Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Oct. 31, 2015 | Jan. 27, 2016 | Apr. 30, 2015 | |
Entity Registrant Name | Heron Lake BioEnergy, LLC | ||
Entity Central Index Key | 1,286,964 | ||
Current Fiscal Year End Date | --10-31 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Oct. 31, 2015 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus (Q1,Q2,Q3,FY) | FY | ||
Amendment Flag | false | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 5,611,916 | ||
Class A | |||
Entity Common Stock, Shares Outstanding, Class B | 62,932,107 | ||
Class B | |||
Entity Common Stock, Shares Outstanding, Class B | 15,000,000 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Oct. 31, 2015 | Oct. 31, 2014 |
Current Assets | ||
Cash | $ 1,126,283 | $ 662,128 |
Restricted cash | 0 | 264,086 |
Accounts receivable | 5,671,181 | 4,055,981 |
Inventory | 5,259,346 | 5,187,267 |
Derivative Assets, Current | 677,149 | 437,500 |
Prepaid expenses and other current assets | 158,473 | 289,740 |
Total current assets | 12,892,432 | 10,896,702 |
Property, Plant and Equipment | ||
Land and improvements | 9,111,838 | 9,111,838 |
Plant buildings and equipment | 81,634,966 | 73,080,366 |
Vehicles and other equipment | 611,976 | 611,976 |
Office buildings and equipment | 641,860 | 613,407 |
Construction in progress | 1,148,578 | 6,559,517 |
Property, plant and equipment, gross | 93,149,218 | 89,977,104 |
Less accumulated depreciation | (40,164,668) | (35,609,106) |
Property, plant and equipment, net | 52,984,550 | 54,367,998 |
Other Assets | ||
Other intangible assets, net | 122,148 | 160,296 |
Other assets | 697,254 | 697,254 |
Total other assets | 819,402 | 857,550 |
Total Assets | 66,696,384 | 66,122,250 |
Current Liabilities | ||
Current maturities of long-term debt | 517,957 | 846,235 |
Bank Overdrafts | 1,836,682 | 0 |
Accounts payable | 3,913,714 | 7,047,544 |
Accrued expenses | 187,750 | 215,616 |
Total current liabilities | 6,456,103 | 8,109,395 |
Long-Term Debt, net of current maturities | 6,711,975 | 2,112,412 |
Members' Equity | ||
Members' Equity Attributable to Heron Lake BioEnergy, LLC: 64,812,107 and 38,622,107 multiple classes of units issued and outstanding at October 31, 2013 and 2012, respectively | 52,446,500 | 55,047,120 |
Non-controlling interest | 1,081,806 | 853,323 |
Total members' equity | 53,528,306 | 55,900,443 |
Total Liabilities and Members' Equity | $ 66,696,384 | $ 66,122,250 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - shares | Oct. 31, 2015 | Oct. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Members' Equity, units issued | 64,812,107 | 38,622,107 |
Members' Equity, units outstanding | 64,812,107 | 38,622,107 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | ||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 | |
Income Statement [Abstract] | |||
Revenues | $ 115,660,469 | $ 149,418,044 | $ 163,764,144 |
Cost of Goods Sold | |||
Cost of Goods Sold | 105,248,092 | 120,569,409 | 155,536,974 |
Gross Profit | 10,412,377 | 28,848,635 | 8,227,170 |
Operating Expenses | (3,001,095) | (2,950,047) | (3,214,036) |
Impairment Charge | 0 | 0 | 0 |
Operating Income | 7,411,282 | 25,898,588 | 5,013,134 |
Other Income (Expense) | |||
Interest income | 1,312 | 658 | 17,335 |
Interest expense | (444,625) | (1,665,007) | (2,789,373) |
Other income | 11,747 | 93,279 | 26,764 |
Total other expense, net | (431,566) | (1,571,070) | (2,745,274) |
Net Income | 6,979,716 | 24,327,518 | 2,267,860 |
Net Income Attributable to Non-controlling Interest | 228,483 | 358,673 | 327,018 |
Net Income Attributable to Heron Lake BioEnergy, LLC | $ 6,751,233 | $ 23,968,845 | $ 1,940,842 |
Weighted Average Units Outstanding - Basic (in shares) | 77,932,107 | 69,233,367 | 44,868,463 |
Net Income Per Unit - Basic (Class A and B) | $ 0.09 | $ 0.35 | $ 0.04 |
Weighted Average Units Outstanding - Diluted (in shares) | 77,932,107 | 78,389,586 | 48,086,445 |
Net Income Per Unit - Diluted (Class A and B) | $ 0.09 | $ 0.31 | $ 0.04 |
Distribution Made to Limited Liability Company (LLC) Member, Cash Distributions Paid | $ 0.12 | $ 0 | $ 0 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Members' Equity - USD ($) | Total | Class A units | Class B units | Heron Lake Bioenergy [Member] | Agrinatural Gas [Member] | Heron Lake Bioenergy, LLC (including non-controlling interest of Agrinatural) [Member] |
Balance at Oct. 31, 2012 | $ 38,622,107 | $ 0 | $ 17,344,433 | $ 205,014 | $ 17,549,447 | |
Increase (Decrease) in Stockholders' Equity | ||||||
Capital Issuance | 8,075,000 | 15,000,000 | 6,922,500 | 0 | 6,922,500 | |
Conversion of subordinated convertible debt | 3,115,000 | 0 | 934,500 | 0 | 934,500 | |
Distribution Made to Limited Liability Company (LLC) Member, Cash Distributions Paid | $ 0 | 0 | 0 | 0 | (123,455) | (123,455) |
Net income (loss) attributable to noncontrolling interest | 327,018 | 0 | 0 | 0 | 327,018 | 327,018 |
Net income (loss) | 1,940,842 | 0 | 0 | 1,940,842 | 0 | 1,940,842 |
Balance at Oct. 31, 2013 | 49,812,107 | 15,000,000 | 27,142,275 | 408,577 | 27,550,852 | |
Increase (Decrease) in Stockholders' Equity | ||||||
Conversion of subordinated convertible debt | 13,120,000 | 0 | 3,936,000 | 0 | 3,936,000 | |
Distribution Made to Limited Liability Company (LLC) Member, Cash Distributions Paid | 0 | |||||
Capital issuance, net | 0 | 0 | 0 | 86,073 | 86,073 | |
Net income (loss) attributable to noncontrolling interest | 358,673 | 0 | 0 | 0 | 358,673 | 358,673 |
Net income (loss) | 23,968,845 | 0 | 0 | 23,968,845 | 0 | 23,968,845 |
Balance at Oct. 31, 2014 | 55,900,443 | 62,932,107 | 15,000,000 | 55,047,120 | 853,323 | 55,900,443 |
Increase (Decrease) in Stockholders' Equity | ||||||
Distribution Made to Limited Liability Company (LLC) Member, Cash Distributions Paid | (9,351,853) | 0 | 0 | (9,351,853) | 0 | (9,351,853) |
Net income (loss) attributable to noncontrolling interest | 228,483 | 0 | 0 | 0 | 228,483 | 228,483 |
Net income (loss) | 6,751,233 | 0 | 0 | 6,751,233 | 0 | 6,751,233 |
Balance at Oct. 31, 2015 | $ 53,528,306 | $ 62,932,107 | $ 15,000,000 | $ 52,446,500 | $ 1,081,806 | $ 53,528,306 |
Consolidated Statements of Cha6
Consolidated Statements of Changes in Members' Equity (Parenthetical) - $ / shares | 12 Months Ended | |
Oct. 31, 2015 | Oct. 31, 2014 | |
Class A units | ||
Class of Stock [Line Items] | ||
Capital issuance (in shares) | 8,075,000 | 8,075,000 |
Conversion of subordinated convertible debt (in shares) | 3,115,000 | 3,115,000 |
Stock issuance cost per unit | $ 0.30 | $ 0.30 |
Class B units | ||
Class of Stock [Line Items] | ||
Capital issuance (in shares) | 15,000,000 | 15,000,000 |
Stock issuance cost per unit | $ 0.30 | $ 0.30 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 | Oct. 31, 2012 | |
Cash Flow From Operating Activities | ||||
Net income | $ 6,979,716 | $ 24,327,518 | $ 2,267,860 | |
Adjustments to reconcile net income to net cash provided by operations: | ||||
Depreciation and amortization | 4,593,710 | 4,321,961 | 4,282,523 | |
Write off of Deferred Debt Issuance Cost | 0 | 369,699 | 0 | |
Gains (Losses) on Sales of Assets | 0 | (58,000) | 0 | |
Impairment charge | 0 | 0 | 0 | |
Change in Unrealized Gain (Loss) on Fair Value Hedging Instruments | (831,227) | (787,617) | 0 | |
Change in operating assets and liabilities: | ||||
Restricted cash | 264,086 | (264,086) | 0 | |
Accounts receivable | (1,615,200) | (3,306,555) | 1,035,335 | |
Inventory | (72,079) | 417,042 | (2,015,737) | |
Commodity derivative instruments | 591,578 | 350,117 | 0 | |
Prepaid expenses and other current assets | 131,267 | 651,610 | (155,442) | |
Accounts payable | (3,483,312) | 2,387,592 | (1,390,905) | |
Accrued expenses | (27,866) | (89,469) | (65,864) | |
Net cash provided by operating activities | 6,530,673 | 28,319,812 | 3,957,770 | |
Cash Flows from Investing Activities | ||||
Payments for capital expenditures | (2,822,633) | (3,602,389) | (917,020) | |
Proceeds from disposal of property and equipment | 0 | 58,000 | 3,728,669 | |
Net cash provided by (used in) investing activities | (2,822,633) | (3,544,389) | 2,811,649 | |
Proceeds from (Repayments of) Bank Overdrafts | 1,836,682 | 0 | 0 | |
Cash Flows from Financing Activities | ||||
Proceeds from (payments on) line of credit | 0 | 0 | (480,000) | |
Proceeds from (Repayments of) Other Long-term Debt | 13,440,990 | 0 | 0 | |
Payments on long-term debt | (9,169,704) | (24,449,533) | (19,493,936) | |
Proceeds from note payable | 0 | 0 | 820,929 | |
Issuance of (payments on) convertible subordinated debt | 0 | (207,000) | 5,077,500 | |
Issuance of member units | 0 | 0 | 6,922,500 | |
Distribution Made to Limited Liability Company (LLC) Member, Cash Distributions Paid | (9,351,853) | 0 | 0 | |
Deferred financing costs | 0 | 0 | (390,858) | |
Release of restricted cash | 0 | 0 | 715,259 | |
Distributions to non-controlling interest | 0 | 0 | (50,936) | |
Net cash used in financing activities | (3,243,885) | (24,656,533) | (6,879,542) | |
Net Increase (Decrease) in cash | 464,155 | 118,890 | (110,123) | |
Cash—Beginning of period | 662,128 | 543,238 | 653,361 | |
Cash—End of period | 1,126,283 | 662,128 | 543,238 | $ 653,361 |
Supplemental Disclosure of Cash Flow Information | ||||
Interest expense | 444,625 | 1,340,260 | $ 2,961,259 | |
Supplemental Disclosure of Non-Cash Investing, Operating and Financing Activities | ||||
Conversion of subordinated convertible debt to member units | 0 | 3,937,550 | 934,500 | |
Cancellation of distribution in accrued expenses | 0 | 86,073 | 0 | |
Capital expenditures included in accounts payable | 349,482 | 3,359,225 | 605,750 | |
Distribution to non-controlling interest in accrued expenses | $ 0 | $ 0 | $ 72,519 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Oct. 31, 2015 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business The Company owns and operates an ethanol plant near Heron Lake, Minnesota with a permitted capacity of approximately 72.3 million gallons per year of undenatured ethanol on a twelve month rolling sum basis. In addition, the Company produces and sells distillers' grains with solubles and corn oil as co-products of ethanol production. Additionally, the Company through a majority owned subsidiary, operates a natural gas pipeline that provides natural gas to the Company's ethanol production facility and other customers. Principles of Consolidation The financial statements include the accounts of Heron Lake BioEnergy, LLC and its wholly owned subsidiary, HLBE Pipeline Company, LLC (collectively, "the Company"). HLBE Pipeline Company, LLC owns 73% of Agrinatural Gas, LLC ("Agrinatural"). Given the Company’s control over the operations of Agrinatural and its majority voting interest, the Company consolidates the financial statements of Agrinatural with its consolidated financial statements, with the equity and earnings attributed to the remaining 27% non-controlling interest identified separately in the accompanying consolidated balance sheets and statements of operations. All significant intercompany balances and transactions are eliminated in consolidation. Fiscal Reporting Period The Company's fiscal year end for reporting financial operations is October 31. Accounting Estimates Management uses estimates and assumptions in preparing these financial statements in accordance with United States generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. The Company uses estimates and assumptions in accounting for significant matters including, among others, the economic lives of property, plant, and equipment, the analysis of impairment of long-lived assets and valuation of commodity derivative instruments, inventory, and inventory purchase and sale commitments. The Company periodically reviews estimates and assumptions, and the effects of revisions are reflected in the period in which the revision is made. Actual results could differ from those estimates. Non-controlling Interest Amounts recorded as non-controlling interest relate to the net investment by an unrelated party in Agrinatural. Income and losses are allocated to the members of Agrinatural based on their respective percentage of membership units held. Agrinatural will provide natural gas to the plant with a specified price per MMBTU for an initial term of 10 years , with two automatic renewal options for five years periods. On July 1, 2014, the Company entered into an amendment to this agreement to exercise early one of the two automatic renewals, thereby extending the term of this agreement to October 31, 2021. The Company previously declared a distribution to the non-controlling interest members for approximately $86,000 . This amount was recorded within accrued expenses at October 31, 2013. During the fiscal year ended October 31, 2014, the Company canceled this distribution. Revenue Recognition The Company generally sells ethanol and related products pursuant to marketing agreements. Revenues from the production of ethanol and the related products are recorded when the customer has taken title and assumed the risks and rewards of ownership, prices are fixed or determinable and collectability is reasonably assured. Title is generally assumed by the buyer at the Company's shipping point. In accordance with the Company's agreements for the marketing and sale of ethanol and related products, marketing fees and commissions due to the marketers are deducted from the gross sales price as earned. These fees and commissions are recorded net of revenues as they do not provide an identifiable benefit that is sufficiently separable from the sale