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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 10-Q
 
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended
June 30, 2011
 
or
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ______________________ to _______________________
 
Commission File Number: 000-51764
 
LINCOLNWAY ENERGY, LLC
(Exact name of registrant as specified in its charter)
 
Iowa
20-1118105
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
 
 
59511 W. Lincoln Highway, Nevada, Iowa
50201
(Address of principal executive offices)
(Zip Code)
515-232-1010
(Registrant's telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)

 
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.
R  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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
R   Yes     o  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer  o
Accelerated filer  o
 
 
 
 
Non-accelerated filer  R
Smaller reporting company  o

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 42,049 membership units outstanding at August 1, 2011.

LINCOLNWAY ENERGY, LLC
FORM 10-Q
For the Quarter Ended June 30, 2011

INDEX

 
 
 
Page
 
 
 
 
Part I.
Financial Information
 
 
 
 
 
 
Item 1.
Unaudited Financial Statements
 
 
 
 
 
 
 
a)   Balance Sheets
 
 
b)   Statements of Operations
 
 
c)   Statements of Cash Flows
 
 
d)   Notes to Unaudited Financial Statements
 
 
 
 
 
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
 
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
 
Item 4.
Controls and Procedures
 
 
 
 
Part II.
Other Information
 
 
 
 
 
 
 
Item 1.
Legal Proceedings
 
Item 1A.
Risk Factors
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
 
Item 3.
Defaults Upon Senior Securities
 
Item 5.
Other Information
 
Item 6.
Exhibits
 
 
 
 
Signatures
 
 
 
 
 
 
Exhibits Filed With This Report
 
 
Rule 13a-14(a) Certification of President and Chief Executive Officer
E-1
 
Rule 13a-14(a) Certification of Chief Financial Officer
E-2
 
Section 1350 Certification of President and Chief Executive Officer
E-3
 
Section 1350 Certification of Chief Financial Officer
E-4


PART I - FINANCIAL INFORMATION

Item 1.    Unaudited Financial Statements.


Lincolnway Energy, LLC

Balance Sheets
 
June 30, 2011
 
September 30, 2010
 
(Unaudited)
 
 
ASSETS (Note 4)
 
 
 
 
 
 
 
CURRENT ASSETS
 
 
 
Cash and cash equivalents
$
667,558

 
$
2,858,110

Due from broker
1,086,792

 
2,305,695

Trade and other accounts receivable (Note 6)
7,364,220

 
5,880,043

Inventories (Note 3)
7,659,711

 
3,951,079

Prepaid expenses and other
359,730

 
298,637

Total current assets
17,138,011

 
15,293,564

 
 
 
 
PROPERTY AND EQUIPMENT
 

 
 

Land and land improvements
7,630,868

 
7,580,868

Buildings and improvements
1,604,305

 
1,604,305

Plant and process equipment
76,005,989

 
75,463,973

Office furniture and equipment
409,357

 
411,177

Construction in progress
1,055,262

 
191,764

 
86,705,781

 
85,252,087

Accumulated depreciation
(41,598,868
)
 
(35,430,641
)
 
45,106,913

 
49,821,446

 
 
 
 
OTHER ASSETS
 

 
 

Restricted cash
351,000

 
351,000

Financing costs, net of amortization of $241,344 and $209,165
230,618

 
262,797

Deposit
476,437

 

Investments
182,970

 
170,093

 
1,241,025

 
783,890

 
 
 
 
 
$
63,485,949

 
$
65,898,900


See Notes to Unaudited  Financial Statements. 











2

Lincolnway Energy, LLC

Balance Sheets (continued)

 
June 30, 2011
 
September 30, 2010
 
(Unaudited)
 
 
LIABILITIES AND MEMBERS' EQUITY
 
 
 
 
 
 
 
CURRENT LIABILITIES
 
 
 
Accounts payable
$
1,207,129

 
$
1,088,299

Accounts payable, related party (Note 5)
624,714

 
460,958

Current maturities of long-term debt (Note 4)
3,782,324

 
76,373

Accrued expenses
1,137,411

 
982,432

Derivative financial instruments (Note 8)
350,750

 
1,191,867

Total current liabilities
7,102,328

 
3,799,929

 
 
 
 
NONCURRENT LIABILITIES
 
 
 
Long-term debt, less current maturities (Note 4)
5,632,387

 
9,409,711

Other
450,000

 
450,000

Total noncurrent liabilities
6,082,387

 
9,859,711

 
 
 
 
COMMITMENTS AND CONTINGENCY (Notes 6 and 9)



 
 
 
 
MEMBERS' EQUITY
 
 
 
Member contributions, 42,049 units issued and outstanding
38,990,105

 
38,990,105

Retained earnings
11,311,129

 
13,249,155

 
50,301,234

 
52,239,260

 
 
 
 
 
$
63,485,949

 
$
65,898,900


See Notes to Unaudited  Financial Statements.


3

Lincolnway Energy, LLC

Statements of Operations

 
Three Months
Ended
 
Three Months
Ended
 
June 30, 2011
 
June 30, 2010
 
(Unaudited)
 
 
 
 
Revenues (Notes 2 and 6)
$
42,028,975

 
$
25,067,784

 
 

 
 

Cost of goods sold
44,928,632

 
25,629,974

 
 

 
 

Gross loss
(2,899,657
)
 
(562,190
)
 
 
 
 
General and administrative expenses
641,728

 
599,335

 
 

 
 

Operating loss
(3,541,385
)
 
(1,161,525
)
 
 
 
 
Other income (expense):
 

 
 

Interest income
2,890

 
5,894

Interest expense
(180,405
)
 
(189,363
)
 
(177,515
)
 
(183,469
)
 
 
 
 
Net loss
$
(3,718,900
)
 
$
(1,344,994
)
 
 
 
 

Weighted average units outstanding
42,049

 
42,049

 
 

 
 

Net loss per unit - basic and diluted
$
(88.44
)
 
$
(31.99
)

See Notes to Unaudited  Financial Statements.

 


4



Lincolnway Energy, LLC

Statements of Operations

 
Nine Months
Ended
 
Nine Months
Ended
 
June 30, 2011
 
June 30, 2010
 
(Unaudited)
 
 
 
 
Revenues (Notes 2 and 6)
$
121,436,098

 
$
85,666,633

 
 

 
 

Cost of goods sold
120,925,209

 
79,536,825

 
 

 
 

Gross profit
510,889

 
6,129,808

 
 
 
 
General and administrative expenses
1,965,052

 
1,908,384

 
 

 
 

Operating income (loss)
(1,454,163
)
 
4,221,424

 
 
 
 
Other income (expense):
 

 
 

Interest income
7,195

 
19,854

Interest expense
(491,058
)
 
(620,168
)
    Other income

 
101,569

 
(483,863
)
 
(498,745
)
 
 
 
 
Net income (loss)
$
(1,938,026
)
 
$
3,722,679

 
 
 
 

Weighted average units outstanding
42,049

 
42,049

 
 

 
 

Net income (loss) per unit - basic and diluted
$
(46.09
)
 
$
88.53


See Notes to Unaudited  Financial Statements.


5



Lincolnway Energy, LLC

Statements of Cash Flows
 
Nine Months
Ended
 
Nine Months
Ended
 
June 30, 2011
 
June 30, 2010
 
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
Net income (loss)
$
(1,938,026
)
 
$
3,722,679

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
 

 
 
Depreciation and amortization
6,289,241

 
6,256,363

Loss on disposal of property and equipment
62,696

 
434

Changes in working capital components:
 

 
 
Due from broker
1,218,903

 
(845,382
)
Trade and other accounts receivable
(1,484,177
)
 
225,196

Inventories
(3,708,632
)
 
(1,329,033
)
Prepaid expenses and other
(61,093
)
 
(110,706
)
Deposits
(476,437
)
 
145,975

Accounts payable
108,339

 
(64,585
)
Accounts payable, related party
163,756

 
104,306

Accrued expenses
(710
)
 
(26,882
)
Derivative financial instruments
(841,117
)
 
86,790

Net cash provided by (used in) operating activities
(667,257
)
 
8,165,155

 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 

 
 
Purchase of property and equipment
(1,439,045
)
 
(346,079
)
Purchase of investments
(12,877
)
 
(19,057
)
Net cash (used in) investing activities
(1,451,922
)
 
(365,136
)
 
 

 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 

 
 
Member distributions

 
(2,102,450
)
Payments on long-term borrowings
(71,373
)
 
(6,320,358
)
Net cash (used in) financing activities
(71,373
)
 
(8,422,808
)
 
 
 
 
Net decrease in cash and cash equivalents
(2,190,552
)
 
(622,789
)
 
 
 
 
CASH AND CASH EQUIVALENTS
 

 
 
Beginning
2,858,110

 
5,824,947

Ending
$
667,558

 
$
5,202,158

 
 
 
 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
 
 
 
     INFORMATION, cash paid for interest
$
505,167

 
$
630,867

 
 

 
 
SUPPLEMENTAL DISCLOSURES OF NONCASH
 

 
 
INVESTING AND FINANCING ACTIVITIES
 
 
 
Construction in progress included in accounts payable and accrued expenses
$
166,180

 
$
135,926


See Notes to Unaudited  Financial Statements.

