Golden Growers Cooperative (GGROU) 10-Q 12 May 17 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2017	May 11, 2017
Document and Entity Information
Entity Registrant Name	Golden Growers Cooperative
Entity Central Index Key	1,489,874
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		15,490,480
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1

BALANCE SHEET

BALANCE SHEET - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Current Assets:
Cash and Cash Equivalents		$ 2,792
Short-Term Investments	$ 220	219
Prepaid Expenses	522	342
Total Current Assets	742	3,353
Furniture and Equipment, Net	1	1
Investment in ProGold Limited Liability Company	22,838	20,484
Total Assets	23,581	23,838
Current Liabilities:
Accounts Payable	52	1
Accrued Liabilities	1	221
Total Current Liabilities	53	222
Members' Equity
Membership Units, Authorized 60,000,000 Units, Issued and Outstanding 15,490,480 as of March 31, 2017 and December 31, 2016	23,528	23,616
Total Members' Equity	23,528	23,616
Total Liabilities and Members' Equity	$ 23,581	$ 23,838

BALANCE SHEETS (Parenthetical)

BALANCE SHEETS (Parenthetical) - shares	Mar. 31, 2017	Dec. 31, 2016
BALANCE SHEETS
Membership Units, Authorized	60,000,000	60,000,000
Membership Units, Issued	15,490,480	15,490,480
Membership Units, Outstanding	15,490,480	15,490,480

STATEMENTS OF OPERATIONS AND CO

STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
OPERATIONS
Corn Revenue	$ 17,367	$ 17,795
Corn Expense	(17,390)	(17,817)
Net Income from ProGold Limited Liability Company	2,355	1,371
General & Administrative Expenses	(206)	(169)
Net Income from Operations	2,126	1,180
Interest Income	2	2
Net Income Before Income Tax	2,128	1,182
Net Income	$ 2,128	$ 1,182
Weighted Average Shares/Units Outstanding	15,490,480	15,490,480
Earnings per Share/Membership Unit Primary and Fully Diluted	$ 0.14	$ 0.08

STATEMENTS OF OPERATIONS AND C5

STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
COMPREHENSIVE INCOME
Net income	$ 2,128	$ 1,182
Pension Liability Adjustment		42
Comprehensive Income	$ 2,128	$ 1,224

STATEMENTS OF CASH FLOWS

STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cash Flows from Operating Activities
Net income	$ 2,128,000	$ 1,182,000
Net (Income) from ProGold Limited Liability Company	(2,355,000)	(1,371,000)
Depreciation		1,000
Changes in assets and liabilities
Prepaids Expenses	(180,000)	284,000
Accounts Payable	51,000	(22,000)
Accrued Liabilities	(220,000)	(110,000)
Net Cash Used in Operating Activities	(576,000)	(36,000)
Cash Flows from Investing Activities
(Purchase) Sale of Investments	(1,000)
Distribution Received from ProGold LLC		2,650,000
Net cash Provided in Investing Activities	(1,000)	2,650,000
Cash Flows from Financing Activities
Member Distributions Paid	(2,215,000)	(3,098,000)
Net Cash Used in Financing Activities	(2,215,000)	(3,098,000)
Increase (Decrease) in Cash and Cash Equivalents	(2,792,000)	(484,000)
Cash and Cash Equivalents, Beginning of Period	$ 2,792,000	2,272,000
Cash and Cash Equivalents, End of Period		$ 1,788,000

BASIS OF PRESENTATION

BASIS OF PRESENTATION	3 Months Ended
	Mar. 31, 2017
BASIS OF PRESENTATION
BASIS OF PRESENTATION	NOTE 1 – BASIS OF PRESENTATION The financial statements of the Golden Growers Cooperative (the “Cooperative”) for the three-month periods ended March 31, 2017 and 2016 are unaudited and reflect all adjustments consisting of normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim period. The condensed financial statements should be read in conjunction with the financial statements and notes thereto, contained in the Cooperative’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016. The results of operations for the periods ended March 31, 2017 are not necessarily indicative of the results for the entire fiscal year ending December 31, 2017.

EXPENSES

EXPENSES	3 Months Ended
	Mar. 31, 2017
EXPENSES
EXPENSES	NOTE 2 – EXPENSES The Cooperative contracts with Cargill, Incorporated (“Cargill”) in connection with the procurement of corn and other agency services for an annual fee of $92,000, which is paid by the Cooperative to Cargill in quarterly installments and terminates on December 31, 2017.