of ethanol and related products. Shipping costs incurred by the Company in the sale of ethanol are not specifically identifiable and as a result, are recorded based on the net selling price reported to the Company from the marketer. Shipping costs incurred by the Company in the sale of ethanol related products are included in cost of goods sold. Agrinatural recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the fee for the arrangement is fixed or determinable and collectability is reasonably assured. Cash The Company maintains its accounts at multiple financial institutions. At times throughout the year, the Company's cash balances may exceed amounts insured by the Federal Deposit Insurance Corporation and the Securities Investor Protection Corporation. The Company does not believe it is exposed to any significant credit risk on its cash balances. Restricted Cash The Company is periodically required to maintain cash balances at its broker related to derivative instrument positions. Accounts Receivable Credit terms are extended to customers in the normal course of business. The Company performs ongoing credit evaluations of its customers' financial condition and, generally, requires no collateral. Accounts receivable are recorded at their estimated net realizable value. Accounts are considered past due if payment is not made on a timely basis in accordance with the Company's credit terms. Accounts considered uncollectible are written off. The Company follows a policy of providing an allowance for doubtful accounts; however, based on historical experience, and its evaluation of the current status of receivables, the Company is of the belief that such accounts will be collectible in all material respects and thus an allowance was not necessary at October 31, 2015 or 2014 . It is at least possible this estimate will change in the future. Inventory Inventory is stated at the lower of cost or net realizable value in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2015-11 issued in July 2015. See " Recently Issued Accounting Pronouncements, Inventory Measurement (Adopted) " below for additional information regarding ASU No. 2015-11. Cost for all inventories is determined using the first in first out method (FIFO). Net realizable value is the estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation. Inventory consists of raw materials, work in process, finished goods, and spare parts. Corn is the primary raw material along with other raw materials. Finished goods consist of ethanol, distillers' grains, and corn oil. Derivative Instruments From time to time, the Company enters into derivative transactions to hedge its exposures to commodity price fluctuations. The Company is required to record these derivatives in the balance sheets at fair value. In order for a derivative to qualify as a hedge, specific criteria must be met and appropriate documentation maintained. Gains and losses from derivatives that do not qualify as hedges, or are undesignated, must be recognized immediately in earnings. If the derivative does qualify as a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will be either offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. Changes in the fair value of undesignated derivatives are recorded in earnings. Additionally, the Company is required to evaluate its contracts to determine whether the contracts are derivatives. Certain contracts that literally meet the definition of a derivative may be exempted as "normal purchases or normal sales". Normal purchases and normal sales are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. Contracts that meet the requirements of normal purchases or sales are documented as normal and exempted from accounting and reporting requirements, and therefore, are not marked to market in our financial statements. In order to reduce the risks caused by market fluctuations, the Company occasionally hedges its anticipated corn, natural gas, and denaturant purchases and ethanol sales by entering into options and futures contracts. These contracts are used with the intention to fix the purchase price of anticipated requirements for corn in the Company's ethanol production activities and the related sales price of ethanol. The fair value of these contracts is based on quoted prices in active exchange-traded or over-the-counter market conditions. Although the Company believes its commodity derivative positions are economic hedges, none have been formally designated as a hedge for accounting purposes and derivative positions are recorded on the balance sheet at their fair market value, with changes in fair value recognized in current period earnings or losses. The Company does not enter into financial instruments for trading or speculative purposes. The Company has adopted authoritative guidance related to “Derivatives and Hedging,” and has included the required enhanced quantitative and qualitative disclosure about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses from derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. Other Intangibles Other intangibles are stated at cost and include road improvements located near the plant in which the Company has a beneficial interest in but does not own the road. The Company amortizes the assets over the economic useful life of 15 years . The Company recorded amortization expense in the amount of approximately $38,000 , $58,000 and $18,000 during the fiscal years ended October 31, 2015 , 2014 and 2013 , respectively. Property and Equipment Property and equipment are recorded at cost. Depreciation is provided over an estimated useful life by use of the straight-line deprecation method. Maintenance and repairs are expensed as incurred; major improvements and betterments are capitalized. Construction in progress expenditures will be depreciated using the straight-line method over their estimated useful lives once the assets are placed into service. Depreciable useful lives are as follows: Land improvements 15 Years Plant building and equipment 7 - 40 Years Vehicles and other equipment 5 - 7 Years Office buildings and equipment 3 - 40 Years Long-Lived Assets Long-lived assets, such as property, plant, and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by an asset to the carrying value of the asset. If the carrying value of the long-lived asset is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including, but not limited to, discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. No indicators of impairment existed during fiscal 2015 , 2014 , or 2013 that would have triggered impairment testing, and therefore, no impairment expense was recorded during fiscal 2015 , 2014 , or 2013. Debt Financing Costs Costs associated with the issuance of loans are classified as financing costs. Financing costs are amortized over the term of the related debt by use of the effective interest method. Amortization and write-offs of debt financing costs for the fiscal year ended October 31, 2015 , 2014 and 2013 was approximately $0 , $370,000 , and $21,000 , respectively, which is included as a component of interest expense within the consolidated statements of operations. Fair Value of Financial Instruments The Company follows guidance for accounting for fair value measurements of financial assets and liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the consolidated financial statements on a recurring and nonrecurring basis. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: • Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. • Level 2 inputs include: 1. Quoted prices in active markets for similar assets or liabilities. 2. Quoted prices in markets that are observable for the asset or liability either directly or indirectly, for substantially the full term of the asset or liability. 3. Inputs that derived primarily from or corroborated by observable market date by correlation or other means. • Level 3 inputs are unobservable inputs for the asset or liability. The level in the fair value hierarchy within which a fair measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Except for those assets and liabilities which are required by authoritative accounting guidance to be recorded at fair value in our balance sheets, the Company has elected not to record any other assets or liabilities at fair value. No events occurred during the fiscal 2015 , 2014 and 2013 that required adjustment to the recognized balances of assets or liabilities, which are recorded at fair value on a nonrecurring basis. The carrying value of cash, restricted cash, accounts receivable, accounts payable and accrued liabilities approximates fair value due to the short maturity of these instruments. The fair value of debt has been estimated using discounted cash flow analysis based upon the Company's current incremental borrowing rates for similar types of financing arrangements. The fair value of outstanding debt will fluctuate with changes in applicable interest rates. Fair value will exceed carrying value when the current market interest rate is lower than the interest rate at which the debt was originally issued. The Company believes the carrying amount of its debt facilities approximates the fair value. Income Taxes The Company is treated as a partnership for federal and state income tax purposes and generally does not incur income taxes. Instead, its 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. Differences between financial statement basis of assets and tax basis of assets is related to capitalization and amortization of organization and start-up costs for tax purposes, whereas these costs are expensed for financial statement purposes. In addition, the Company uses the alternative depreciation system (ADS) for tax depreciation instead of the straight-line method that is used for book depreciation, which also causes temporary differences. The Company's tax year end is December 31. Primarily due to the partnership tax status, the Company does not have any significant tax uncertainties that would require disclosure. The Company recognizes and measures tax benefits when realization of the benefits is uncertain under a two-step approach. The first step is to determine whether the benefit meets the more-likely-than-not condition for recognition and the second step is to determine the amount to be recognized based on the cumulative probability that exceeds 50%. Primarily due to the Company's tax status as a partnership, the adoption of this guidance had no material impact on the Company's financial condition or results of operations. The Company files income tax returns in the United States federal and Minnesota state jurisdictions. The Company is no longer subject to United States federal and state income tax examinations by tax authorities for years before 2012. Net Income per Unit Basic net income per unit is computed by dividing net income by the weighted average number of members' units outstanding during the period. Diluted net income or loss per unit is computed by dividing net income by the weighted average number of members' units and members' unit equivalents outstanding during the period. Environmental Liabilities The Company's operations are subject to environmental laws and regulations adopted by various governmental entities in the jurisdiction in which it operates. These laws require the Company to investigate and remediate the effects of the release or disposal of materials at its location. Accordingly, the Company has adopted policies, practices, and procedures in the areas of pollution control, occupational health, and the production, handling, storage and use of hazardous materials to prevent material environmental or other damage, and to limit the financial liability, which could result from such events. Environmental liabilities are recorded when the liability is probable and the costs can be reasonably estimated. Recently Issued Accounting Pronouncements Inventory Measurement (Adopted) In July 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-11, which amended Inventory (Topic 330) Related to Simplifying the Measurement of Inventory of the Accounting Standards Codification. The amended guidance applies to all inventory except that which is measured using last-in, first-out (LIFO) or the retail inventory method. Inventory measured using first-in, first-out (FIFO) or average cost is included in the new amendments. Inventory within the scope of the new guidance should be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. The amendments will take effect for the Company for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The new guidance should be applied prospectively, and earlier application is permitted as of the beginning of an interim or annual reporting period. The Company has elected to adopt the standard as of November 1, 2014, and it did not have a material effect on the financial statements. Contract Revenue Recognition (Evaluating) In May 2014 and amended in August 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09 which amended the Revenue from Contracts with Customers (Topic 606) of the Accounting Standards Codification. The core principle of the new guidance is that an entity should recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity receives or expects to receive. The guidance will be effective for the Company for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. The Company is still evaluating the guidance and its effect on its financial statements. |
RISKS AND UNCERTAINTIES
RISKS AND UNCERTAINTIES | 12 Months Ended |