6

Lincolnway Energy, LLC

Notes to Unaudited Financial Statements
_____________________________________________________________________________________________________




Note 1.    Nature of Business and Significant Accounting Policies

Principal business activity:  Lincolnway Energy, LLC (the Company), located in Nevada, Iowa, was formed in May 2004 to pool investors to build a 50 million gallon annual production dry mill corn-based ethanol plant.  The Company began making sales on May 30, 2006 and became operational during the quarter ended June 30, 2006.

Basis of presentation and other information: The balance sheet as of September 30, 2010 was derived from the Company's audited balance sheet as of that date.  The accompanying financial statements as of and for the three and nine months ended June 30, 2011 and 2010 are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim periods.  These unaudited financial statements and notes should be read in conjunction with the audited financial statements and notes thereto, for the year ended September 30, 2010 contained in the Company's Annual Report  on Form 10-K.  The results of operations for the interim periods presented are not necessarily indicative of the results for the entire year.

Use of estimates:  The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Trade accounts receivable: Trade accounts receivable are recorded at original invoice amounts less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering customers financial condition, credit history and current economic conditions. Receivables are written off when deemed uncollectible. Recoveries of receivables written off are recorded when received. A receivable is considered past due if any portion of the receivable is outstanding more than 90 days.
  
Income taxes:  The Company is organized as a partnership for federal and state income tax purposes and generally does not incur income taxes.  Instead, the Company's earnings and losses are included in the income tax returns of the members.  Therefore, no provision or liability for federal or state income taxes has been included in these financial statements.

Earnings per unit:  Basic and diluted earnings per unit have been computed on the basis of the weighted average number of units outstanding during each period presented.

Fair Value of financial instruments:  The carrying amounts of cash and cash equivalents, due from broker, derivative financial instruments, trade and other accounts receivable, accounts payable and accrued expenses approximate fair value.  The carrying amount of long-term debt approximates fair value because the interest rates fluctuate with market rates or the fixed rates approximate current rates offered to the Company for debt with similar terms and maturities.



Note 2.    Revenue

Components of revenue are as follows:

(Excludes hedging activity)
 
Three Months
 
Three Months
 
Nine months
 
Nine months
 
 
 Ended
 
 Ended
 
Ended
 
Ended
(In thousands)
 
June 30, 2011
 
June 30, 2010
 
June 30, 2011
 
June 30, 2010
Ethanol
 
$
32,846

 
$
19,808

 
$
97,282

 
$
69,390

Distillers' Grains
 
7,906

 
4,833

 
22,464

 
14,507

Other
 
1,025

 
435

 
2,381

 
1,248






7


Lincolnway Energy, LLC

Notes to Unaudited Financial Statements
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________


Note 3.    Inventories

Inventories consist of the following as of:
 
June 30,
2011
 
September 30,
2010
 
 
 
 
Raw materials, including corn, coal, chemicals and supplies
$
4,012,764

 
$
2,496,681

Work in process
1,395,044

 
796,409

Ethanol and distillers grains
2,251,903

 
657,989

Total
$
7,659,711

 
$
3,951,079







Note 4.    Long-Term Debt

Long-term debt consists of the following as of:

 
June 30,
2011
 
September 30,
2010
 
 
 
 
Construction term loan. (A)
$
6,500,000

 
$
6,500,000

 
 

 
 

Construction/revolving term loan. (C)

 

 
 

 
 

Note payable to contractor, interest-only quarterly payments at 5% due through maturity date of November 2014, secured by real estate and subordinate to financial institution debt commitments. (B )
1,216,781

 
1,216,781

 
 

 
 

Note payable to contractor, unsecured, interest-only quarterly payments at 4% due through maturity date of May 2021
1,250,000

 
1,250,000

 
 

 
 

Note payable to Iowa Department of Economic Development. (D)
160,000

 
182,500

 
 

 
 

Note payable to Iowa Department of Transportation. (E)
287,930

 
336,803

 
 
 
 

 
9,414,711

 
9,486,084

Less current maturities
(3,782,324
)
 
(76,373
)
 
$
5,632,387

 
$
9,409,711


8


Lincolnway Energy, LLC

Notes to Unaudited Financial Statements
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________


(A)
The Company has a construction and term loan with a financial institution.  Borrowings under the term loan include a variable interest rate based on the one-month LIBOR index rate plus 3.30%.  The rate will be reset automatically without notice to the Company, on the first “US Banking Day” of each succeeding week, and each change shall be applicable to all outstanding balances as of that date.  The agreement requires principal payments of $1,250,000 per quarter commencing in December 2006 through March 2013. In order to alleviate some of the interest rate risk, the Company on July 25, 2008, fixed a portion of the loan or $7,750,000 at an interest rate of 6.62%, through July 2011. Upon maturity the fixed portion of the loan will revert back to a variable rate.  The same payment amortization schedule will apply. As of June 30, 2011, the entire balance outstanding is at a fixed rate.  The agreement requires the maintenance of certain financial and nonfinancial covenants.   Borrowings under this agreement are collateralized by substantially all of the Company's assets.  As of June 30, 2011, the Company has made principal payments of $32,500,000, since the inception of the loan, which under the terms of the agreement have been applied to scheduled payments in order of their maturity. The Company's next scheduled payment under the agreement is due in December 2011.

(B)
The Company has a $1,100,000 subordinated note payable dated November 17, 2004 to an unrelated third party.  Quarterly interest payments began on March 31, 2007.  The third party allowed the Company to include the accrued interest of $116,781 through December 2006 into the principal of the note. Principal is due in full at maturity on November 17, 2014.

(C)
The Company has a $10,000,000 construction/revolving term credit facility with a financial institution which expires on September 1, 2016.  Borrowings under the credit facility agreement include a variable interest rate based on the one-month LIBOR index rate plus 3.30%.  The rate will be reset automatically without notice to the Company, on the first “US Banking Day” of each succeeding week, and each change shall be applicable to all outstanding balances as of that date.  Borrowings are subject to borrowing base restrictions as defined in the agreement.  The credit facility and revolving credit agreement require the maintenance of certain financial and nonfinancial covenants.  The variable interest rate will be based on the borrowings under this agreement are collateralized by substantially all of the Company's assets.  There was no balance outstanding as of June 30, 2011.

(D)
The Company also has a $300,000 loan agreement with the Iowa Department of Economic Development (IDED).  The $300,000 loan is noninterest-bearing and due in monthly payments of $2,500 beginning December 2006 and a final payment of $152,500 due November 2012.  Borrowings under this agreement are collateralized by substantially all of the Company's assets and subordinate to the above financial institution debt and construction and revolving loan/credit agreements included in (A) and (C).

(E)
The Company entered into a $500,000 loan agreement with the Iowa Department of Transportation (IDOT) in February 2005.  The proceeds were disbursed upon submission of paid invoices.  Interest at 2.11% began accruing on January 1, 2007.  Principal payments will be due semiannually through July 2016.  The loan is secured by all rail track material constructed as part of the plant construction.  The debt is subordinate to the above $39,000,000 financial institution debt and construction and revolving loan/credit agreements included in (A) and (C).

Note 5.    Related-Party Transactions

The Company has an agreement with the Heart of Iowa Coop , dba Key Cooperative (Key), a member of the Company, to provide 100% of the requirement of corn for use in the operation of the ethanol plant.  The Company purchased corn totaling $35,466,965 and $91,196,046 for the three months and nine months ended June 30, 2011.  There were corn purchases of $16,106,675 and $52,642,565 for the three months and nine months ended June 30, 2010. As of June 30, 2011, the Company had several corn cash contracts with Key amounting to approximately 3,092,787 bushels, for a commitment of $19,889,825 and several basis contracts representing 1,000,000 bushels of corn.  The contracts mature on various dates through September 2011.  The Company also has made some miscellaneous purchases from Key (storage fees, fuel, and propane costs) amounting to $34,094 and $68,570 for the three months and nine months ended June 30, 2011 , respectively.  There were miscellaneous purchases of $25,809 and $73,195 for the three months and nine months ended June 30, 2010. As of June 30, 2011 the amount due to Key is $624,133.

The Company is also purchasing propane from Prairie Land Cooperative, a member of the Company.  Total purchases for the three months and nine months ended June 30, 2011 is $580 and $15,003, respectively. Total purchases for the three months and six months ended June 30, 2010 is $6,013 and $20,451, respectively. As of June 30, 2011 there is $580 due to Prairie Land Cooperative.


9

Lincolnway Energy, LLC

Notes to Unaudited Financial Statements
_____________________________________________________________________________________________________


Note 6.    Commitments and Major Customer

On September 25, 2009, the Company entered into a agreement with an unrelated entity. The agreement became effective on October 1, 2009. The unrelated entity is responsible for marketing and purchasing all of the ethanol produced by the Company. For the three months and nine months ended June 30, 2011 the Company has expensed $159,529 and $518,300 respectively, under this agreement for marketing fees. For the three and nine months ended June 30, 2010 the Company has expensed $172,803 and $513,278, respectively. Revenues with this customer were $32,845,845 and $97,281,863 for the three and nine months ended June 30, 2011 , respectively. For the three and nine months ended June 30, 2010, revenues with this customer were $19,807,584 and $69,318,982, respectively. Trade accounts receivable of $5,034,356 was due from the customer as of June 30, 2011.

