a dividend reinvested basis, for the Company, the NASDAQ Composite Index (the “NASDAQ”) and an index of other companies that have the same SIC code as the Company (the “Industry Index”). The graph assumes $100 was invested in each of the Company’s units, the NASDAQ, and the Industry Index on October 1, 2006. Data points on the graph are annual. Note that historic stock price performance is not necessarily indicative of future unit price performance.

 

Pursuant to the rules and regulations of the Securities and Exchange Commission, the performance graph and the information set forth therein shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, and shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

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ITEM 6.  SELECTED FINANCIAL DATA

 

The following table presents selected financial and operating data as of the dates and for the periods indicated.  The selected balance sheet financial data as of October 31, 2007, 2006 and 2005 and the selected statement of operations data and other financial data for the years ended October 31, 2006 and 2005 have been derived from our audited financial statements that are not included in this Form 10-K.  The selected balance sheet financial data as of October 31, 2009 and 2008 and the selected statement of operations data and other financial data for each of the years in the three year period ended October 31, 2009 have been derived from the audited financial statements included elsewhere in this Form 10-K.  You should read the following table in conjunction with Item 7 “Management Discussion and Analysis of Financial Condition and Results of Operations”  and the financial statements and the accompanying notes included elsewhere in this Form 10-K.  Among other things, those financial statements include more detailed information regarding the basis of presentation for the following financial data.

 

Statement of
Operations Data:

 

2009

 

2008

 

2007

 

2006

 

2005

 

Revenues

 

$

91,282,031

 

$

99,393,373

 

$

94,776,725

 

$

93,549,478

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost Goods Sold

 

$

87,464,936

 

$

102,396,467

 

$

75,772,701

 

$

54,539,754

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

Lower of Cost or Market Adjustment

 

$

 

$

1,947,000

 

$

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-Production Expenses

 

$

 

$

 

$

 

$

 

$

251,235

 

 

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Gross Profit (Loss)

 

$

3,817,095

 

$

(4,950,094

)

$

19,004,024

 

$

39,009,724

 

$

(251,235

)

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

$

2,045,615

 

$

2,916,170

 

$

2,807,130

 

$

2,894,018

 

$

492,353

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income (Loss)

 

$

1,771,480

 

$

(7,866,264

)

$

16,196,894

 

$

36,115,706

 

$

(743,588

)

 

 

 

 

 

 

 

 

 

 

 

 

Other Income (Expense)

 

$

(685,300

)

$

188,005

 

$

(265,153

)

$

(1,370,038

)

$

(470,511

)

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

$

1,086,180

 

$

(7,678,259

)

$

15,931,741

 

$

34,745,668

 

$

(1,214,099

)

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Capital Units Outstanding

 

30,781

 

31,156

 

31,156

 

31,156

 

31,143

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss) Per Capital Unit

 

$

35.29

 

$

(246.45

)

$

511.35

 

$

1,115.22

 

$

(38.98

)

 

 

 

 

 

 

 

 

 

 

 

 

Cash Distributions per Capital Unit

 

$

 

$

 

$

300.00

 

$

320.96

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet
Data:

 

2009

 

2008

 

2007

 

2006

 

2005

 

Current Assets

 

$

14,015,271

 

$

9,382,784

 

$

15,901,679

 

$

25,028,447

 

$

1,025,548

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Property and Equipment

 

$

42,425,018

 

$

48,648,041

 

$

54,677,788

 

$

55,393,293

 

$

52,861,088

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Assets

 

$

32,894

 

$

35,694

 

$

38,493

 

$

434,185

 

$

487,574

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$

56,473,183

 

$

58,066,519

 

$

70,617,960

 

$

80,855,925