Oct. 31, 2015 | |
Risks and Uncertainties [Abstract] | |
UNCERTAINTIES | RISKS AND UNCERTAINTIES The Company has certain risks and uncertainties that it experienced during volatile market conditions. These volatilities can have a severe impact on operations. The Company's revenues are primarily derived from the sale and distribution of ethanol, distillers' grains and corn oil to customers primarily located in the United States. Corn for the production process is supplied to the plant primarily from local agricultural producers. Ethanol sales average 75% - 85% of total revenues and corn costs average 65% - 85% of cost of goods sold. The Company's operating and financial performance is largely driven by the prices at which it sells ethanol and the net expense of corn. The price of ethanol is influenced by factors such as supply and demand, the weather, government policies and programs, unleaded gasoline prices and the petroleum markets as a whole. Excess ethanol supply in the market, in particular, puts downward pressure on the price of ethanol. The largest cost of production is corn. The cost of corn is generally impacted by factors such as supply and demand, the weather, government policies and programs, and a risk management program used to protect against the price volatility of these commodities. Market fluctuations in the price of and demand for these products may have a significant adverse effect on the Company's operations, profitability and the availability and adequacy of cash flow to meet the Company's working capital requirements. The supply and demand for ethanol are impacted by federal and state legislation and regulation, most significantly the Renewable Fuels Standard ("RFS"), and any changes in legislation or regulation could cause the demand for ethanol to decline or its supply to increase, which could have a material adverse effect on our business, results of operations and financial condition, and the ability to operate at a profit. On November 30, 2015, the EPA announced final Renewable Volume Obligation (“RVO”) requirements for the RFS for calendar years 2014, 2015 and 2016. Although the new RVO requirements set are above the proposed reductions, they are below the original requirements set by the RFS. Opponents of ethanol such as large oil companies will likely continue their efforts to repeal or reduce the RFS through lawsuits or lobbying of Congress. Successful reduction or repeal of the blending requirements of the RFS could result in a significant decrease in ethanol demand. Current ethanol nameplate production capacity is approximately 15.5 billion gallons, with operating production capacity at approximately 14.9 billion gallons according to the Renewable Fuels Association (“RFA”). Reduction of blending requirements could reduce the demand for and price of ethanol. If demand for ethanol decreases, it could materially adversely affect our business, results of operations and financial condition. Ethanol has historically traded at a discount to gasoline, however with the recent decline in oil prices, ethanol is currently trading at a premium to gasoline causing a disincentive for discretionary blending of ethanol beyond the required blend rate. Consequently, there may be a negative impact on ethanol pricing and demand, which could result in a material adverse effect on our business, results of operations and financial condition. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Oct. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The Company follows accounting guidance related to fair value disclosures. For the Company, this guidance applies to certain derivative investments. The authoritative guidance also clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair measurements. The following table sets forth, by level, the Company assets that were accounted for at fair value on a recurring basis as of October 31, 2015 . Fair Value Carrying Amount in Balance Sheet Quoted Prices in Active Markets Significant Other Observable Inputs Significant Unobservable inputs Financial Assets Fair Value (Level 1) (Level 2) (Level 3) Corn Derivative Contracts $ 677,149 $ 677,149 $ 677,149 $ — $ — The following table sets forth, by level, the Company assets that were accounted for at fair value on a recurring basis as of October 31, 2014 . Fair Value Carrying Amount in Balance Sheet Quoted Prices in Active Markets Significant Other Observable Inputs Significant Unobservable inputs Financial Assets Fair Value (Level 1) (Level 2) (Level 3) Corn Derivative Contracts $ 437,500 $ 437,500 $ 437,500 $ — $ — We determine the fair value of commodity derivative instruments by obtaining 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 Chicago Board of Trade market and New York Mercantile Exchange. |
CONCENTRATIONS
CONCENTRATIONS | 12 Months Ended |
Oct. 31, 2015 | |
CONCENTRATIONS | |
CONCENTRATIONS | CONCENTRATIONS The Company sells all of the ethanol and distiller grains produced to two customers under marketing agreements at October 31, 2015 . Two customers accounted for approximately 97% and 88% of the outstanding accounts receivable balance at October 31, 2015 and 2014 , respectively. These customers accounted for approximately 97% , 96% and 97% of revenue for the years ended October 31, 2015 , 2014 and 2013 , respectively. |
INVENTORY
INVENTORY | 12 Months Ended |
Oct. 31, 2015 | |
Inventory Disclosure [Abstract] | |
INVENTORY | INVENTORY Inventory consists of the following at October 31: 2015 2014 Raw materials $ 1,800,320 $ 2,462,754 Work in process 693,844 791,490 Finished Goods 1,829,311 1,072,646 Supplies 935,871 860,377 Totals $ 5,259,346 $ 5,187,267 |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | 12 Months Ended |
Oct. 31, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS The Company enters into corn, ethanol, and natural gas derivatives in order to protect cash flows from fluctuations caused by volatility in commodity prices for periods up to 24 months . These derivatives are put in place to protect gross profit margins from potentially adverse effects of market and price volatility on ethanol sales and corn purchase commitments where the prices are set at a future date. Although these derivative instruments serve the Company's purpose as an economic hedge, they are not designated as effective hedges for accounting purposes. For derivative instruments that are not accounted for as hedges, or for the ineffective portions of qualifying hedges, the change in fair value is recorded through earnings in the period of change. The following table provides detail regarding the Company's derivative financial instruments at October 31, 2015, none of which were designated as hedging instruments: Consolidated Balance Sheet Location Assets Liabilities Corn contracts Commodity derivative instruments $ 677,149 $ — Totals $ 677,149 $ — The following table provides detail regarding the Company's derivative financial instruments at October 31, 2014, none of which were designated as hedging instruments: Consolidated Balance Sheet Location Assets Liabilities Corn contracts Commodity derivative instruments $ 437,500 $ — Totals $ 437,500 $ — As of October 31, 2015 , the total notional amount of the Company's outstanding corn derivative instruments was approximately 1,875,000 bushels, comprised of long corn positions on 360,000 bushels, and short corn positions on 1,515,000 bushels, that were entered into to hedge forecasted corn purchases through December 2016. There may be offsetting positions that are not shown on a net basis that could lower the notional amount of positions outstanding. As of October 31, 2015, the Company had $0 of cash collateral (restricted cash) related to corn derivatives held by a broker. As of October 31, 2014, the total notional amount of the Company's outstanding corn derivative instruments was approximately 2,790,000 bushels, comprised of long corn positions on 2,605,000 bushels, and short corn positions on 185,000 bushels, that were entered into to hedge forecasted corn purchases through July 2015. As of October 31, 2014 , the Company had approximately $264,000 of cash collateral (restricted cash) related to corn derivatives held by a broker. The following tables provide details regarding the gains from the Company's derivative instruments in consolidated statements of operations, none of which are designated as hedging instruments: Statement of Operations location Twelve Months Ended October 31, 2015 2014 2013 Corn contracts Cost of goods sold $ 831,227 $ 787,617 $ — Totals $ 831,227 $ 787,617 $ — |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Notes) | 12 Months Ended |
Oct. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment Disclosure [Text Block] | PROPERTY AND EQUIPMENT A summary of property and equipment is as follows: October 31, 2015 October 31, 2014 Land and improvements $ 9,111,838 $ 9,111,838 Plant buildings and equipment 81,634,966 73,080,366 Vehicles 611,976 611,976 Office buildings 641,860 613,407 Construction in progress 1,148,578 6,559,517 93,149,218 89,977,104 Less: accumulated depreciation (40,164,668 ) (35,609,106 ) Net property, plant and equipment $ 52,984,550 $ 54,367,998 Depreciation expense totaled approximately $4,556,000 , $4,264,000 and $4,258,000 during the fiscal years ended October 31, 2015 , 2014 and 2013 , respectively. On July 31, 2015, the Company placed a purchase order with an unrelated party for a new regenerative thermal oxidizer and made a down payment of approximately $375,000 to secure the order. The total commitment approximates $1.9 million and is expected to be completed during the latter part of fiscal year 2016. |
DEBT FACILITIES
DEBT FACILITIES | 12 Months Ended |
Oct. 31, 2015 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | DEBT FACILITIES Long-term debt consists of the following: October 31, October 31, Revolving term note payable to lending institution, see terms below. $ 4,822,777 $ — Assessment payable as part of water treatment agreement, due in semi-annual installments of $189,393 with interest at 6.55%, enforceable by statutory lien, with the final payment due in 2021. The Company made deposits for one years' worth of debt service payments of approximately $364,000, which is included with other assets that are held on deposit to be applied with the final payments of the assessment. 1,775,828 2,018,767 Assessment payable as part of water treatment agreement, due in semi-annual installments of $25,692 with interest at 0.50%, enforceable by statutory lien, with the final payment due in 2016. 51,199 102,074 Assessment payable as part of water supply agreement, due in monthly installments of $3,942 with interest at 8.73%, enforceable by statutory lien, with the final payment due in 2019. 136,378 172,072 Note payable to electrical company with monthly payments of $6,250 with interest at 0.00% and a 1.00% maintenance fee due each October, due September 2017. The electrical company is a member of the Company. 143,750 218,750 Note payable to non-controlling interest member of Agrinatural. Interest is at One Month LIBOR plus 4.0%. The note is considered due on demand with payments due at Agrinatural Board of Managers discretion. 300,000 300,000 Equipment payable on corn oil separation equipment from a vendor. The Company paid approximately $40,000 per month conditioned upon revenue generated from the corn oil equipment. The monthly payment included implicit interest of 5.57%. This note was paid in full in February 2015. — 146,984 Totals 7,229,932 2,958,647 Less amounts due within one year 517,957 846,235 Net long-term debt $ 6,711,975 $ 2,112,412 Revolving Term Note The Company has a revolving term loan with a lender initially totaling $28,000,000 . Under the terms of the credit facility, the revolving term loan commitment declines by $3,500,000 annually, starting March 1, 2015 and continues each anniversary thereafter until maturity. Therefore, the amount available on this facility at October 31, 2015 was $24,500,000 . Amounts borrowed by the Company under the revolving term loan and repaid or prepaid may be re-borrowed at any time prior to the March 1, 2022 maturity date. Interest on the revolving term loan accrues at a variable rate equal to 3.25% above the One-Month London Interbank Offered Rate (“ LIBOR ”) Index rate. The Company may elect to enter into a fixed interest rate on this loan at various times throughout the term of the loan as provided in the loan agreements. The Company also agreed to pay an unused commitment fee on the unused portion of the revolving term loan commitment at the rate of 0.50% per annum. The revolving term loan is subject to a prepayment fee for any prepayment on the term loan prior to July 1, 2016 due to refinancing. The credit facility contains customary covenants. The loan is secured by substantially all of the Company assets including a subsidiary guarantee. The interest rate on the revolving term loan was 3.45% and 3.41% at October 31, 2015 , and October 31, 2014 , respectively. As part of the Credit Facility closing, the Company entered into an Administrative Agency Agreement with CoBank, ACP (“CoBank”). CoBank purchased a participation interest in the AgStar loans and was appointed the administrative agent for the purpose of servicing the loans. As a result, CoBank will act as the agent for AgStar with respect to the Credit Facility. The Company agreed to pay CoBank an annual fee of $2,500 as the agent for Ag Star. Estimated maturities of long-term debt at October 31, 2015 are as follows: 2016 $ 517,957 2017 480,064 2018 432,182 2019 319,376 2020 326,798 After 2020 5,153,555 Total debt $ 7,229,932 |