The Company has an agreement with an unrelated entity for marketing, selling and distributing the distiller's grains. For the three months and nine months ended June 30, 2011, the Company has expensed marketing fees of $134,117 and $377,814, respectively, under this agreement. The company has expensed marketing fees of $70,402 and $218,159 for the three months and nine months ended June 30, 2010, respectively. Revenues with this customer were $7,906,409 and $22,464,052 for the three months and nine months ended June 30, 2011 , respectively. For the three months and nine months ended June 30, 2010, revenues with this customer were $4,832,580 and $14,506,222, respectively. Trade accounts receivable of $1,551,960 was due from the customer as of June 30, 2011.

The Company has an agreement with an unrelated party to provide the coal supply for the ethanol plant. The agreement expires on January 1, 2013. The agreement is subject to a minimum purchase requirement. For the calendar year 2011 and 2012 the estimated purchase commitments total $5,091,200 and $5,171,200, respectively. For the three months and nine months ended June 30, 2011 the company has purchased $1,672,384 and $5,041,505, respectively, of coal under this contract. For the three months and nine months ended June 30, 2010 is $1,371,536 and $4,366,471, respectively.

The Company has entered into a variable contract with a supplier of denaturant. The variable contract is for a minimum purchase of 234,000 gallons at the average of the OPIS Conway In-Well Natural Gasoline High and Low price plus $.1175/usg. The term of the contract is from July 1, 2011 through August 30, 2011. The minimum future purchase commitment is $538,434.

The Company has entered into a fixed contract with a supplier of anhydrous ammonia. The contract is for a minimum purchase of 120 tons at the rate of $700 delivered ton. The term of the contract is from June 22, 2011 through August 10, 2011. The minimum future purchase commitment is $84,000.

On October 15, 2010, the Company entered into an agreement with an unrelated entity to perform the dirt work for the additional rail spur that is going to be added to the Company's existing track. The total future purchase commitment is $635,874.

On June 30, 2011 the Company entered into an agreement with an unrelated entity to perform the rail work for the additional rail spur that is going to be added to the Company's existing track. The total future purchase commitment is $1,611,603.

On June 23, 2011 the Company entered into an purchase and sale agreement with an unrelated party. The agreement is to sell approximately 57.75 acres of the Company's property to the west of the plant for $20,000 per acre. It is anticipated that the closing will occur within 75 days of the date of the agreement.

Note 7.    Risk Management

The Company's activities expose it to a variety of market risks, including the effects of changes in commodity prices.  These financial exposures are monitored and managed by the Company as an integral part of its overall risk management program.  The Company's risk management program focuses on the unpredictability of commodity markets and seeks to reduce the potentially adverse effects that the volatility of these markets may have on its operating results.

The Company maintains a risk management strategy that uses derivative instruments to minimize significant, unanticipated earnings fluctuations caused by market fluctuations.  The Company's specific goal is to protect the Company from large moves in the commodity costs.

To reduce price risk caused by market fluctuations, the Company generally follows a policy of using exchange-traded futures and

10


Lincolnway Energy, LLC

Notes to Unaudited Financial Statements
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

options contracts to minimize its net position of merchandisable agricultural commodity inventories and forward purchases and sales contracts.  Exchange traded futures and options contracts are designated as non-hedge derivatives and are valued at market price with changes in market price recorded in operating income through cost of goods sold for corn derivatives and through revenue for ethanol derivatives. The effects on operating income from derivative activities is as follows:

 
Three Months
 
Three Months
 
Nine Months
 
Nine Months
 
Ended
 
Ended
 
Ended
 
Ended
 
June 30, 2011
 
June 30, 2010
 
June 30, 2011
 
June 30, 2010
 
 
 
 
 
 
 
 
Increase (decrease) in revenue due to derivatives related to ethanol sales:
 
 
 
 
 
 
 
Realized
$
(288,507
)
 
$
501,480

 
$
(953,648
)
 
$
516,600

Unrealized
539,847

 
(508,897
)
 
262,500

 
77,073

Total effect on revenue
251,340

 
(7,417
)
 
(691,148
)
 
593,673

 
 
 
 

 
 
 
 
(Increase) decrease in cost of goods sold due to derivatives related to corn costs:
 
 
 
 
 
 
 
Realized
(1,149,338
)
 
(18,613
)
 
(3,062,963
)
 
(48,388
)
Unrealized
(1,343,663
)
 
59,988

 
(313,250
)
 
25,638

Total effect on cost of goods sold
(2,493,001
)
 
41,375

 
(3,376,213
)
 
(22,750
)
 
 
 
 

 
 
 
 
Total increase (decrease) to operating income due to derivative activities
$
(2,241,661
)
 
$
33,958

 
$
(4,067,361
)
 
$
570,923


Unrealized gains and losses on forward contracts, in which delivery has not occurred, are deemed “normal purchases and normal sales”, and therefore are not marked to market in the Company's financial statements but are subject to a lower of cost or market assessment.

Note 8.    Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  In determining fair value, the Company uses various methods including market, income and cost approaches.  Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique.  These inputs can be readily observable, market-corroborated, or generally unobservable inputs.  The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.  Based on the observability of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy.  The fair value hierarchy ranks the quality and reliability of the information used to determine fair values.  Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1 -
Valuations for assets and liabilities traded in active markets from readily available pricing sources for market transactions involving identical assets or liabilities.
Level 2 -
Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities.
Level 3 -
Valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.
A description of the valuation methodologies used for instruments measured at fair value, including the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.  These valuation methodologies were applied to all of the Company's financial assets and financial liabilities carried at fair value.

11


Lincolnway Energy, LLC

Notes to Unaudited Financial Statements
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

 
Derivative financial instruments:  Commodity futures and exchange-traded commodity options contracts are reported at fair value utilizing Level 1 inputs.  For these contracts, the Company obtains fair value measurements from an independent pricing service.  The fair value measurements consider observable data that may include dealer quotes and live trading levels from the CME and NYMEX markets.  The fair value measurements consider observable data that may include dealer quotes and live trading levels from the over-the-counter markets. 

The following table summarizes the financial liabilities measured at fair value on a recurring basis as of June 30, 2011 and September 30, 2010, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

 
 
June 30, 2011
 
 
Total
 
Level 1
 
Level 2
 
Level 3
Liabilities, derivative financial instruments
 
$
350,750

 
$
350,750

 
$

 
$

 
 
 
 
 
 
 
 
 
 
 
September 30, 2010
 
 
Total

 
Level 1

 
Level 2

 
Level 3

Liabilities, derivative financial instruments
 
$
1,191,867

 
$
1,191,867

 
$

 
$




Note 9.    Contingency

In May 2010, a lawsuit was filed against the Company and approximately 20 other ethanol plants by an unrelated party claiming the Company's operation of the corn oil extraction system is a patent infringement. The plaintiff seeks injunctive relief, an award of damages with interest and any other remedies available under certain patent statutes or otherwise under law.  The Company is currently reviewing the lawsuit with legal counsel.  The Company is unable to determine at this time if the lawsuit will have a material adverse affect on the Company.

12

Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Statement on Forward Looking Statements and Industry and Market Data

Various discussions and statements in this Item and other sections of this quarterly report are or contain forward looking statements that express Lincolnway Energy's current beliefs, forecasts, projections and predictions about future events.  All statements other than statements of historical fact are forward looking statements, and include statements with respect to financial results and condition; anticipated trends in business, revenues, net income, net profits or net losses; projections concerning operations, capital needs and cash flow; investment, business, growth, expansion, acquisition and divestiture opportunities and strategies; management's plans or intentions for the future; competitive position or circumstances; and other forecasts, projections and statements of expectation.  Words such as "expects," "anticipates," "estimates," "plans," "may," "will," "contemplates," "forecasts," "future," "strategy," "potential," "predicts," "projects," "prospects," "possible," "continue," "hopes," "intends," "believes," "seeks," "should," "could," "thinks," "objectives" and other similar expressions or variations of those words or those types of words help identify forward looking statements.

Forward looking statements involve and are subject to various material risks, uncertainties and assumptions.  Forward looking statements are necessarily subjective and are made based on numerous and varied estimates, projections, views, beliefs, strategies and assumptions made or existing at the time of such statements and are not guarantees of future results or performance.  Forecasts and projections are also in all events likely to be inaccurate, at least to some degree, and especially over long periods of time, and in particular in a still relatively new and developing industry such as the ethanol industry.  Forecasts and projections are also currently difficult to make with any degree of reliability or certainty given the difficult and uncertain credit, market and other economic circumstances and uncertainties in existence at the time of the preparation of this quarterly report, both generally and with respect to the ethanol industry in particular.  Lincolnway Energy disclaims any obligation to update or revise any forward looking statements based on the occurrence of future events, the receipt of new information, or otherwise.  Lincolnway Energy cannot guarantee Lincolnway Energy's future results, performance or business conditions, and strong or undue reliance must not be placed on any forward looking statements.