MEMBERS' EQUITY
MEMBERS' EQUITY | 12 Months Ended |
Oct. 31, 2015 | |
Equity [Abstract] | |
MEMBERS' EQUITY | MEMBERS' EQUITY The Company is authorized to issue 80,000,000 capital units, of which 65,000,000 have been designated Class A units and 15,000,000 have been designated as Class B units. Members of the Company are holders of units who have been admitted as members and who hold at least 2,500 units. Any holder of units who is not a member will not have voting rights. Transferees of units must be approved by our board of governors to become members. Members are entitled to one vote for each unit held. Subject to the Member Control Agreement, all units share equally in the profits and losses and distributions of assets on a per unit basis. On July 31, 2013, the Company issued 8,075,000 Class A units and 15,000,000 Class B units, at a purchase price of $0.30 per unit, to Project Viking for total proceeds of approximately $6,900,000 . On September 18, 2013, the Company issued 3,115,000 Class A units, at a conversion price of $0.30 per unit, to current members upon conversion of subordinated convertible debt of $934,500 . On July 1, 2014, the Company issued 13,120,000 Class A units of the Company to the holders of Subordinated Convertible Notes electing conversion and redeemed the remaining $207,000 of the Notes at par value. On December 18, 2014, the Company's board of governors declared a distribution of $0.12 per membership unit for a total of approximately $9,352,000 to be paid to members of record as of December 18, 2014. The distribution was paid in January 2015. Based on the covenants contained in the Company's AgStar credit facilities, the foregoing distribution was approved by its lender prior to distribution. Subsequent to the end of the Company's 2015 fiscal year, on December 17, 2015, the Company's board of governors declared a distribution of $0.05 per membership unit for a total of approximately $3,897,000 to be paid to members of record as of December 18, 2015. The distribution was paid in January 2016. Based on the covenants contained in the Company's AgStar credit facilities, the foregoing distribution was approved by its lender prior to distribution. |
LEASES
LEASES | 12 Months Ended |
Oct. 31, 2015 | |
Leases [Abstract] | |
LEASES | LEASES The Company has lease agreements with leasing companies for 145 rail cars for the transportation of the Company's ethanol with various maturity dates through May 2017. The rail car lease payments are due monthly in the aggregate amount of approximately $143,000 . The Company has a lease agreement with a leasing company for 50 hopper cars to assist in with the transport of the distiller's grains by rail with a maturity date of May 2017. The rail car lease payments are due monthly in the amount of approximately $35,000 . At October 31, 2015 , the Company had the following minimum future lease payments, which at inception had non-cancelable terms of more than one year : 2016 $ 2,133,300 2017 1,006,650 Total lease commitments $ 3,139,950 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Oct. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The differences between consolidated financial statement basis and tax basis of assets and liabilities are estimated as follows at October 31: 2015 2014 Consolidated financial statement basis of assets $ 66,696,384 $ 66,122,250 Plus: Organization and start-up costs capitalized 1,091,020 1,248,749 Less: Unrealized gains on commodity derivative instruments (677,149 ) (437,500 ) Less: Accumulated tax depreciation and amortization greater than financial statement basis (54,580,532 ) (43,116,534 ) Plus: Impairment charge 27,844,579 27,844,579 Income tax basis of assets $ 40,374,302 $ 51,661,544 There were no significant differences between the consolidated financial statement basis of liabilities and the income tax basis of liabilities at October 31, 2015 and 2014 . |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Oct. 31, 2015 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS Project Viking, LLC On July 31, 2013, Project Viking invested $6.9 million in the Company for 8,075,000 Class A units and 15,000,000 Class B units at a purchase price of $0.30 per unit. In May 2013, Project Viking participated in the initial subordinated convertible debt offering and lent the Company $102,000 . On July 31, 2013, Project Viking obtained a controlling interest in the Company. On July 31, 2013, Project Viking sold its interest to Granite Falls Energy, L.L.C. ("GFE"), which is now considered a related party. GFE operates an ethanol plant in the Midwest. Granite Falls Energy, LLC The Company entered into a Management Services Agreement with GFE on July 31, 2015. Under the Management Services Agreement, GFE agreed to supply its own personnel to act as part-time officers and managers of the Company for the positions of Chief Executive Officer, Chief Financial Officer, and Commodity Risk Manager. The initial term of the Management Services Agreement is three years. The Company agreed to pay GFE $35,000 per month during the first year of the agreement. During years two and three of the agreement, the Company agreed to pay GFE 50% of the total salary, bonuses, and other expenses and costs incurred by GFE for the three management positions. At the expiration of the initial term, the agreement will automatically renew for successive one-year terms unless and until the Company or GFE gives the other party 90-days written notice of termination prior to expiration of the initial term or the start of a renewal term. Total expenses under this agreement were $414,000 , $392,000 and $105,000 for fiscal years 2015 , 2014 and 2013, respectively. As part of the purchase of Project Viking, GFE obtained the interest in Project Viking's convertible subordinated debt in the amount of $102,000 . In September 2013, the Company completed the convertible subordinated debt offering of $5,077,000 and each subscriber had the option to convert to units at $0.30 per unit conversion price. Subsequently, in September 2013, GFE converted their $102,000 of subordinated debt for 340,000 Class A units. The Company paid approximately $2,000 in interest expense to GFE related to the subordinated convertible debt for the year ended October 31, 2013. Corn Purchase - Members The Company purchased approximately $11,032,000 of corn from board members in fiscal year 2015 , $14,860,000 in fiscal year 2014 and none in 2013. Agrinatural During 2013, the Company borrowed $300,000 from the non-controlling interest member of Agrinatural. Total interest paid in relation to this note payable amounted to approximately $16,000 for each of the years ended October 31, 2015 and 2014 . Swan Engineering On March 27, 2015, Agrinatural executed a new management and operating agreement with Swan Engineering, Inc. ("SEI"). SEI, together with an unrelated third party owns Rural Energy Solutions, LLC ("RES"), the 27% minority owner of Agrinatural. Under the new management and operating agreement, SEI will continue to provide Agrinatural with day-to-day management and operation of Agrinatural's pipeline distribution business. In exchange for these services, Agrinatural will pay SEI an aggregate management fee equal to the fixed monthly base fee plus the variable customer management fee based on the number of customers served on the pipeline less the agreed monthly fee reduction of $4,500 . For the year ended October 31, 2015, the Company paid approximately $18,000 and $83,000 for the monthly base fee and variable customer management fee, respectively. The new management and operating agreement with SEI expires July 1, 2019 unless earlier terminated for cause as defined in the agreement. On March 27, 2015, Agrinatural also executed a new project management agreement with SEI. Pursuant to the new project management agreement, SEI will continue to supervise all of Agrinatural's pipeline construction projects. These projects are constructed by unrelated third-party pipeline construction companies. Under the new project management agreement, Agrinatural will pay SEI a total of 10% of the actual capital expenditures for construction projects approved by Agrinatural's Board of Directors, excluding capitalized marketing costs. For the year ended October 31, 2015, the Company paid approximately $19,000 project management fees. The new project management with SEI expires June 30, 2019 unless earlier terminated for cause as defined in the agreement. Amounts due to SEI from Agrinatural included in accounts payable on the consolidated balance sheets totaled approximately $340,000 and $517,000 at October 31, 2015 and 2014 , respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Oct. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Water Agreements In October 2003, the Company entered into an industrial water supply development and distribution agreement with the City of Heron Lake for 15 years. The Company has the exclusive rights to the first 600 gallons per minute of capacity that is available from the well, and provides for the Company, combined with an unrelated company, to approve any other supply contracts that the City may enter into. In consideration, the Company will pay one half of the City's water well bond payments of $735,000 , plus a 5% administrative fee, totaling approximately $594,000 , and operating costs, relative to the Company's water usage, plus a 10% profit. These costs will be paid as water usage fees. The Company recorded an assessment of approximately $367,000 with long-term debt as described in Note 8. The Company pays operating and administrative expenses of approximately $12,000 per year. In May 2006, the Company entered into a water treatment agreement with the City of Heron Lake and Jackson County for 30 years. The Company will pay for operating and maintenance costs of the plant in exchange for receiving treated water. In addition, the Company agreed to an assessment for a portion of the capital costs of the water treatment plant. The Company recorded assessments with long-term debt of $500,000 and $3,550,000 in fiscal 2007 and 2006, respectively, as described in Note 8. The Company paid operating and maintenance expenses of approximately $57,000 , $114,000 , and $289,000 in fiscal 2015 , 2014 , and 2013 , respectively. Marketing Agreements The Company has a marketing agreement ("Eco Agreement") with Eco-Energy, Inc., an unrelated party ("Eco-Energy") for the sale of ethanol. Under this ethanol agreement, Eco-Energy purchases, markets and resells 100% of the ethanol produced at the Company's ethanol production facility and arranges for the transportation of ethanol. The Company pays Eco-Energy a marketing fee based on a percentage of the applicable sale price of the ethanol, as well as a fixed lease fee for rail cars leased from Eco-Energy to the Company. The marketing fee was negotiated based on prevailing market-rate conditions for comparable ethanol marketing services. The term of Eco Agreement continues through December 31, 2016, with automatic renewals for additional three terms of three year periods unless terminated by either party by providing written notice to the other party at least 3 months prior to the end of the then current term. Gavilon Ingredients, LLC, an unrelated party ("Gavilon"), has serves as the distillers' grains marketer for our plant pursuant to a distillers' grains off-take agreement. Pursuant to our agreement with Gavilon, Gavilon purchases all of the distillers' grains produced at our ethanol plant. We pay Gavilon a service fee for its services under this agreement. The contract commenced on November 1, 2013 with an initial term of six months, and will continue to remain in effect until terminated by either party at its unqualified option, by providing written notice of not less than 60 days to the other party. RPMG, Inc., an unrelated party, markets the corn oil produced at our ethanol plant pursuant to a corn oil marketing agreement. We pay RPMG a commission based on each pound of corn oil sold by RPMG under the agreement. The contract commenced on November 1, 2013 with an initial term of one year and will continue to remain in effect until terminated by either party at its unqualified option, by providing written notice of not less than 90 days to the other party. The Company also has a base agreement for the sale and purchase of natural gas with Constellation New Energy—Gas Division, LLC pursuant to which it buys all of its natural gas from Constellation. This agreement runs until March 31, 2016. Forward Contracts At October 31, 2015 , the Company had cash and basis contracts for forward corn purchase commitments for approximately 2,604,000 bushels for deliveries through October 2016. At October 31, 2015 , the Company had forward contracts to sell approximately $2,366,000 of ethanol for various delivery periods from November 2015 through December 2015 which approximates 15% of its anticipated ethanol sales during that period. At October 31, 2015 , the Company had forward contracts to sell approximately $151,000 of distillers' grains for delivery in November 2015. At October 31, 2015 , the Company had forward contracts to sell approximately $383,000 of corn oil for delivery through November 2015. |
BUSINESS SEGMENTS (Notes)
BUSINESS SEGMENTS (Notes) | 12 Months Ended |
Oct. 31, 2015 | |
Segment Reporting [Abstract] | |