Actual future performance, outcomes and results may differ materially from those suggested by or expressed in forward looking statements as a result of numerous and varied factors, risks and uncertainties, some that are known and some that are not, and many of which are beyond the control of Lincolnway Energy and Lincolnway Energy's management.  It is not possible to predict or identify all of those factors, risks and uncertainties, but they include inaccurate assumptions or predictions by management, the accuracy and completeness of the publicly available information upon which part of Lincolnway Energy's business strategy is based and all of the various factors, risks and uncertainties discussed in this Item and elsewhere in this quarterly report and in Item 1A of Lincolnway Energy's Annual Report on Form 10-K for the fiscal year ended September 30, 2010. 

Lincolnway Energy may have obtained industry, market, competitive position and other data used in this quarterly report or Lincolnway Energy's general business plan from Lincolnway Energy's own research or internal surveys, studies conducted by other persons and/or trade or industry associations or general publications and other publicly available information.  Lincolnway Energy attempts to utilize third party sources of information which Lincolnway Energy believes to be materially complete, accurate, balanced and reliable, but there is no assurance of the accuracy, completeness or reliability of any third party information.  For example, a trade or industry association for the ethanol industry may present information in a manner that is more favorable to the ethanol industry than would be presented by an independent source.  Industry publications and surveys and other publicly available information also generally state that they have obtained information from sources believed to be reliable, but do not guarantee the accuracy and completeness of any information.

General Overview

Lincolnway Energy is an Iowa limited liability company that operates a dry mill, coal fired ethanol plant located in Nevada, Iowa.  Lincolnway Energy has been processing corn into fuel grade ethanol and distillers' grains at the ethanol plant since May 22, 2006.  

The ethanol plant has a nameplate production capacity of 50,000,000 gallons, which, at that capacity, would also generate approximately 136,000 tons of distillers' grains per year.  Lincolnway Energy's ethanol is marketed by Green Plains Trading Group, LLC and Lincolnway Energy's distillers' grains are marketed by Hawkeye Gold, LLC. Lincolnway Energy's revenues are derived primarily from the sale of its ethanol and distillers' grains.

13


Lincolnway Energy extracts corn oil from syrup which is generated in the production of ethanol.   Lincolnway Energy estimates that it will produce approximately 3,000 tons of corn oil per year.  Lincolnway Energy's corn oil is marketed by FEC Solutions, L.L.C.

EPCO Carbon Dioxide Products, Inc. has a plant located on Lincolnway Energy's, Nevada, Iowa site that collects the carbon dioxide gas which is produced as part of the fermentation process and converts that raw carbon dioxide gas into liquid carbon dioxide. EPCO markets and sells the liquid carbon dioxide. Lincolnway Energy estimates that it will supply approximately 90,000 tons of carbon dioxide gas per year.

Lincolnway Energy does not anticipate that sales of both corn oil and carbon dioxide gas will be material sources of revenue for Lincolnway Energy. Lincolnway Energy was able to implement the processes to collect corn oil and carbon dioxide gas on a low cost basis.

Lincolnway Energy expects to fund its operations during the next 12 months using cash flow from continuing operations.  Lincolnway Energy also has revolving lines of credit which are available to Lincolnway Energy.

Executive Summary

Highlights for the nine months ended months ended June 30, 2011, are as follows:

Total revenues increased 42% or $35.8 million, compared to the 2010 comparable period.

Total cost of goods sold increased 52%, or $41.4 million, compared to the 2010 comparable period.

Net loss was $1.9 million, compared to net income of $3.7 million for the 2010 period.


14

Results of Operations

The following table shows the results of operations and the percentages of revenues, cost of goods sold, operating expenses and other items to total revenues in Lincolnway Energy's statement of operations for the three months and nine months ended June 30, 2011 and 2010 ( dollars in thousands):
 
 
 
Three Months Ended June 30,
 
Nine Months Ended June 30,
 
 
(Unaudited)
 
(Unaudited)
Income Statement Data
 
2011
 
2010
 
2011
 
2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
42,029

 
100.0
 %
 
$
25,068

 
100.0
 %
 
$
121,436

 
100
 %
 
$
85,667

 
100
 %
Cost of goods sold
 
44,929

 
106.9
 %
 
25,630

 
102.2
 %
 
120,925

 
99.6
 %
 
79,537

 
92.8
 %
Gross profit (loss)
 
(2,900
)
 
(6.9
)%
 
(562
)
 
(2.2
)%
 
511

 
0.4
 %
 
6,130

 
7.2
 %
General and administrative expenses
 
642

 
1.5
 %
 
599

 
2.4
 %
 
1,965

 
1.6
 %
 
1,908

 
2.2
 %
Operating income (loss)
 
(3,542
)
 
(8.4
)%
 
(1,161
)
 
(4.6
)%
 
(1,454
)
 
(1.2
)%
 
4,222

 
5.0
 %
Other (expense)
 
(177
)
 
(0.4
)%
 
(183
)
 
(0.7
)%
 
(484
)
 
(0.4
)%
 
(499
)
 
(0.6
)%
Net income (loss)
 
$
(3,719
)
 
(8.8
)%
 
$
(1,344
)
 
(5.3
)%
 
$
(1,938
)
 
(1.6
)%
 
$
3,723

 
4.4
 %



The following table shows other key data for the periods presented:
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
June 30,
 
 
(Unaudited)
Operating Data:
 
2011
 
2010
 
2011
 
2010
 
 
 
 
 
 
 
 
 
Ethanol sold (gallons in thousands)
 
12,762

 
13,270

 
41,464

 
40,508

Average gross price of ethanol sold (dollars per gallon)
 
$
2.56

 
$
1.49

 
$
2.35

 
$
1.71

Dry distillers grain sold (tons)
 
32,995

 
32,456

 
103,164

 
93,299

Average dry distillers grain sales price per ton
 
$
234.73

 
$
147.53

 
$
211.06

 
$
150.56

Average corn cost per bushel
 
$
7.35

 
$
3.43

 
$
6.15

 
$
3.55




Results of Operations for the Three Months Ended June 30, 2011 as Compared to the Three Months Ended June 30, 2010

Revenues. Revenues increased by $17.0 million, or 67.7% to $42.0 million for the three months ended June 30, 2011 from $25.0 million for the three months ended June 30, 2010. The increase in total revenues was primarily the result of a 72.0% increase in ethanol price for the three months ended June 30, 2011, when compared to the three months ended June 30, 2010 and a 59.1% increase in dried distillers grains price from the comparable period.

15


Sales from ethanol increased $13.0 million, or 65.8%, to $32.8 million for the three months ended June 30, 2011 from $19.8 million for the three months ended June 30, 2010. The average price of ethanol sold was $2.56 per gallon for the three months ended June 30, 2011 compared to $1.49 per gallon for the three months ended June 30, 2010. Ethanol sales volume decreased approximately .5 million gallons, or 3.8% for the three months ended June 30, 2011, when compared to the three months ended June 30, 2010. The decrease in sales volume is due to a increase in ethanol finished goods inventory compared to a smaller ethanol finished good inventory balance that was carried in the prior year. The large finished goods inventory balance was held to obtain a higher market price in future months. For more information on ethanol please refer to the next section, Risks, Trends and Factors that May Affect Future Operating Results.

Sales from co-products increased by $3.6 million, or 67.9%, to $8.9 million for the three months ended June 30, 2011
from $5.3 million for the three months ended June 30, 2010. Co-products include, dried distillers grain, wet distillers grain, corn oil, syrup and CO2. An increase in the volume of dried distillers grain sold and the sales price, generated the large increase for the three months ended June 30, 2011 compared to the three months ended June 30, 2010. The average price of dried distillers grain sold was $234.73 per ton for the three months ended June 30, 2011, compared to $147.53 for the three months ended June 30, 2010. The increase in dried distillers grain price is attributable to the increase price of corn. Dried distillers grain sales volume increased by 539 tons, or 1.7% for the three months ended June 30, 2011, compared to the three months ended June 30, 2010. For the three months ended June 30, 2011 there were reported sales for syrup, corn oil and CO2 of $1.0 million an increase of $.6 million from the three months ended June 30, 2010. The sales increase is from the CO2 income of $41,418 that Lincolnway Energy received in the three months ended June 30, 2011 compared to $0 in the three months ended June 30, 2010 and the 76% price increase in corn oil from the three months ended June 30, 2011 compared to the three months ended June 30, 2010. The increase in corn oil prices is due to increased demand from biodiesel plants and increased soybean oil prices which positively impacts the corn oil price.

Revenues included a combined unrealized and realized net gain of $251,340 related to ethanol derivative contracts for the three months ended June 30, 2011, compared to a $(7,417) combined unrealized and realized loss for the three months ended June 30, 2010. As ethanol prices fluctuate, the value of ethanol-related derivative instruments are impacted, which effects Lincolnway Energy's financial performance. Lincolnway Energy expects the volatility in these derivative instruments to continue to have an impact on revenues due to the changes in value of derivative instruments relative to ethanol sales. These instruments are the primary tools of Lincolnway Energy's risk management program for ethanol revenues.

Cost of goods sold. Cost of goods sold increased by $19.3 million, or 75.3% to $44.9 million for the three months ended June 30, 2011 from $25.6 million for the three months ended June 30, 2010. The increase was primarily due to higher corn cost in the 2011 period compared to the 2010 period. Cost of goods sold includes, corn costs, process chemicals, denaturant, coal costs, electricity, production labor, repairs and maintenance, and depreciation.

Corn costs increased $18.0 million, or 113% to $34.0 million for the three months ended June 30, 2011 from $16.0 million for the three months ended June 30, 2010. Corn costs represented 75.7% of our cost of goods sold for the three months ended June 30, 2011 compared to 62.5% for the three months ended June 30, 2010.

The increase in corn costs was driven by an increase in cash corn prices and a loss in derivative activities compared to the prior period . The average price of corn was $7.35 per bushel for the three months ended June 30, 2011, compared to $3.43 per bushel for the three months ended June 30, 2010. The three months ended June 30, 2011 corn costs also included a marked to market net loss of $2.5 million for derivatives relating to future deliveries of corn, compared to a $41,375 gain in the same quarter for the prior year. Lincolnway Energy purchased July 2011 derivative contracts on the Chicago Mercantile Exchange that decreased in value as corn prices decreased over $1.29 to settle at a low on June 30, 2011. These forward contracts were purchased to offset sales of flat price forward ethanol to lock in a crush margin. This derivative loss will be offset by lower fixed price corn costs for the 4th quarter of fiscal year 2011. Since Lincolnway Energy's derivative contracts are marked to market each quarter, the benefits of this risk management tool can cause corn costs to be volatile from quarter to quarter due to the change in value of the positions relative to the cost and use of the corn commodity being hedged. For more information on the corn markets please refer to the next section, Risks, Trends and Factors that May Affect Future Operating Results.

Process chemicals increased $.4 million to $1.7 million for the three months ended June 30, 2011 from 1.3 million for the three months ended June 30, 2010. The increase is due to an increase in pricing and increase usage of enzymes and denaturant.


16


Results of Operations for the Nine months Ended June 30, 2011 as Compared to the Nine months Ended June 30, 2010

Revenues. Revenues increased by $35.7 million, or 41.7% to $121.4 million for the nine months ended June 30, 2011 from $85.7 million for the nine months ended June 30, 2010. The increase in total revenues was the result of a 37.4% increase in ethanol price for the nine months ended June 30, 2011, when compared to the nine months ended June 30, 2010 and a 40.2% increase in dried distillers grains price from the comparable period.

Sales from ethanol increased $27.9 million, or 40.2%, to $97.3 million for the nine months ended June 30, 2011 from $69.4 million for the nine months ended June 30, 2010. The average price of ethanol sold was $2.35 per gallon for the nine months ended June 30, 2011 compared to $1.71 per gallon for the nine months ended June 30, 2010. Ethanol sales volume increased approximately 1.0 million gallons, or 2.4% for the nine months ended June 30, 2011, when compared to the nine months ended June 30, 2010. The increase in sales volume is due to a reduction in ethanol finished goods inventory compared to the large ethanol finished goods inventory balance that was carried in the prior year in order to obtain a higher market price in the future months. For more information on ethanol please refer to the next section, Risks, Trends and Factors that May Affect Future Operating Results.

Sales from co-products increased by $9.2 million, or 58.6%, to $24.8 million for the nine months ended June 30, 2011
from $15.7 million for the nine months ended June 30, 2010. Co-products include, dried distillers grain, wet distillers grain, corn oil, syrup and CO2. An increase in the volume of dried distillers grain sold and the sales price, generated the large increase for the nine months ended June 30, 2011 compared to the nine months ended June 30, 2010. The average price of dried distillers grain sold was $211.06 per ton for the nine months ended June 30, 2011, compared to $150.56 for the nine months ended June 30, 2010. The increase in dried distillers grain price is attributable to the increased price of corn. Dried distillers grain sales volume increased by 9,865 tons, or 10.6% for the nine months ended June 30, 2011, compared to the nine months ended June 30, 2010. Wet distiller's grain sales volume decreased by 4,960 tons, or 31.4% for the nine months ended June 30, 2011 from the nine months ended June 30, 2010. Dried distillers grain production increased for the nine months ended June 30, 2011, due to fewer infections which required fermentor treatments compared to the nine months ended June 30, 2010. For the three months ended June 30, 2011 there were reported sales for syrup, corn oil and CO2 of $2.4 million, an increase of $1.2 million from the nine months ended June 30, 2010. The majority of the sales increase is from the CO2 income of $129,957 that Lincolnway Energy received in the nine months ended June 30, 2011 compared to $0 in the nine months ended June 30, 2010 and the 72% price increase in corn oil from the nine months ended June 30, 2011 compared to the nine months ended June 30, 2010. The increase in corn oil prices is due to increase demand from biodiesel plants and increased soybean oil prices which positively impacts the corn oil price.

Revenues included a combined unrealized and realized net loss of $691,148 related to ethanol derivative contracts for the nine months ended June 30, 2011, compared to a $593,673 combined unrealized and realized gain for the nine months ended June 30, 2010. For the nine months ended June 30, 2011, Lincolnway Energy sold derivative contracts on the Chicago Mercantile Exchange that decreased in value as ethanol prices increased. This resulted in a derivative loss that was offset by increased revenue received for the price of ethanol when sold. For the nine months ended June 30, 2010, the ethanol spot sales prices gave Lincolnway Energy the best market price for ethanol, therefore there was no need to sell derivative contracts on the Chicago Mercantile Exchange. As ethanol prices fluctuate, the value of ethanol-related derivative instruments are impacted, which effects Lincolnway Energy's financial performance. Lincolnway Energy expects the volatility in these derivative instruments to continue to have an impact on revenues due to the changes in value of derivative instruments relative to ethanol sales. These instruments are the primary tools of Lincolnway Energy's risk management program for ethanol revenues.

Cost of goods sold. Cost of goods sold increased by $41.4 million, or 52.1% to $120.9 million for the nine months ended June 30, 2011 from $79.5 million for the nine months ended June 30, 2010. The increase was primarily due to higher corn and hedging cost in the 2011 period compared to the 2010 period. Cost of goods sold includes, corn costs, process chemicals, denaturant, coal costs, electricity, production labor, repairs and maintenance, and depreciation.

Corn costs increased $40.2 million, or 77.9% to $91.8 million for the nine months ended June 30, 2011 from $51.6 million for the nine months ended June 30, 2010. Corn costs represented 75.9% of our cost of goods sold for the nine months ended June 30, 2011 compared to 64.8% for the nine months ended June 30, 2010.

17


The increase in corn costs was partially driven by an increase in cash corn prices compared to the prior period. The average price of corn was $6.15 per bushel for the nine months ended June 30, 2011, compared to $3.55 per bushel for the nine months ended June 30, 2010. The nine months ended June 30, 2011 corn costs also included a marked to market net loss of $3.4 million for derivatives relating to future deliveries of corn, compared to a $22,750 loss in the same period for the prior year. Since Lincolnway Energy's derivative contracts are marked to market each quarter, the benefits of this risk management tool can cause corn costs to be volatile from quarter to quarter due to the change in value of the positions relative to the cost and use of the corn commodity being hedged. For more information on the corn markets please refer to the next section, Risks, Trends and Factors that May Affect Future Operating Results.

Process chemicals increased $1.4 million to $5.1 million for the nine months ended June 30, 2011 from $3.7 million for the nine months ended June 30, 2010. The increase is due to an increase in pricing and increase usage of enzymes and denaturant.

Coal costs increased $.5 million to $5.1 million for the nine months ended June 30, 2011 from $4.6 million for the nine months ended June 30, 2010. The increase is due to higher production and an increase in transportation costs from the prior comparable period.

Ethanol freight costs decreased $.9 million to $1.0 million for the nine months ended June 30, 2011 from $1.9 million for the nine months ended June 30, 2010. The decrease is due to pricing a majority of the ethanol contracts at a FOB Nevada, Iowa price. The freight is built into the price of ethanol, rather than broken out as a separate cost. The offset of the lower freight costs are offset by lower ethanol revenue. Management feels that Lincolnway Energy has improved their profit margin on ethanol sales by switching from a pooled marketing arrangement to a stand-alone concept. Marketing and logistics have become more efficient as freight considerations drive each trade, ensuring that ethanol moves to the closest geographical outlet, ultimately lowering freight costs and receiving a better contract price. Lincolnway Energy can now accept or decline trades based on Lincolnway Energy's specific economics.



Risks, Trends and Factors that May Affect Future Operating Results

The ethanol industry continues to be effected by the price volatility of corn. The United States Department of Agricultural (USDA) released its latest crop production report on July 12, 2011 and raised ending stocks from the June 2011 report by 150 million bushels to 880 million bushels. The USDA also announced on June 30, 2011 that farmers will be planting an estimated 92.3 million acres of corn, up 5.0% from the 88.19 million in 2010. Growers expect to harvest 84.9 million acres, up 4% from the prior year. After the unexpected drop in corn prices on June 30, 2011, the market was then oversold and the price then rebounded. The next obstacle for ethanol plants in the upcoming months is the increase in corn basis. In the pacific northwest, the basis rose to $1.35 over September corn. In the corn belt, basis is trading at approximately $.25 - .50 over September corn.