Segment Reporting Disclosure [Text Block] | BUSINESS SEGMENTS Based on the growth of the Company's natural gas pipeline subsidiary during the fourth quarter of fiscal 2014, the Company has determined they now have two operating segments. The Company groups its operations into the following two business segments: Ethanol Production: Ethanol and co-product production and sales Natural gas pipeline: Ownership and operations of natural gas pipeline Segment reporting is intended to give financial statement users a better view of how the Company manages and evaluates its businesses. The accounting policies for each segment are the same as those described in the summary of significant accounting policies in Note 1. Segment income or loss does not include any allocation of shared-service costs. Segment assets are those that are directly used in or identified with segment operations. Inter-segment balances and transactions have been eliminated. The following tables summarize financial information by segment and provide a reconciliation of segment contribution to operating income and total assets for the fiscal years ended October 31: Revenue: 2015 2014 Ethanol production $ 114,669,831 $ 148,512,052 Natural gas pipeline 2,761,042 2,621,898 Eliminations (1,770,404 ) (1,715,906 ) Total Revenue $ 115,660,469 $ 149,418,044 Operating Income: 2015 2014 Ethanol production $ 8,106,105 $ 26,170,923 Natural gas pipeline 1,075,581 1,443,571 Eliminations (1,770,404 ) (1,715,906 ) Operating Income $ 7,411,282 $ 25,898,588 Total Assets: 2015 2014 Ethanol production $ 53,663,064 $ 53,826,820 Natural gas pipeline 13,033,320 12,295,430 Total assets $ 66,696,384 $ 66,122,250 |
QUARTERLY FINANCIAL DATA (UNAUD
QUARTERLY FINANCIAL DATA (UNAUDITED) | 12 Months Ended |
Oct. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
QUARTERLY FINANCIAL DATA (UNAUDITED) | QUARTERLY FINANCIAL DATA (UNAUDITED) Summary quarterly results are as follows: First Second Third Fourth Fiscal year ended October 31, 2015 Revenues $ 27,177,449 $ 29,813,571 $ 30,192,430 $ 28,477,019 Gross profit 1,847,050 2,673,825 4,755,934 1,135,568 Operating income 966,668 1,891,732 4,014,168 538,714 Net income attributable to Heron Lake BioEnergy, LLC 879,256 1,733,837 3,808,820 329,320 Basic earnings per unit (Class A and B) $ 0.01 $ 0.02 $ 0.05 $ 0.01 Diluted earnings per unit (Class A and B) $ 0.01 $ 0.02 $ 0.05 $ 0.01 First Second Third Fourth Fiscal year ended October 31, 2014 Revenues $ 40,910,555 $ 39,149,053 $ 39,082,103 $ 30,276,333 Gross profit 7,180,730 7,602,033 8,292,015 5,773,857 Operating income 6,340,753 6,758,565 7,514,741 5,284,529 Net income attributable to Heron Lake BioEnergy, LLC 5,824,444 6,323,059 6,785,754 5,035,588 Basic earnings per unit (Class A and B) $ 0.09 $ 0.10 $ 0.10 $ 0.06 Diluted earnings per unit (Class A and B) $ 0.08 $ 0.08 $ 0.09 $ 0.06 First Second Third Fourth Fiscal year ended October 31, 2013 Revenues $ 44,121,305 $ 35,498,926 $ 45,583,441 $ 38,560,472 Gross profit 920,219 698,812 4,060,158 2,547,981 Operating income (loss) (95,367 ) (192,887 ) 3,385,958 1,915,430 Net income (loss) attributable to Heron Lake BioEnergy, LLC (920,554 ) (998,139 ) 2,554,493 1,305,042 Basic earnings (loss) per unit (Class A and B) $ (0.02 ) $ (0.03 ) $ 0.07 $ 0.03 Diluted earnings (loss) per unit (Class A and B) $ (0.02 ) $ (0.03 ) $ 0.06 $ 0.03 The above quarterly financial date is unaudited, but in the opinion of management, all adjustments necessary for a fair presentation of the selected data for these periods presented have been included. |
SUMMARY OF SIGNIFICANT ACCOUN23
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Oct. 31, 2015 | |
Accounting Policies [Abstract] | |
Nature of Operations | Nature of Business The Company owns and operates an ethanol plant near Heron Lake, Minnesota with a permitted capacity of approximately 72.3 million gallons per year of undenatured ethanol on a twelve month rolling sum basis. In addition, the Company produces and sells distillers' grains with solubles and corn oil as co-products of ethanol production. Additionally, the Company through a majority owned subsidiary, operates a natural gas pipeline that provides natural gas to the Company's ethanol production facility and other customers. |
Principles of Consolidation | Principles of Consolidation The financial statements include the accounts of Heron Lake BioEnergy, LLC and its wholly owned subsidiary, HLBE Pipeline Company, LLC (collectively, "the Company"). HLBE Pipeline Company, LLC owns 73% of Agrinatural Gas, LLC ("Agrinatural"). Given the Company’s control over the operations of Agrinatural and its majority voting interest, the Company consolidates the financial statements of Agrinatural with its consolidated financial statements, with the equity and earnings attributed to the remaining 27% non-controlling interest identified separately in the accompanying consolidated balance sheets and statements of operations. All significant intercompany balances and transactions are eliminated in consolidation. |
Fiscal Reporting Period | Fiscal Reporting Period The Company's fiscal year end for reporting financial operations is October 31. |
Accounting Estimates | Accounting Estimates Management uses estimates and assumptions in preparing these financial statements in accordance with United States generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. The Company uses estimates and assumptions in accounting for significant matters including, among others, the economic lives of property, plant, and equipment, the analysis of impairment of long-lived assets and valuation of commodity derivative instruments, inventory, and inventory purchase and sale commitments. The Company periodically reviews estimates and assumptions, and the effects of revisions are reflected in the period in which the revision is made. Actual results could differ from those estimates. |
Noncontrolling Interest | Non-controlling Interest Amounts recorded as non-controlling interest relate to the net investment by an unrelated party in Agrinatural. Income and losses are allocated to the members of Agrinatural based on their respective percentage of membership units held. Agrinatural will provide natural gas to the plant with a specified price per MMBTU for an initial term of 10 years , with two automatic renewal options for five years periods. On July 1, 2014, the Company entered into an amendment to this agreement to exercise early one of the two automatic renewals, thereby extending the term of this agreement to October 31, 2021. The Company previously declared a distribution to the non-controlling interest members for approximately $86,000 . This amount was recorded within accrued expenses at October 31, 2013. During the fiscal year ended October 31, 2014, the Company canceled this distribution. |
Revenue Recognition | Revenue Recognition The Company generally sells ethanol and related products pursuant to marketing agreements. Revenues from the production of ethanol and the related products are recorded when the customer has taken title and assumed the risks and rewards of ownership, prices are fixed or determinable and collectability is reasonably assured. Title is generally assumed by the buyer at the Company's shipping point. In accordance with the Company's agreements for the marketing and sale of ethanol and related products, marketing fees and commissions due to the marketers are deducted from the gross sales price as earned. These fees and commissions are recorded net of revenues as they do not provide an identifiable benefit that is sufficiently separable from the sale of ethanol and related products. Shipping costs incurred by the Company in the sale of ethanol are not specifically identifiable and as a result, are recorded based on the net selling price reported to the Company from the marketer. Shipping costs incurred by the Company in the sale of ethanol related products are included in cost of goods sold. Agrinatural recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the fee for the arrangement is fixed or determinable and collectability is reasonably assured. |
Cash and Equivalents | Cash The Company maintains its accounts at multiple financial institutions. At times throughout the year, the Company's cash balances may exceed amounts insured by the Federal Deposit Insurance Corporation and the Securities Investor Protection Corporation. The Company does not believe it is exposed to any significant credit risk on its cash balances. |
Restricted Cash | Restricted Cash The Company is periodically required to maintain cash balances at its broker related to derivative instrument positions. |
Accounts Receivable | Accounts Receivable Credit terms are extended to customers in the normal course of business. The Company performs ongoing credit evaluations of its customers' financial condition and, generally, requires no collateral. Accounts receivable are recorded at their estimated net realizable value. Accounts are considered past due if payment is not made on a timely basis in accordance with the Company's credit terms. Accounts considered uncollectible are written off. The Company follows a policy of providing an allowance for doubtful accounts; however, based on historical experience, and its evaluation of the current status of receivables, the Company is of the belief that such accounts will be collectible in all material respects and thus an allowance was not necessary at October 31, 2015 or 2014 . It is at least possible this estimate will change in the future. |
Inventory | Inventory Inventory is stated at the lower of cost or net realizable value in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2015-11 issued in July 2015. See " Recently Issued Accounting Pronouncements, Inventory Measurement (Adopted) " below for additional information regarding ASU No. 2015-11. Cost for all inventories is determined using the first in first out method (FIFO). Net realizable value is the estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation. Inventory consists of raw materials, work in process, finished goods, and spare parts. Corn is the primary raw material along with other raw materials. Finished goods consist of ethanol, distillers' grains, and corn oil. |
Derivative Instruments | Derivative Instruments From time to time, the Company enters into derivative transactions to hedge its exposures to commodity price fluctuations. The Company is required to record these derivatives in the balance sheets at fair value. In order for a derivative to qualify as a hedge, specific criteria must be met and appropriate documentation maintained. Gains and losses from derivatives that do not qualify as hedges, or are undesignated, must be recognized immediately in earnings. If the derivative does qualify as a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will be either offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. Changes in the fair value of undesignated derivatives are recorded in earnings. Additionally, the Company is required to evaluate its contracts to determine whether the contracts are derivatives. Certain contracts that literally meet the definition of a derivative may be exempted as "normal purchases or normal sales". Normal purchases and normal sales are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. Contracts that meet the requirements of normal purchases or sales are documented as normal and exempted from accounting and reporting requirements, and therefore, are not marked to market in our financial statements. In order to reduce the risks caused by market fluctuations, the Company occasionally hedges its anticipated corn, natural gas, and denaturant purchases and ethanol sales by entering into options and futures contracts. These contracts are used with the intention to fix the purchase price of anticipated requirements for corn in the Company's ethanol production activities and the related sales price of ethanol. The fair value of these contracts is based on quoted prices in active exchange-traded or over-the-counter market conditions. Although the Company believes its commodity derivative positions are economic hedges, none have been formally designated as a hedge for accounting purposes and derivative positions are recorded on the balance sheet at their fair market value, with changes in fair value recognized in current period earnings or losses. The Company does not enter into financial instruments for trading or speculative purposes. The Company has adopted authoritative guidance related to “Derivatives and Hedging,” and has included the required enhanced quantitative and qualitative disclosure about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses from derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. |
Other Intangibles | Other Intangibles Other intangibles are stated at cost and include road improvements located near the plant in which the Company has a beneficial interest in but does not own the road. The Company amortizes the assets over the economic useful life of 15 years . The Company recorded amortization expense in the amount of approximately $38,000 , $58,000 and $18,000 during the fiscal years ended October 31, 2015 , 2014 and 2013 , respectively. |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost. Depreciation is provided over an estimated useful life by use of the straight-line deprecation method. Maintenance and repairs are expensed as incurred; major improvements and betterments are capitalized. Construction in progress expenditures will be depreciated using the straight-line method over their estimated useful lives once the assets are placed into service. Depreciable useful lives are as follows: Land improvements 15 Years Plant building and equipment 7 - 40 Years Vehicles and other equipment 5 - 7 Years Office buildings and equipment 3 - 40 Years |
Long-Lived Assets | Long-Lived Assets Long-lived assets, such as property, plant, and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by an asset to the carrying value of the asset. If the carrying value of the long-lived asset is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including, but not limited to, discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. No indicators of impairment existed during fiscal 2015 , 2014 , or 2013 that would have triggered impairment testing, and therefore, no impairment expense was recorded during fiscal 2015 , 2014 , or 2013. |
Debt Financing Costs | Debt Financing Costs Costs associated with the issuance of loans are classified as financing costs. Financing costs are amortized over the term of the related debt by use of the effective interest method. Amortization and write-offs of debt financing costs for the fiscal year ended October 31, 2015 , 2014 and 2013 was approximately $0 , $370,000 , and $21,000 , respectively, which is included as a component of interest expense within the consolidated statements of operations. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company follows guidance for accounting for fair value measurements of financial assets and liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the consolidated financial statements on a recurring and nonrecurring basis. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: • Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. • Level 2 inputs include: 1. Quoted prices in active markets for similar assets or liabilities. 2. Quoted prices in markets that are observable for the asset or liability either directly or indirectly, for substantially the full term of the asset or liability. 3. Inputs that derived primarily from or corroborated by observable market date by correlation or other means. • Level 3 inputs are unobservable inputs for the asset or liability. The level in the fair value hierarchy within which a fair measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Except for those assets and liabilities which are required by authoritative accounting guidance to be recorded at fair value in our balance sheets, the Company has elected not to record any other assets or liabilities at fair value. No events occurred during the fiscal 2015 , 2014 and 2013 that required adjustment to the recognized balances of assets or liabilities, which are recorded at fair value on a nonrecurring basis. The carrying value of cash, restricted cash, accounts receivable, accounts payable and accrued liabilities approximates fair value due to the short maturity of these instruments. The fair value of debt has been estimated using discounted cash flow analysis based upon the Company's current incremental borrowing rates for similar types of financing arrangements. The fair value of outstanding debt will fluctuate with changes in applicable interest rates. Fair value will exceed carrying value when the current market interest rate is lower than the interest rate at which the debt was originally issued. The Company believes the carrying amount of its debt facilities approximates the fair value. |
Income Taxes | Income Taxes The Company is treated as a partnership for federal and state income tax purposes and generally does not incur income taxes. Instead, its 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. Differences between financial statement basis of assets and tax basis of assets is related to capitalization and amortization of organization and start-up costs for tax purposes, whereas these costs are expensed for financial statement purposes. In addition, the Company uses the alternative depreciation system (ADS) for tax depreciation instead of the straight-line method that is used for book depreciation, which also causes temporary differences. The Company's tax year end is December 31. Primarily due to the partnership tax status, the Company does not have any significant tax uncertainties that would require disclosure. The Company recognizes and measures tax benefits when realization of the benefits is uncertain under a two-step approach. The first step is to determine whether the benefit meets the more-likely-than-not condition for recognition and the second step is to determine the amount to be recognized based on the cumulative probability that exceeds 50%. Primarily due to the Company's tax status as a partnership, the adoption of this guidance had no material impact on the Company's financial condition or results of operations. The Company files income tax returns in the United States federal and Minnesota state jurisdictions. The Company is no longer subject to United States federal and state income tax examinations by tax authorities for years before 2012. |
Net Income (Loss) per Unit | Net Income per Unit Basic net income per unit is computed by dividing net income by the weighted average number of members' units outstanding during the period. Diluted net income or loss per unit is computed by dividing net income by the weighted average number of members' units and members' unit equivalents outstanding during the period. |
Environmental Liabilities | Environmental Liabilities The Company's operations are subject to environmental laws and regulations adopted by various governmental entities in the jurisdiction in which it operates. These laws require the Company to investigate and remediate the effects of the release or disposal of materials at its location. Accordingly, the Company has adopted policies, practices, and procedures in the areas of pollution control, occupational health, and the production, handling, storage and use of hazardous materials to prevent material environmental or other damage, and to limit the financial liability, which could result from such events. Environmental liabilities are recorded when the liability is probable and the costs can be reasonably estimated. |
Accounting Pronouncements - Inventory Measurement [Policy Text Block] | Inventory Measurement (Adopted) In July 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-11, which amended Inventory (Topic 330) Related to Simplifying the Measurement of Inventory of the Accounting Standards Codification. The amended guidance applies to all inventory except that which is measured using last-in, first-out (LIFO) or the retail inventory method. Inventory measured using first-in, first-out (FIFO) or average cost is included in the new amendments. Inventory within the scope of the new guidance should be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. The amendments will take effect for the Company for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The new guidance should be applied prospectively, and earlier application is permitted as of the beginning of an interim or annual reporting period. The Company has elected to adopt the standard as of November 1, 2014, and it did not have a material effect on the financial statements. |
Accounting Pronouncements - Contract Revenue Recognition [Policy Text Block] | Contract Revenue Recognition (Evaluating) In May 2014 and amended in August 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09 which amended the Revenue from Contracts with Customers (Topic 606) of the Accounting Standards Codification. The core principle of the new guidance is that an entity should recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity receives or expects to receive. The guidance will be effective for the Company for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. The Company is still evaluating the guidance and its effect on its financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN24
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
Accounting Policies [Abstract] | |
Schedule of depreciable useful lives of property and equipment | Depreciable useful lives are as follows: Land improvements 15 Years Plant building and equipment 7 - 40 Years Vehicles and other equipment 5 - 7 Years Office buildings and equipment 3 - 40 Years A summary of property and equipment is as follows: October 31, 2015 October 31, 2014 Land and improvements $ 9,111,838 $ 9,111,838 Plant buildings and equipment 81,634,966 73,080,366 Vehicles 611,976 611,976 Office buildings 641,860 613,407 Construction in progress 1,148,578 6,559,517 93,149,218 89,977,104 Less: accumulated depreciation (40,164,668 ) (35,609,106 ) Net property, plant and equipment $ 52,984,550 $ 54,367,998 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value of assets measured on a non-recurring basis | The following table sets forth, by level, the Company assets that were accounted for at fair value on a recurring basis as of October 31, 2015 . Fair Value Carrying Amount in Balance Sheet Quoted Prices in Active Markets Significant Other Observable Inputs Significant Unobservable inputs Financial Assets Fair Value (Level 1) (Level 2) (Level 3) Corn Derivative Contracts $ 677,149 $ 677,149 $ 677,149 $ — $ — The following table sets forth, by level, the Company assets that were accounted for at fair value on a recurring basis as of October 31, 2014 . Fair Value Carrying Amount in Balance Sheet Quoted Prices in Active Markets Significant Other Observable Inputs Significant Unobservable inputs Financial Assets Fair Value (Level 1) (Level 2) (Level 3) Corn Derivative Contracts $ 437,500 $ 437,500 $ 437,500 $ — $ — |
INVENTORY (Tables)
INVENTORY (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory | Inventory consists of the following at October 31: 2015 2014 Raw materials $ 1,800,320 $ 2,462,754 Work in process 693,844 791,490 Finished Goods 1,829,311 1,072,646 Supplies 935,871 860,377 Totals $ 5,259,346 $ 5,187,267 |
DERIVATIVE INSTRUMENTS (Tables)
DERIVATIVE INSTRUMENTS (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
Derivatives, Fair Value [Line Items] | |
Schedule of Derivative Instruments [Table Text Block] | The following table provides detail regarding the Company's derivative financial instruments at October 31, 2015, none of which were designated as hedging instruments: Consolidated Balance Sheet Location Assets Liabilities Corn contracts Commodity derivative instruments $ 677,149 $ — Totals $ 677,149 $ — The following table provides detail regarding the Company's derivative financial instruments at October 31, 2014, none of which were designated as hedging instruments: Consolidated Balance Sheet Location Assets Liabilities Corn contracts Commodity derivative instruments $ 437,500 $ — Totals $ 437,500 $ — |
Schedule of gains (losses) from derivative instruments included in the Condensed Consolidated Statements of Operations | The following tables provide details regarding the gains from the Company's derivative instruments in consolidated statements of operations, none of which are designated as hedging instruments: Statement of Operations location Twelve Months Ended October 31, 2015 2014 2013 Corn contracts Cost of goods sold $ 831,227 $ 787,617 $ — Totals $ 831,227 $ 787,617 $ — |
PROPERTY, PLANT AND EQUIPMENT28
PROPERTY, PLANT AND EQUIPMENT (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment [Table Text Block] | Depreciable useful lives are as follows: Land improvements 15 Years Plant building and equipment 7 - 40 Years Vehicles and other equipment 5 - 7 Years Office buildings and equipment 3 - 40 Years A summary of property and equipment is as follows: October 31, 2015 October 31, 2014 Land and improvements $ 9,111,838 $ 9,111,838 Plant buildings and equipment 81,634,966 73,080,366 Vehicles 611,976 611,976 Office buildings 641,860 613,407 Construction in progress 1,148,578 6,559,517 93,149,218 89,977,104 Less: accumulated depreciation (40,164,668 ) (35,609,106 ) Net property, plant and equipment $ 52,984,550 $ 54,367,998 |
DEBT FACILITIES (Tables)
DEBT FACILITIES (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term debt | Long-term debt consists of the following: October 31, October 31, Revolving term note payable to lending institution, see terms below. $ 4,822,777 $ — Assessment payable as part of water treatment agreement, due in semi-annual installments of $189,393 with interest at 6.55%, enforceable by statutory lien, with the final payment due in 2021. The Company made deposits for one years' worth of debt service payments of approximately $364,000, which is included with other assets that are held on deposit to be applied with the final payments of the assessment. 1,775,828 2,018,767 Assessment payable as part of water treatment agreement, due in semi-annual installments of $25,692 with interest at 0.50%, enforceable by statutory lien, with the final payment due in 2016. 51,199 102,074 Assessment payable as part of water supply agreement, due in monthly installments of $3,942 with interest at 8.73%, enforceable by statutory lien, with the final payment due in 2019. 136,378 172,072 Note payable to electrical company with monthly payments of $6,250 with interest at 0.00% and a 1.00% maintenance fee due each October, due September 2017. The electrical company is a member of the Company. 143,750 218,750 Note payable to non-controlling interest member of Agrinatural. Interest is at One Month LIBOR plus 4.0%. The note is considered due on demand with payments due at Agrinatural Board of Managers discretion. 300,000 300,000 Equipment payable on corn oil separation equipment from a vendor. The Company paid approximately $40,000 per month conditioned upon revenue generated from the corn oil equipment. The monthly payment included implicit interest of 5.57%. This note was paid in full in February 2015. — 146,984 Totals 7,229,932 2,958,647 Less amounts due within one year 517,957 846,235 Net long-term debt $ 6,711,975 $ 2,112,412 |