Lincolnway Energy has seen a 37% increase in the average price per gallon of ethanol from the nine months ended June 30, 2011 compared to the nine months ended June 30, 2010. The increase is attributed to the high corn prices, high energy prices and increased exports to Brazil which has positively impacted ethanol prices. Ethanol production is estimated to be at 13.5 billion gallons for 2011. The ethanol industry current capacity is at roughly 14.6 billion gallons annually. E15 will be a very slow process and we do not expect to see additional demand from its introduction in 2011. There have been several bills introduced in Washington to end the current ethanol tax incentive and use the funds for debt reduction, infrastructure investment, and cellulosic ethanol investment. If the ethanol tax incentive is not extended, the ethanol industry could experience lower ethanol prices and decreased profitability for the ethanol plants.

Lincolnway Energy attempts to offset or hedge some of the risk involved with changing corn prices through the trading of futures and options on the Chicago Mercantile Exchange, as well as the purchase and physical delivery contracts from suppliers. At this reporting time, Lincolnway Energy has corn coverage through the month of September 2011. Lincolnway Energy continues to monitor and attempt to ensure adequate supply and protection against rapid price increases.






18

Liquidity and Capital Resources

The following table summarizes Lincolnway Energy's sources and uses of cash and cash equivalents from the unaudited statement of cash flows for the periods presented (in thousands):
 
 
 
Nine Months Ended June 30,
 
 
(Unaudited)
Cash Flow Data:
 
2011
 
2010
Net cash provided by operating activities
 
$
(667
)
 
$
8,165

Net cash provided by (used in) investing activities
 
(1,452
)
 
(365
)
Net cash (used in) financing activities
 
(71
)
 
(8,423
)
Net increase in cash and cash equivalents
 
(2,190
)
 
(623
)


For the nine months ended June 30, 2011, net cash provided by operating activities decreased by $8.8 million, when compared to cash provided by operating activities for the nine months ended June 30, 2010 . The decrease is primarily due to a decrease in net income for the nine months ended June 30, 2011 of $5.7 million, an increase of $1.7 million in trade and other receivables, increase of inventories of $2.4 million and a increase of $.6 million for deposits offset by a decrease of $1.1 million of derivative activities. The $5.7 million decrease in net income is primarily driven by higher market prices for corn for the nine months ended June 30, 2011 compared to the prior year. Lincolnway Energy also experienced a $4.1 million loss in derivative activities for the nine months ended June 30, 2011, compared to a $570,923 gain for the nine months ended June 30, 2010.

Cash flows used in investing activities reflect the impact of property and equipment acquired for the ethanol plant. Net cash used in investing activities increased by $1.1 million for the nine months ended June 30, 2011 compared to cash provided by investing activities for the nine months ended June 30, 2010. The increase is due to an increase of property and equipment purchases for the plant. The rail spur addition makes up approximately $1.0 million of the purchases.

Cash flows from financing activities include transactions and events whereby cash is obtained from, or paid to, depositors, creditors or investors. Net cash used in financing activities decreased by $8.4 million for the nine months ended June 30, 2011 compared to cash used in investing activities for the nine months ended June 30, 2010. The decrease is due to a decrease in payments on long-term borrowings and member distributions for the nine months ended June 30, 2011, compared to the nine months ended June 30, 2010.

Lincolnway Energy's next term loan payment is due December 2011.

As of August 2011, Lincolnway Energy is in compliance with all bank covenants related to bank financing.

Lincolnway Energy's financial position and liquidity are, and will be, influenced by a variety of factors, including:

their ability to generate cash flows from operations;

the level of their outstanding indebtedness and the interest they are obligated to pay; and

their capital expenditure requirements, which consists primarily of plant improvements to improve efficiencies and railspur expansion.

Lincolnway Energy expects to have available cash to meet their current anticipated liquidity needs.









19

Critical Accounting Estimates and Accounting Policies

Lincolnway Energy's financial statements are prepared in conformity with accounting principles generally accepted in the United States of America and follow general practices within the industries in which Lincolnway Energy operates. This preparation requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, actual results could differ from the estimates, assumptions, and judgments reflected in the financial statements. Certain policies inherently have a greater reliance on the use of estimates, assumptions, and judgments and, as such, have a greater possibility of producing results that could be materially different than originally reported. Management believes the following policies are both important to the portrayal of Lincolnway Energy's financial condition and results of operations and require subjective or complex judgments; therefore, management considers the following to be critical accounting policies.

Revenue Recognition

Revenue from the sale of Lincolnway Energy's ethanol and distiller's grains is recognized at the time title and all risks of ownership transfer to the customers. This generally occurs upon the loading of the product. For ethanol, title passes from Lincolnway Energy at the time the product crosses the loading flange into either a railcar or truck. For distiller's grains, title passes upon the loading of distiller's grains into trucks. For railcar shipments, this takes place when the railcar is filled and the marketer receives written notice that they have been loaded and are available for billing. Shipping and handling costs incurred by Lincolnway Energy for the sale of ethanol and distiller's grain are included in costs of goods sold.

Lincolnway Energy's ethanol production is sold to Green Plains Trade Group LLC (GPTG). The purchase price payable to Lincolnway Energy is GPTG's contract selling price for the ethanol in question, less various costs and a fee to GPTG. The ethanol marketing agreement includes a minimum purchase price. Title and all risk of loss and damage to all ethanol commences at the time the ethanol passes across the inlet flange into rail cars or tank cars of the GPTG carrier at the Lincolnway Energy plant.

Lincolnway Energy's distiller's grain production is sold to Hawkeye Gold, LLC. Lincolnway Energy pays Hawkeye Gold, LLC a marketing fee for dried distiller's grains equal to the greater of 2% of the FOB plant price for the dried distiller's grain or a per-ton fee of $1.30 for the dried distiller's grain. The marketing fee for wet distiller's grains is the greater of 3% of the FOB plant price for the wet distiller's grains or a per-ton fee of $1.00 for the wet distiller's grains.

Lincolnway Energy's corn oil production is sold to FEC Solutions, LLC (FECS). For corn oil, title passes upon the loading of the corn oil into the trucks. The purchase price payable by FECS for each shipment of corn oil is the FOB sales price less a marketing and technical assistance fee in an amount equal to 5% of the FOB sales price.

Lincolnway Energy's CO2 production is sold to EPCO Carbon Dioxide Products, Inc. For CO2, title passes at the point at which the carbon dioxide gas pipe from Lincolnway Energy's plant joins the corresponding pipe from the EPCO plant. The purchase price payable by EPCO for the carbon dioxide gas provided by Lincolnway Energy during each calendar month is based upon EPCO's shipped tons of liquid carbon dioxide. Under the agreement, EPCO agrees to purchase, during each contract year, a minimum of the greater of 180 shipped tons per day or 70% of the annual liquid carbon dioxide production capacity of the EPCO plant at full capacity, with that capacity to be determined in accordance with the testing processes set out in the agreement. The "take or pay" obligation is trued up at the end of each contract year, and the purchase price for any "take or pay" tons will be the average per shipped ton purchase price paid by EPCO during the contract year. Lincolnway Energy began selling CO2 to EPCO in August, 2010.

Derivative Instruments
Lincolnway Energy enters into derivative contracts to hedge its exposure to price risk related to forecasted corn needs, forward corn purchase contracts and ethanol contracts. Lincolnway Energy does not typically enter into derivative instruments other than for hedging purposes. All the derivative contracts are recognized on the June 30, 2011 balance sheet at their fair value. Although Lincolnway Energy believes its derivative positions are economic hedges, none has been designated as a hedge for accounting purposes. Accordingly, any realized or unrealized gain or loss related to these derivative instruments is recorded in the statement of operations as a component of cost of goods sold for corn derivatives and through revenue for ethanol derivatives.

Off-Balance Sheet Arrangements
Lincolnway Energy currently does not have any off-balance sheet arrangements.

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Item 3.    Quantitative and Qualitative Disclosures About Market Risk

In addition to the various risks inherent in Lincolnway Energy's operations, Lincolnway Energy is exposed to various market risks.  The primary market risks arise as a result of possible changes in certain commodity prices and changes in interest rates.

Commodity Price Risk

Lincolnway Energy is exposed to market risk with respect to the price of ethanol, which is Lincolnway Energy's principal product, and the price and availability of corn and coal, which are the principal commodities used by Lincolnway Energy to produce ethanol.  The other primary product of Lincolnway Energy is distiller's grains, and Lincolnway Energy is also subject to market risk with respect to the price for distiller's grains.  The prices for ethanol, distiller's grains, corn and coal are volatile, and Lincolnway Energy will experience market conditions where the prices Lincolnway Energy receives for its ethanol and distiller's grains are declining, but the price Lincolnway Energy pays for its corn, coal and other inputs is increasing.  Lincolnway Energy's results will therefore vary substantially over time, and include the possibility of losses, which could be substantial.