Schedule of estimated maturities of long-term debt | Estimated maturities of long-term debt at October 31, 2015 are as follows: 2016 $ 517,957 2017 480,064 2018 432,182 2019 319,376 2020 326,798 After 2020 5,153,555 Total debt $ 7,229,932 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
Leases [Abstract] | |
Schedule of minimum future lease payments | At October 31, 2015 , the Company had the following minimum future lease payments, which at inception had non-cancelable terms of more than one year : 2016 $ 2,133,300 2017 1,006,650 Total lease commitments $ 3,139,950 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Schedule of differences between consolidated financial statement basis and tax basis of assets and liabilities | The differences between consolidated financial statement basis and tax basis of assets and liabilities are estimated as follows at October 31: 2015 2014 Consolidated financial statement basis of assets $ 66,696,384 $ 66,122,250 Plus: Organization and start-up costs capitalized 1,091,020 1,248,749 Less: Unrealized gains on commodity derivative instruments (677,149 ) (437,500 ) Less: Accumulated tax depreciation and amortization greater than financial statement basis (54,580,532 ) (43,116,534 ) Plus: Impairment charge 27,844,579 27,844,579 Income tax basis of assets $ 40,374,302 $ 51,661,544 |
BUSINESS SEGMENTS (Tables)
BUSINESS SEGMENTS (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
Segment Reporting Information [Line Items] | |
Schedule of Segment Reporting Information, by Segment [Table Text Block] | The following tables summarize financial information by segment and provide a reconciliation of segment contribution to operating income and total assets for the fiscal years ended October 31: Revenue: 2015 2014 Ethanol production $ 114,669,831 $ 148,512,052 Natural gas pipeline 2,761,042 2,621,898 Eliminations (1,770,404 ) (1,715,906 ) Total Revenue $ 115,660,469 $ 149,418,044 Operating Income: 2015 2014 Ethanol production $ 8,106,105 $ 26,170,923 Natural gas pipeline 1,075,581 1,443,571 Eliminations (1,770,404 ) (1,715,906 ) Operating Income $ 7,411,282 $ 25,898,588 Total Assets: 2015 2014 Ethanol production $ 53,663,064 $ 53,826,820 Natural gas pipeline 13,033,320 12,295,430 Total assets $ 66,696,384 $ 66,122,250 |
Schedule of Primary Business Segments [Table Text Block] | The Company groups its operations into the following two business segments: Ethanol Production: Ethanol and co-product production and sales Natural gas pipeline: Ownership and operations of natural gas pipeline |
QUARTERLY FINANCIAL DATA (UNA33
QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
Summary of quarterly results | Summary quarterly results are as follows: First Second Third Fourth Fiscal year ended October 31, 2015 Revenues $ 27,177,449 $ 29,813,571 $ 30,192,430 $ 28,477,019 Gross profit 1,847,050 2,673,825 4,755,934 1,135,568 Operating income 966,668 1,891,732 4,014,168 538,714 Net income attributable to Heron Lake BioEnergy, LLC 879,256 1,733,837 3,808,820 329,320 Basic earnings per unit (Class A and B) $ 0.01 $ 0.02 $ 0.05 $ 0.01 Diluted earnings per unit (Class A and B) $ 0.01 $ 0.02 $ 0.05 $ 0.01 First Second Third Fourth Fiscal year ended October 31, 2014 Revenues $ 40,910,555 $ 39,149,053 $ 39,082,103 $ 30,276,333 Gross profit 7,180,730 7,602,033 8,292,015 5,773,857 Operating income 6,340,753 6,758,565 7,514,741 5,284,529 Net income attributable to Heron Lake BioEnergy, LLC 5,824,444 6,323,059 6,785,754 5,035,588 Basic earnings per unit (Class A and B) $ 0.09 $ 0.10 $ 0.10 $ 0.06 Diluted earnings per unit (Class A and B) $ 0.08 $ 0.08 $ 0.09 $ 0.06 First Second Third Fourth Fiscal year ended October 31, 2013 Revenues $ 44,121,305 $ 35,498,926 $ 45,583,441 $ 38,560,472 Gross profit 920,219 698,812 4,060,158 2,547,981 Operating income (loss) (95,367 ) (192,887 ) 3,385,958 1,915,430 Net income (loss) attributable to Heron Lake BioEnergy, LLC (920,554 ) (998,139 ) 2,554,493 1,305,042 Basic earnings (loss) per unit (Class A and B) $ (0.02 ) $ (0.03 ) $ 0.07 $ 0.03 Diluted earnings (loss) per unit (Class A and B) $ (0.02 ) $ (0.03 ) $ 0.06 $ 0.03 |
SUMMARY OF SIGNIFICANT ACCOUN34
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) gal in Millions | Dec. 18, 2014USD ($) | Oct. 31, 2015USD ($)optiongal | Oct. 31, 2014USD ($) | Oct. 31, 2013USD ($) |
Accounting Policies [Abstract] | ||||
Operating capacity of Ethanol plant owned and operated | gal | 72.3 | |||
Summary of significant accounting policies | ||||
Events requiring balance sheet adjustments | 0 | 0 | 0 | |
Asset Impairment Charges | $ 0 | $ 0 | $ 0 | |
Asset Impairment Charges, Cumulative | 27,844,579 | 27,844,579 | ||
Cancellation of distribution in accrued expenses | $ 0 | 86,073 | 0 | |
Other Intangibles | ||||
Economic useful life of other intangibles | 15 years | |||
Amortization of Intangible Assets | $ 38,000 | 58,000 | 18,000 | |
Amortization of financing costs | $ 0 | $ 370,000 | 21,000 | |
Distribution Made to Limited Liability Company (LLC) Member, Cash Distributions Declared | $ 9,352,000 | |||
HLBE Pipeline Company, LLC | ||||
Summary of significant accounting policies | ||||
Percentage of Agrinatural Gas, LLC owned by HLBE Pipeline Company, LLC | 73.00% | |||
Agrinatural | ||||
Summary of significant accounting policies | ||||
Remaining percentage in Agrinatural Gas, LLC included as noncontrolling interest (as a percent) | 27.00% | |||
Agrinatural, LLC [Member] | ||||
Summary of significant accounting policies | ||||
Remaining percentage in Agrinatural Gas, LLC included as noncontrolling interest (as a percent) | 27.00% | |||
Initial term of providing natural gas to the plant | 10 years | |||
Number of renewal options | option | 2 | |||
Term of renewed contract | 5 years | |||
Other Intangibles | ||||
Distribution Made to Limited Liability Company (LLC) Member, Cash Distributions Declared | $ 86,000 |
SUMMARY OF SIGNIFICANT ACCOUN35
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) | 12 Months Ended | ||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 | |
Property, Plant and Equipment [Line Items] | |||
Depreciation | $ 4,556,000 | $ 4,264,000 | $ 4,258,000 |
Long-Lived Assets | |||
Impairment charge | $ 0 | $ 0 | $ 0 |
Plant building and equipment | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Depreciable useful life | 7 years | ||
Plant building and equipment | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Depreciable useful life | 40 years | ||
Vehicles and equipment | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Depreciable useful life | 5 years | ||
Vehicles and equipment | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Depreciable useful life | 7 years | ||
Office buildings and equipment | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Depreciable useful life | 3 years | ||
Office buildings and equipment | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Depreciable useful life | 40 years |
RISKS AND UNCERTAINTIES (Detail
RISKS AND UNCERTAINTIES (Details) | 12 Months Ended |
Oct. 31, 2015 | |
Total revenues | Ethanol | Minimum | |
RISKS AND UNCERTAINTIES | |
Average percentage of total sales or cost of goods sold | 75.00% |
Total revenues | Ethanol | Maximum | |
RISKS AND UNCERTAINTIES | |
Average percentage of total sales or cost of goods sold | 85.00% |
Cost of goods sold | Corn | Minimum | |
RISKS AND UNCERTAINTIES | |
Average percentage of total sales or cost of goods sold | 65.00% |
Cost of goods sold | Corn | Maximum | |
RISKS AND UNCERTAINTIES | |
Average percentage of total sales or cost of goods sold | 85.00% |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) | 12 Months Ended | ||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 | |
Fair value measurements | |||
Other intangible assets, net | $ 122,148 | $ 160,296 | |
Asset Impairment Charges | 0 | 0 | $ 0 |
Derivative Assets, Current | 677,149 | 437,500 | |
Derivative Asset, Fair Value, Gross Asset | 677,149 | 437,500 | |
Level 3 | |||
Fair value measurements | |||
Derivative Asset, Fair Value, Gross Asset | 0 | 0 | |
Fair Value, Inputs, Level 1 [Member] | |||
Fair value measurements | |||
Derivative Asset, Fair Value, Gross Asset | 677,149 | 437,500 | |
Fair Value, Inputs, Level 2 [Member] | |||
Fair value measurements | |||
Derivative Asset, Fair Value, Gross Asset | $ 0 | $ 0 |
CONCENTRATIONS (Details)
CONCENTRATIONS (Details) - customer | 3 Months Ended | 12 Months Ended | |
Jan. 31, 2015 | Jan. 31, 2014 | Oct. 31, 2015 | |
Number of customers to whom all of the ethanol and dry distiller grains sold | 1 | 2 | |
Customer Concentration Risk - Accounts Receivable [Member] | |||
Concentration Risk, Percentage | 88.00% | 97.00% | |
Customer Concentration Risk - Revenue [Member] | |||
Concentration Risk, Percentage | 96.00% | 97.00% | 97.00% |
INVENTORY (Details)
INVENTORY (Details) - USD ($) | Oct. 31, 2015 | Oct. 31, 2014 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 1,800,320 | $ 2,462,754 |
Work in process | 693,844 | 791,490 |
Finished Goods | 1,829,311 | 1,072,646 |
Supplies | 935,871 | 860,377 |
Totals | $ 5,259,346 | $ 5,187,267 |
DERIVATIVE INSTRUMENTS (Details
DERIVATIVE INSTRUMENTS (Details) | 12 Months Ended | ||
Oct. 31, 2015USD ($)bu | Oct. 31, 2014USD ($)bu | Oct. 31, 2013USD ($) | |
Derivative Instruments | |||
Derivative Assets | $ 677,149 | $ 437,500 | |
Derivative Liabilities, Current | 0 | 0 | |
Gains and (losses) from derivative instruments | 831,227 | 787,617 | $ 0 |
Restricted Cash and Investments, Current | 0 | 264,000 | |
Corn contracts | |||
Derivative Instruments | |||
Derivative Assets | 677,149 | 437,500 | |
Derivative Liabilities, Current | $ 0 | $ 0 | |
Derivative, Nonmonetary Notional Amount | bu | 1,875,000 | 2,790,000 | |
Derivatives not designated as hedging instruments | Commodity prices | |||
Derivative Instruments | |||
Maximum term of corn, ethanol and natural gas derivatives entered to protect cash flows (in months) | 24 months | ||
Derivatives not designated as hedging instruments | Corn contracts | |||
Derivative Instruments | |||
Gains and (losses) from derivative instruments | $ 831,227 | $ 787,617 | $ 0 |
long position [Member] | Corn contracts | |||
Derivative Instruments | |||
Derivative, Nonmonetary Notional Amount | bu | 360,000 | 2,605,000 | |
Short position [Member] | Corn contracts | |||
Derivative Instruments | |||
Derivative, Nonmonetary Notional Amount | bu | 1,515,000 | 185,000 |
PROPERTY, PLANT AND EQUIPMENT41
PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Jan. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 | |
Property, Plant and Equipment [Line Items] | ||||
Construction in Progress, Gross | $ 1,148,578 | $ 6,559,517 | ||
Depreciation | 4,556,000 | 4,264,000 | $ 4,258,000 | |
Land and Land Improvements | 9,111,838 | 9,111,838 | ||
Plant Buildings and Equipment | 81,634,966 | 73,080,366 | ||
Vehicles and Other Equipment | 611,976 | 611,976 | ||
Office Buildings and Equipment | 641,860 | 613,407 | ||
Property, Plant and Equipment, Gross | 93,149,218 | 89,977,104 | ||
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | (40,164,668) | (35,609,106) | ||
Property, Plant and Equipment, Net | 52,984,550 | $ 54,367,998 | ||
Regenerative Thermal Oxidizer (RTO) [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Payments for Construction in Process | $ 375,000 | |||
Construction in Progress, Gross | $ 1,900,000 |
DEBT FACILITIES (Details)
DEBT FACILITIES (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Sep. 18, 2013 | Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 | Sep. 30, 2013 | |
Debt financing | |||||
Long-term Debt | $ 7,229,932 | $ 2,958,647 | |||
Less amounts due on demand or within one year | 517,957 | 846,235 | |||
Net long term debt | 6,711,975 | 2,112,412 | |||
Convertible rate of class A unit | $ 0.30 | ||||
Conversion of subordinated convertible debt to member units | 0 | 3,937,550 | $ 934,500 | ||
Convertible subordinated debt | $ 5,077,000 | ||||
Estimated maturities of long-term debt | |||||
2,014 | 517,957 | ||||
2,015 | 480,064 | ||||
2,016 | 432,182 | ||||
2,017 | 319,376 | ||||
2,018 | 326,798 | ||||
After 2,018 | 5,153,555 | ||||
Revolving term note payable to lending institution | |||||
Debt financing | |||||
Long-term Debt | $ 4,822,777 | $ 0 | |||
Interest rate (as a percent) | 3.45% | 3.41% | |||
Initial amount of debt | $ 28,000,000 | ||||
Line of Credit Facility, Amount Outstanding | 24,500,000 | ||||
Annual reduction in maximum borrowing capacity | $ 3,500,000 | ||||
Debt Instrument, Interest Rate, Effective Percentage Rate Range, Minimum | 3.25% | ||||
Line of Credit Facility, Interest Rate Description | LIBOR | ||||
Line of Credit Facility, Commitment Fee Description | 0.005 | ||||
Debt Instrument, Fee Amount | $ 2,500 | ||||
Assessments payable as part of water treatment agreement, with interest at 6.55%, due in 2021 | |||||
Debt financing | |||||
Long-term Debt | 1,775,828 | $ 2,018,767 | |||
Semi-annual payment | $ 189,393 | ||||
Interest rate (as a percent) | 6.55% | ||||
Period of worth of debt | 1 year | ||||
Assessments payable as part of water treatment agreement, with interest at 0.50%, due in 2016 | |||||
Debt financing | |||||