In general, rising ethanol and distiller's grains prices result in higher profit margins, and therefore represent favorable market conditions.  Lincolnway Energy is, however, subject to various material risks related to its production of ethanol and distiller's grains and the price for ethanol and distiller's grains.  For example, ethanol and distiller's grains prices are influenced by various factors beyond the control of Lincolnway Energy's management, including the supply and demand for gasoline, the availability of substitutes and the effects of laws and regulations.

In general, rising corn prices result in lower profit margins and, accordingly, represent unfavorable market conditions.  Lincolnway Energy will generally not be able to pass along increased corn costs to its ethanol customers.  Lincolnway Energy is subject to various material risks related to the availability and price of corn, many of which are beyond the control of Lincolnway Energy.  For example, the availability and price of corn is subject to wide fluctuations due to various unpredictable factors, including weather conditions, crop yields, farmer planting decisions, governmental policies with respect to agriculture, and local, regional, national and international trade, demand and supply.  If Lincolnway Energy's corn costs were to increase $.10 per bushel from one year to the next, the impact on cost of goods sold would be approximately $1.97 million for the year, assuming corn use of 19.7 million bushels during the year.  Lincolnway Energy consumed approximately 19.7 million bushels of corn during the fiscal year ended September 30, 2010.
   
Lincolnway Energy's average gross corn cost during the three and nine months ended June 30, 2011 was, respectively, approximately $7.35 and $6.15 per bushel, compared to $3.43 and $3.55 per bushel for the three and nine months ended June 30, 2010.

During the quarter ended ended June 30, 2011, corn prices based on the Chicago Mercantile Exchange daily futures data ranged from a low of $6.165 per bushel for July 2011 delivery to a high of $7.99 per bushel for July 2011 delivery.  The corn prices based on the Chicago Mercantile Exchange daily futures data during the quarter ended ended June 30, 2010 ranged from a low of $3.24 per bushel for July 2010 delivery to a high of $3.85 per bushel for July 2010 delivery.

The average price Lincolnway Energy received for its ethanol during the three and nine months ended June 30, 2011 was, respectively, approximately $2.56 and $2.35 per gallon, as compared to $1.49 and $1.71 per gallon, respectively, during the three and nine months ended June 30, 2010.

During the quarter ended June 30, 2011, ethanol prices based on the Chicago Mercantile Exchange daily futures data ranged from a low of $2.46 per gallon for July 2011 delivery to a high of $2.788 per gallon for July 2011 delivery.  The ethanol prices based on the Chicago Mercantile Exchange daily futures data during the quarter ended June 30, 2010 ranged from a low of $1.47 per gallon for July 2010 delivery to a high of $1.66 for July 2010 delivery.

Lincolnway Energy may from time to time take various cash, futures, options or other positions with respect to its corn and ethanol needs in an attempt to minimize or reduce Lincolnway Energy's price risks related to corn and ethanol.  Those activities are, however, also subject to various material risks, including that price movements in the cash and futures corn and ethanol markets are highly volatile and are influenced by many factors and occurrences which are beyond the control of Lincolnway Energy.

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Although Lincolnway Energy intends its futures and option positions to accomplish an economic hedge against Lincolnway Energy's future purchases of corn or futures sales of ethanol, Lincolnway Energy has chosen not to use hedge accounting for those positions, which would match the gain or loss on the positions to the specific commodity purchase being hedged.  Lincolnway Energy is instead using fair value accounting for the positions, which generally means that as the current market price of the positions changes, the realized or unrealized gains and losses are immediately recognized in Lincolnway Energy's costs of goods sold in the statement of operations for corn positions or as a component of revenue in the statement of operations for ethanol positions.  The immediate recognition of gains and losses on those positions can cause net income to be volatile from quarter to quarter due to the timing of the change in value of the positions relative to the cost and use of the commodity being hedged.  For example, Lincolnway Energy's net loss on corn derivative financial instruments that was included in its cost of goods sold for the nine months ended June 30, 2011 was $(3,376,213), as opposed to the net loss of $(22,750) for the nine months ended June 30, 2010.

 
The extent to which Lincolnway Energy may enter into arrangements with respect to its ethanol or corn during the year may vary substantially from time to time based on a number of factors, including supply and demand factors affecting the needs of customers to purchase ethanol or suppliers to sell Lincolnway Energy raw materials on a fixed basis, Lincolnway Energy's views as to future market trends, seasonable factors and the cost of future contracts.

Lincolnway Energy's cost per ton for coal under its current coal supply agreement is subject to various fixed and periodic adjustments based on factors which are outside of the control of Lincolnway Energy's management. The factors include changes in certain inflation type indices, increases in transportation costs and the quality of coal.  Lincolnway Energy's coal costs will therefore vary, and the variations could be material.  Lincolnway Energy's coal costs for the three months ended June 30, 2011 and 2010 represented approximately 4% and 6%, respectively, of Lincolnway Energy's total cost of goods sold for that period.  

On June 30, 2011, Lincolnway Energy received a letter from Williams Bulk Transfer ('WBT") of its declaring force majeure on the coal agreement pursuant to Article 18, thereof. This is due to the flooding of the Missouri River in Iowa, Nebraska and Kansas area resulting in extending routes, and unavoidable delays in transporting coal to the Lincolnway Energy plant. WBT is working to find alternative sources during the force majeure, however control of shipments via the Burlington Northern and Santa Fe Railway is out of their control. As of August 1, 2011, Lincolnway Energy has been receiving enough coal to run the plant as scheduled. WBT did not provide an expected duration of the force majeure.

Interest Rate Risk

Lincolnway Energy has various loan agreements and promissory notes that expose Lincolnway Energy to market risk related to changes in the interest rate imposed under those loan agreements and promissory notes.

Lincolnway Energy has loan agreements and/or promissory notes with the following entities and with the principal balance and interest rates indicated:

 
Principal Balance
 
Lender
As of June 30, 2011
Interest Rate
 
 
 
Co-Bank
$
6,500,000

6.62%
Iowa Department of Economic Development
$
160,000

0.00%
Iowa Department of Transportation
$
287,930

2.11%
Fagen, Inc.
$
1,216,781

5.00%
Fagen, Inc.
$
1,250,000

4.00%

The interest rates under the respective loan agreements and promissory notes are fixed at the interest rates specified above, but the Co-Bank interest rate is fixed only through July 2011. After July 2011, the Co-Bank loan will revert back to a variable interest rate loan based on the one-month LIBOR index rate, plus 3.30%. The latter rate as of August 1, 2011 was 3.49% per annum.

Lincolnway Energy does not anticipate any material increase in interest rates during the remainder of 2011.

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Item 4.    Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Lincolnway Energy's  management,  under the supervision and with  the  participation  of  Lincolnway Energy's president and chief executive officer and Lincolnway Energy's chief financial  officer,  have evaluated the  effectiveness of Lincolnway Energy's disclosure  controls  and  procedures  (as defined in Rule  13a-15(e) under the Securities  Exchange  Act of 1934) as of the end of the  period covered by this quarterly report.  Based on that evaluation,  Lincolnway Energy's president and chief executive officer and Lincolnway Energy's chief financial  officer have  concluded  that, as of the end of the period covered by this quarterly report, Lincolnway Energy's disclosure controls and procedures have been effective to provide  reasonable  assurance that the information required to be disclosed in the reports Lincolnway Energy  files or submits  under the Securities Exchange  Act of 1934 is (i)  recorded,  processed, summarized and reported within the time  periods  specified  in the  Securities  and  Exchange Commission's   rules  and  forms,  and  (ii)  accumulated  and  communicated  to management,  including Lincolnway Energy's  principal executive and principal financial officers or persons performing such functions,  as appropriate,  to allow timely decisions regarding  disclosure.  Lincolnway Energy believes that a control system, no matter how well designed and operated, cannot provide absolute  assurance that the  objectives of the control system are met, and no evaluation of controls can provide  absolute  assurance that all control issues and instances of fraud,  if any, within a company have been detected.
 
Changes in Internal Control Over Financial Reporting
 
No change in Lincolnway Energy's internal control over financial reporting occurred during the period covered by this quarterly report that has materially affected, or is reasonably likely to materially affect, Lincolnway Energy's internal control over financial reporting.


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PART II - OTHER INFORMATION

Item 1.    Legal Proceedings.

Except as noted in the following paragraphs, as of the date of this quarterly report, Lincolnway Energy was not aware of any material pending legal proceeding to which Lincolnway Energy was a party or of which any of Lincolnway Energy's property was the subject, other than ordinary routine litigation, if any, that was incidental to Lincolnway Energy's business.  Except as noted in the following paragraphs, as of the date of this quarterly report, Lincolnway Energy was not aware that any governmental authority was contemplating any material proceeding against Lincolnway Energy or any of Lincolnway Energy's property.