Long-term Debt | $ 51,199 | 102,074 | |||
Semi-annual payment | $ 25,692 | ||||
Interest rate (as a percent) | 0.50% | ||||
Assessments payable as part of water supply agreement, with interest at 8.73%, due in 2019 | |||||
Debt financing | |||||
Long-term Debt | $ 136,378 | 172,072 | |||
Interest rate (as a percent) | 8.73% | ||||
Monthly payment | $ 3,942 | ||||
Note payable to electrical provider, due in December 2012 | |||||
Debt financing | |||||
Implicit interest rate (as a percent) | 1.50% | ||||
Monthly payment | $ 29,775 | ||||
Note payable to electrical company, due September 2017 | |||||
Debt financing | |||||
Long-term Debt | $ 143,750 | 218,750 | |||
Maintenance fee (as a percent) | 1.00% | ||||
Monthly payment | $ 6,250 | ||||
Construction note payable | |||||
Debt financing | |||||
Interest rate (as a percent) | 5.29% | ||||
Term of debt instrument | 3 years | ||||
Equipment note, second | |||||
Debt financing | |||||
Long-term Debt | $ 0 | 146,984 | |||
Interest rate (as a percent) | 5.57% | ||||
Monthly payment | $ 40,000 | ||||
Class A units | |||||
Debt financing | |||||
Conversion of subordinated convertible debt to member units | $ 934,500 | ||||
Agrinatural | Note payable to noncontrolling interest, due October 2014 | |||||
Debt financing | |||||
Long-term Debt | $ 300,000 | $ 300,000 | |||
Interest rate (as a percent) | 5.43% |
MEMBERS' EQUITY (Details)
MEMBERS' EQUITY (Details) | Dec. 17, 2015USD ($)$ / shares | Dec. 18, 2014USD ($)$ / shares | Sep. 18, 2013$ / sharesshares | Jul. 31, 2013USD ($)$ / sharesshares | Sep. 18, 2013USD ($)shares | Jul. 31, 2013USD ($)$ / sharesshares | May. 31, 2013USD ($) | Oct. 31, 2015USD ($)vote_per_share$ / sharesshares | Oct. 31, 2014USD ($)$ / sharesshares | Oct. 31, 2013USD ($)$ / sharesshares |
Class of Stock [Line Items] | ||||||||||
Members' Equity, units outstanding | 64,812,107 | 38,622,107 | ||||||||
Units authorized (in shares) | 80,000,000 | |||||||||
Minimum number of units held by members of the company (in shares) | 2,500 | |||||||||
Number of votes per unit | vote_per_share | 1 | |||||||||
Gross proceeds | $ | $ 6,900,000 | $ 0 | $ 0 | $ 6,922,500 | ||||||
Number of units sold (in shares) | 64,812,107 | 38,622,107 | ||||||||
Conversion of subordinated convertible debt to member units | $ | $ 0 | $ 3,937,550 | $ 934,500 | |||||||
Early Repayment of Subordinated Debt | $ | $ 207,000 | |||||||||
Distribution Made to Member or Limited Partner, Distributions Declared, Per Unit | $ / shares | $ 0.12 | |||||||||
Distribution Made to Member or Limited Partner, Cash Distributions Declared | $ | $ 9,352,000 | |||||||||
Project Viking | ||||||||||
Class of Stock [Line Items] | ||||||||||
Gross proceeds | $ | $ 6,900,000 | |||||||||
Purchase price per unit (in dollars per unit) | $ / shares | $ 0.30 | $ 0.30 | ||||||||
Stock issuance cost per unit | $ / shares | $ 0.30 | |||||||||
Conversion of subordinated convertible debt to member units | $ | $ 102,000 | |||||||||
Class A units | ||||||||||
Class of Stock [Line Items] | ||||||||||
Units authorized (in shares) | 65,000,000 | |||||||||
Capital issuance (in shares) | 8,075,000 | 8,075,000 | 1,414,033 | |||||||
Number of units sold (in shares) | 3,115,000 | 3,115,000 | ||||||||
Stock issuance cost per unit | $ / shares | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.50 | ||||||
Conversion of subordinated convertible debt to member units | $ | $ 934,500 | |||||||||
Stock Issued During Period, Shares, Conversion of Units | 13,120,000 | |||||||||
Class A units | Project Viking | ||||||||||
Class of Stock [Line Items] | ||||||||||
Number of units sold (in shares) | 8,075,000 | 8,075,000 | ||||||||
Class B units | ||||||||||
Class of Stock [Line Items] | ||||||||||
Units authorized (in shares) | 15,000,000 | |||||||||
Capital issuance (in shares) | 15,000,000 | 15,000,000 | ||||||||
Stock issuance cost per unit | $ / shares | $ 0.30 | $ 0.30 | ||||||||
Class B units | Project Viking | ||||||||||
Class of Stock [Line Items] | ||||||||||
Number of units sold (in shares) | 15,000,000 | 15,000,000 | ||||||||
Subsequent Event [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Distribution Made to Member or Limited Partner, Distributions Declared, Per Unit | $ / shares | $ 0.05 | |||||||||
Distribution Made to Member or Limited Partner, Cash Distributions Declared | $ | $ 3,897,000 |
LEASES (Details)
LEASES (Details) | 12 Months Ended |
Oct. 31, 2015USD ($) | |
Operating Leased Assets [Line Items] | |
Minimum non-cancelable lease term at inception (in years) | 1 year |
Minimum future lease payments | |
Operating Leases, Future Minimum Payments Due, Next Twelve Months | $ 2,133,300 |
Capital Leases, Future Minimum Payments Due in Two Years | 1,006,650 |
Total lease commitments | $ 3,139,950 |
Rail cars [Member] | |
Operating Leased Assets [Line Items] | |
Capital Leased Assets, Number of Units | 145 |
Rent expense | $ 143,000 |
Hopper Cars [Member] | |
Operating Leased Assets [Line Items] | |
Capital Leased Assets, Number of Units | 50 |
Rent expense | $ 0 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2015 | Oct. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||
Consolidated financial statement basis of assets | $ 66,696,384 | $ 66,122,250 |
Plus: Organization and start-up costs capitalized | 1,091,020 | 1,248,749 |
Unrealized Gain (Loss) on Derivatives | (677,149) | (437,500) |
Less: Accumulated tax depreciation and amortization greater than financial statement basis | 54,580,532 | 43,116,534 |
Plus: Impairment charge | 27,844,579 | 27,844,579 |
Income tax basis of assets | $ 40,374,302 | $ 51,661,544 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | Jul. 31, 2013 | Sep. 30, 2013 | Jul. 31, 2013 | May. 31, 2013 | Jan. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 |
RELATED PARTY TRANSACTIONS | ||||||||
Gross proceeds | $ 6,900,000 | $ 0 | $ 0 | $ 6,922,500 | ||||
Conversion of subordinated convertible debt to member units | 0 | 3,937,550 | 934,500 | |||||
Management Services Agreement, Term | 3 years | |||||||
Management Services Agreement | 414,000 | 392,000 | 105,000 | |||||
Convertible subordinated debt | $ 5,077,000 | |||||||
Convertible rate of class A unit | $ 0.30 | |||||||
Conversion of Stock, Amount Converted | $ 102,000 | |||||||
Amount of corn purchased from members | 11,032,000 | 14,860,000 | 0 | |||||
Long-term Debt | $ 7,229,932 | 2,958,647 | ||||||
Capital Expenditure Reimbursement | 10.00% | |||||||
Project Viking | ||||||||
RELATED PARTY TRANSACTIONS | ||||||||
Gross proceeds | $ 6,900,000 | |||||||
Purchase price per unit (in dollars per unit) | $ 0.30 | $ 0.30 | ||||||
Conversion of subordinated convertible debt to member units | $ 102,000 | |||||||
Project Viking | Class A units | ||||||||
RELATED PARTY TRANSACTIONS | ||||||||
Class A units Authorized (in shares) | 8,075,000 | 8,075,000 | ||||||
Project Viking | Class B units | ||||||||
RELATED PARTY TRANSACTIONS | ||||||||
Class A units Authorized (in shares) | 15,000,000 | 15,000,000 | ||||||
Principal Owner [Member] | Class A units | ||||||||
RELATED PARTY TRANSACTIONS | ||||||||
Conversion of Stock, Shares Converted | 340,000 | |||||||
Majority Shareholder [Member] | ||||||||
RELATED PARTY TRANSACTIONS | ||||||||
Management Fee, Amount Paid | 35,000 | |||||||
Management Services Agreement, Percentage of Applicable Compensation | 50.00% | |||||||
Agrinatural Gas [Member] | ||||||||
RELATED PARTY TRANSACTIONS | ||||||||
Interest Expense, Debt | $ 16,000 | |||||||
Long-term Debt | 300,000 | |||||||
Swan Engineering Inc (SEI) [Member] | ||||||||
RELATED PARTY TRANSACTIONS | ||||||||
Accounts Payable, Related Parties, Current | 340,000 | $ 517,000 | ||||||
Convertible Subordinated Debt [Member] | Majority Shareholder [Member] | ||||||||
RELATED PARTY TRANSACTIONS | ||||||||
Interest Expense, Debt | $ 2,000 | |||||||
Granite Falls Energy LLC [Member] | Project Viking | ||||||||
RELATED PARTY TRANSACTIONS | ||||||||
Convertible Subordinated Debt, Transferred | $ 102,000 | |||||||
Agrinatural, LLC [Member] | ||||||||
RELATED PARTY TRANSACTIONS | ||||||||
Management Fee Reduction | 4,500 | |||||||
Monthly Base Fee | 18,000 | |||||||
Monthly Variable Fee | 83,000 | |||||||
Project Management Fees | $ 19,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | 1 Months Ended | 12 Months Ended | |||||
May. 31, 2006 | Oct. 31, 2003USD ($)gal | Oct. 31, 2015USD ($)bu | Oct. 31, 2014USD ($) | Oct. 31, 2013USD ($) | Oct. 31, 2007USD ($) | Oct. 31, 2006USD ($) | |
Corn Contracts [Member] | |||||||
COMMITMENTS AND CONTINGENCIES | |||||||
Forward Commitment Contracts | bu | 2,604,000 | ||||||
Water supply development and distribution agreement | |||||||
COMMITMENTS AND CONTINGENCIES | |||||||
Term of agreement | 15 years | ||||||
Initial volume per minute of capacity that is available from the well for which the entity has exclusive rights (in gallons) | gal | 600 | ||||||
City's water well bond payments | $ 735,000 | ||||||
Administrative fee to be paid as water usage fees (as a percent) | 5.00% | ||||||
Administrative fee to be paid as water usage fees | $ 594,000 | ||||||
Percentage of profit to be paid as water usage fees | 10.00% | ||||||
Operating and administrative/maintenance expenses paid | $ 12,000 | ||||||
Water supply development and distribution agreement | Assessments payable | |||||||
COMMITMENTS AND CONTINGENCIES | |||||||
Long-term debt | $ 367,000 | ||||||
Water treatment agreement | |||||||
COMMITMENTS AND CONTINGENCIES | |||||||
Term of agreement | 30 years | ||||||
Operating and administrative/maintenance expenses paid | $ 57,000 | $ 114,000 | $ 289,000 | ||||
Water treatment agreement | Assessments payable | |||||||
COMMITMENTS AND CONTINGENCIES | |||||||
Long-term debt | $ 500,000 | $ 3,550,000 | |||||
Marketing, corn supply and corn storage agreements | |||||||
COMMITMENTS AND CONTINGENCIES | |||||||
Percentage of ethanol and distillers grains products produced by the entity to be purchased, marketed and resold by Gavilon | 100.00% | ||||||
Ethanol Contracts [Member] | |||||||
COMMITMENTS AND CONTINGENCIES | |||||||
Forward Sales Contracts | $ 2,366,000 | ||||||
Percent of Anticipated Sales | 15.00% | ||||||
Distiller's Grains [Member] | |||||||
COMMITMENTS AND CONTINGENCIES | |||||||
Forward Sales Contracts | $ 151,000 | ||||||
Corn Oil [Member] | |||||||
COMMITMENTS AND CONTINGENCIES | |||||||
Forward Sales Contracts | $ 383,000 |
BUSINESS SEGMENTS (Details)
BUSINESS SEGMENTS (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||||||
Oct. 31, 2015 | Jul. 31, 2015 | Apr. 30, 2015 | Jan. 31, 2015 | Oct. 31, 2014 | Jul. 31, 2014 | Apr. 30, 2014 | Jan. 31, 2014 | Oct. 31, 2013 | Jul. 31, 2013 | Apr. 30, 2013 | Jan. 31, 2013 | Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 | |
Segment Reporting Information [Line Items] | |||||||||||||||
Revenues | $ 115,660,469 | $ 149,418,044 | |||||||||||||
Operating Income (Loss) | $ 538,714 | $ 4,014,168 | $ 1,891,732 | $ 966,668 | $ 5,284,529 | $ 7,514,741 | $ 6,758,565 | $ 6,340,753 | $ 1,915,430 | $ 3,385,958 | $ (192,887) | $ (95,367) | 7,411,282 | 25,898,588 | $ 5,013,134 |
Total Assets | 66,696,384 | 66,122,250 | 66,696,384 | 66,122,250 | |||||||||||
Ethanol [Member] | |||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||
Revenues | 114,669,831 | 148,512,052 | |||||||||||||
Operating Income (Loss) | 8,106,105 | 26,170,923 | |||||||||||||
Total Assets | 53,663,064 | 53,826,820 | 53,663,064 | 53,826,820 | |||||||||||
Natural Gas [Member] | |||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||
Revenues | 2,761,042 | 2,621,898 | |||||||||||||
Operating Income (Loss) | 1,075,581 | 1,443,571 | |||||||||||||
Total Assets | $ 13,033,320 | $ 12,295,430 | 13,033,320 | 12,295,430 | |||||||||||
Intersegment Eliminations [Member] | |||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||
Revenues | (1,770,404) | (1,715,906) | |||||||||||||
Operating Income (Loss) | $ (1,770,404) | $ (1,715,906) |
QUARTERLY FINANCIAL DATA (UNA49
QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||||||
Oct. 31, 2015 | Jul. 31, 2015 | Apr. 30, 2015 | Jan. 31, 2015 | Oct. 31, 2014 | Jul. 31, 2014 | Apr. 30, 2014 | Jan. 31, 2014 | Oct. 31, 2013 | Jul. 31, 2013 | Apr. 30, 2013 | Jan. 31, 2013 | Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||
Revenues | $ 28,477,019 | $ 30,192,430 | $ 29,813,571 | $ 27,177,449 | $ 30,276,333 | $ 39,082,103 | $ 39,149,053 | $ 40,910,555 | $ 38,560,472 | $ 45,583,441 | $ 35,498,926 | $ 44,121,305 | $ 115,660,469 | $ 149,418,044 | $ 163,764,144 |
Gross profit (loss) | 1,135,568 | 4,755,934 | 2,673,825 | 1,847,050 | 5,773,857 | 8,292,015 | 7,602,033 | 7,180,730 | 2,547,981 | 4,060,158 | 698,812 | 920,219 | 10,412,377 | 28,848,635 | 8,227,170 |
Operating income (loss) | 538,714 | 4,014,168 | 1,891,732 | 966,668 | 5,284,529 | 7,514,741 | 6,758,565 | 6,340,753 | 1,915,430 | 3,385,958 | (192,887) | (95,367) | 7,411,282 | 25,898,588 | 5,013,134 |
Net income (loss) attributable to Heron Lake BioEnergy, LLC | $ 329,320 | $ 3,808,820 | $ 1,733,837 | $ 879,256 | $ 5,035,588 | $ 6,785,754 | $ 6,323,059 | $ 5,824,444 | $ 1,305,042 | $ 2,554,493 | $ (998,139) | $ (920,554) | $ 6,979,716 | $ 24,327,518 | $ 2,267,860 |
Basic earnings (loss) per unit (Class A and B) | $ 0.01 | $ 0.05 | $ 0.02 | $ 0.01 | $ 0.06 | $ 0.10 | $ 0.10 | $ 0.09 | $ 0.03 | $ 0.07 | $ (0.03) | $ (0.02) | $ 0.09 | $ 0.35 | $ 0.04 |
Diluted earnings (loss) per unit (Class A and B) | $ 0.01 | $ 0.05 | $ 0.02 | $ 0.01 | $ 0.06 | $ 0.09 | $ 0.08 | $ 0.08 | $ 0.03 | $ 0.06 | $ (0.03) | $ (0.02) | $ 0.09 | $ 0.31 | $ 0.04 |