A Complaint for Patent Infringement was filed against Lincolnway Energy and certain other parties on May 3, 2010 by GS CleanTech Corporation, a wholly owned subsidiary of GreenShift Corporation. The Complaint was filed in the United States District Court for the Northern District of Iowa, Western Division, as Case No. 5:10-cv-04036. The Complaint alleges, in general, that the corn oil extraction equipment and related processes used by Lincolnway Energy and the other parties infringes upon one or more of the claims under certain patents held by GS CleanTech Corporation. The Complaint seeks injunctive relief, an award of damages with interest, and any other remedies available under certain patent statutes or otherwise under law. The Complaint claims damages of at least a reasonable royalty rate and lost profits. The Complaint also alleges that the alleged infringing conduct by Lincolnway Energy is willful, resulting in the right to recover treble damages and attorney fees pursuant to 35 U.S.C. §284. The case was transferred on August 6, 2010 to the United States District Court for the Southern District of Indiana pursuant to Multi-District Litigation proceedings, as Case No. 1:10-ml-02181. Lincolnway Energy is unable to determine at this time if the Complaint will have a material adverse effect on Lincolnway Energy.


Item 1A.    Risk Factors.

There have been no material changes from the risk factors as previously disclosed in Lincolnway Energy's Form 10-K for the fiscal year ended September 30, 2010 and filed with the Securities and Exchange Commission on December 21, 2010.  

A continuing legislative risk to the ethanol industry is that Congress only extended the various ethanol tax incentives, including the 45¢ per gallon blenders credit for ethanol use and the 54¢ secondary tariff on imported ethanol, through December 31, 2011. There is no assurance that those incentives will be extended past December 31, 2011, and the loss of those tax incentives could have materially adverse effects on the ethanol industry. The effects could be similar to those caused in the biodiesel industry by the failure to extend the biodiesel tax incentives by their originally scheduled termination date.

There continues to be a substantial amount of political and economic uncertainty surrounding the budget deficit and related budget and tax issues in the United States. It is not clear at this time what exact measures will be taken to address those various and complex issues, but substantial cuts in the federal budget and changes to the tax code, including the elimination of various tax incentives and deductions and possibly higher tax rates, are likely to occur. Nearly all of the states are facing similar political, economic, budget and tax issues. The possible outcomes to, and effects of, all of those issues are very difficult to analyze or predict at this time, but there will almost certainly be some adverse effects, at least in some ways and for some period of time, on certain groups or sectors of the economy, and perhaps the economy as a whole. Similar issues are also being faced by many other countries.

There is a substantial amount of civil unrest and other political uncertainty in the Middle East and other oil producing nations, and there have been changes in the government in some countries, with additional and further changes appearing to be very likely. It is not possible to predict with any certainty at this time the possible end results of the unrest and changes in government, and how that may affect oil supplies and prices, the general stability of those countries and the region, and those countries' economies and relationship with the United States. The results could, however, be materially adverse to the United States in general and to energy related industries, such as ethanol.

An investment in any membership units of Lincolnway Energy involves a high degree of risk and is a speculative and volatile investment.  An investor could lose all or part of his or her investment in any membership units.


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Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds.

Lincolnway Energy did not sell any membership units during the period of April 1, 2011 through June 30, 2011.

None of Lincolnway Energy's membership units were purchased by or on behalf of Lincolnway Energy or any affiliated purchaser (as defined in Rule 10b-18(a)(3) of the Exchange Act) of Lincolnway Energy during the period of April 1, 2011 through June 30, 2011.


Item 3.    Defaults Upon Senior Securities.

There has been no material default in the payment of principal, interest, a sinking or purchase fund installment, or any other material default not cured within 30 days, with respect to any indebtedness of Lincolnway Energy exceeding 5% of the total assets of Lincolnway Energy.

No material arrearage in the payment of dividends or any other material delinquency has occurred with respect to any class of preferred membership units of Lincolnway Energy which is registered or which ranks prior to any class of registered membership units of Lincolnway Energy.


Item 5.    Other Information.

There was no information required to be disclosed in a report on Form 8-K during the period of April 1, 2011 through June 30, 2011 which was not reported on a Form 8-K.

There were no material changes during the period of April 1, 2011 through June 30, 2011 to the procedures by which the members of Lincolnway Energy may recommend nominees to Lincolnway Energy's board.


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Item 6.    Exhibits.

The following exhibits are filed as part of this quarterly report.  Exhibits previously filed are incorporated by reference, as noted.
 
 
 
 
 
 
Incorporated by Reference
Exhibit
 
 
 
Filed Herewith;
 
 
 
Period
 
 
 
Filing
Number
 
Exhibit Description
 
Page Number
 
Form
 
Ending
 
Exhibit
 
Date
 
 
 
 
 
 
 
 
 
 
 
 
 
 3.1
 
Restatement of the Certificate of Organization
 
 
 
10-K
 
9/30/2010
 
 3.1
 
12/21/2010
 3.2
 
Second Amended and Restated Operating Agreement and Unit Assignment Policy
 
 
 
10-K
 
9/30/2010
 
 3.2
 
12/21/2010
10.2
 
Master Loan Agreement Between Lincolnway Energy, LLC and Farm Credit Services of America
 
 
 
10
 
 
 
10.2
 
1/27/2006
10.3
 
Construction and Term Loan Supplement Between Lincolnway Energy, LLC and FarmCredit Services of America
 
 
 
10
 
 
 
10.3
 
1/27/2006
10.4
 
Construction and Revolving Term Loan Supplement Between Lincolnway Energy, LLC and Farm Credit Services of America
 
 
 
10
 
 
 
10.4
 
1/27/2006
10.5
 
Loan Agreement Between Lincolnway Energy,  LLC and Iowa Department of Transportation
 
 
 
10
 
 
 
10.5
 
1/27/2006
10.7
 
Distiller's Grain Marketing Agreement Between Lincolnway Energy, LLC and Hawkeye Gold, LLC
 
 
 
10-K
 
9/30/2007
 
10.7
 
12/21/2007
*10.9
 
Coal Supply Agreement Between Lincolnway Energy, LLC and Williams Bulk Transfer, Inc.  See Exhibit 10.9.1 for an amendment to this agreement.
 
 
 
10
 
 
 
10.9
 
1/27/2006
*10.9.1
 
Amendment Number One to Coal Supply Agreement Between Lincolnway Energy, LLC and Williams Bulk Transfer, Inc.
 
 
 
10-K
 
9/30/2007
 
10.9.1
 
12/21/2007
10.10
 
Loan Agreement Between Lincolnway Energy, LLC and Iowa Department of Economic Development
 
 
 
10
 
 
 
10.10
 
1/27/2006
10.11
 
Amended and Restated Grain Handling Agreement Between Lincolnway Energy, LLC and Heart of Iowa Cooperative
 
 
 
10
 
 
 
10.11
 
1/27/2006
10.13
 
Industry Track Contract Between Lincolnway Energy, LLC and Union Pacific Railroad
 
 
 
10-Q
 
6/30/2006
 
10.13
 
8/14/2006
*10.15
 
Ethanol Marketing Agreement Between Lincolnway Energy, LLC and Green Plains Trade Group LLC
 
 
 
10-K
 
9/30/2009
 
10.15
 
12/22/2009
31.1
 
Rule 13a-14(a) Certification of President and Chief Executive Officer
 
E-1
 
 
 
 
 
 
 
 
31.2
 
Rule 13a-14(a) Certification of Chief Financial Officer
 
E-2
 
 
 
 
 
 
 
 
32.1
 
Section 1350 Certification of President and Chief Executive Officer
 
E-3
 
 
 
 
 
 
 
 
32.2
 
Section 1350 Certification of Chief Financial Officer
 
E-4
 
 
 
 
 
 
 
 
101
 
Interactive data file (furnished electonically herewith pursuant to Rule 405 of Regulation S-T)
 
 
 
 
 
 
 
 
 
 
* Material has been omitted pursuant to a request for confidential treatment and such material have been filed separately with the Securities and Exchange Commission.



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27

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
LINCOLNWAY ENERGY, LLC
 
 
 
August 12, 2011
By:
/s/   Richard Brehm
 
Name:    Richard Brehm
 
Title:      President and Chief
 
                 Executive Officer
 
 
 
August 12, 2011
By:
/s/   Kim Supercynski
 
Name:    Kim Supercynski
 
Title:      Chief Financial Officer



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EXHIBIT INDEX

Exhibits Filed With Form 10-Q
of Lincolnway Energy, LLC
For the Quarter Ended June 30, 2011

Description of Exhibit.
 
 
Page
 
 
 
 
31

Rule 13a-14(a)/15d-14(a) Certifications
 
 
 
 
 
 
31.1

Rule 13a-14(a) Certification of President and Chief Executive Officer
E-1
 
 
 
 
 
31.2

Rule 13a-14(a) Certification of Chief Financial Officer
E-2
 
 
 
 
32

Section 1350 Certifications
 
 
 
 
 
 
32.1

Section 1350 Certification of President and Chief Executive Officer
E-3
 
 
 
 
 
32.2

Section 1350 Certification of Chief Financial Officer
E-4
 
 
 
 
101

Interactive Data File (furnished electronically herewith pursuant to Rule 405 of Regulation S-T)
 


29