PROGOLD LIMITED LIABILITY COMPA

PROGOLD LIMITED LIABILITY COMPANY	3 Months Ended
	Mar. 31, 2017
PROGOLD LIMITED LIABILITY COMPANY
PROGOLD LIMITED LIABILITY COMPANY	NOTE 3 – PROGOLD LIMITED LIABILITY COMPANY The Cooperative has a 49% ownership interest in ProGold Limited Liability Company (“ProGold LLC”). Following is summary financial information for ProGold LLC, which were derived from the monthly unaudited financial statements of ProGold LLC: March 31, December 31, (In Thousands) 2017 2016 2016 Current Assets $ 5,718 $ 463 $ 125 Long-Term Assets 41,198 50,346 42,086 Total Assets $ 46,916 $ 50,809 $ 42,211 Current Liabilities $ 307 $ 401 $ 407 Long-Term Liabilities — 300 0 Total Liabilities 307 701 407 Members’ Equity 46,609 50,108 41,804 Total Liabilities and Members’ Equity $ 46,916 $ 50,809 $ 42,211 Rent Revenue on Operating Lease $ 5,617 $ 5,756 $ 22,837 Expenses 812 2,957 11,866 Net Income $ 4,805 $ 2,799 $ 10,971

INVESTMENTS

INVESTMENTS	3 Months Ended
	Mar. 31, 2017
INVESTMENTS
INVESTMENTS	NOTE 4 – INVESTMENTS Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Quoted market prices are generally not available for the Company’s financial instruments. Fair values are based on judgments regarding anticipated cash flows, future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates involve uncertainties and matters of judgment, and therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. The Cooperative has determined fair value of its investments held to maturity based on Level 1 inputs. The Cooperative’s investments held to maturity are as follows as of March 31, 2017 and December 31, 2016 (in thousands): Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value March 31, 2017: Money Market & CD’s $ 220 $ — $ — $ 220 December 31, 2016: Money Market & CD’s $ 219 $ — $ — $ 219

EMPLOYEE BENEFIT PLANS

EMPLOYEE BENEFIT PLANS	3 Months Ended
	Mar. 31, 2017
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS	NOTE 5 – EMPLOYEE BENEFIT PLANS Pension Plan – In December 2012, the Cooperative approved a change to freeze the Cooperative’s defined benefit plan. As a result, no additional benefits will accrue to participants in the plan and no new employees are eligible for the plan. The following schedules provide the components of Net Periodic Benefit Cost for the three-months ended March 31, 2017 and March 31 , 2016 (in thousands) : March 31, March 31, 2017 2016 Service Cost $ — $ — Interest Cost 8 37 Expected Return on Plan Assets (12) (47) Amortization of Net (Gain) Loss 1 8 Net Periodic Pension Cost $ (3) $ (2) Through the three-months ended March 31, 2017, the Cooperative has made $0 in contributions as compared to $6,000 through the three-months ended March 31, 2016. The Cooperative anticipates $9,000 in contributions in 2017. Contributions in 2016 totaled $20,000.

RECENTLY ISSUED ACCOUNTING PRON

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS	3 Months Ended
	Mar. 31, 2017
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS	NOTE 6 – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In May 2014, the FASB issued ASU 2014-09, Revenues from Contracts with Customers. The new revenue guidance broadly replaces the revenue guidance provided throughout the Codification. The core principle of the revenue guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The new revenue guidance also requires the capitalization of certain contract acquisition costs. Reporting entities must prepare new disclosures providing qualitative and quantitative information on the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. New disclosures also include qualitative and quantitative information on significant judgments, changes in judgments, and contract acquisition assets. At issuance, ASU 2014-09 was effective starting in 2017 for calendar-year public entities, and interim periods within that year. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, which defers the adoption of ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. During the fourth quarter of 2016, the Cooperative completed the initial evaluation of the new standard and the related assessment and review of existing revenue contracts with its customers. The Cooperative determined, on a preliminary basis, that the timing, pattern and amount of revenue recognized during the year should remain substantially the same. The Cooperative anticipates utilizing the full retrospective transition method. The primary impact of the adoption on the Cooperative’s financial statements will be the additional required disclosures around revenue recognition in the notes to the financial statements.

CHANGE IN ACCOUNTING STANDARDS

CHANGE IN ACCOUNTING STANDARDS	3 Months Ended
	Mar. 31, 2017
CHANGE IN ACCOUNTING STANDARDS
CHANGE IN ACCOUNTING STANDARDS	NOTE 7 – CHANGE IN ACCOUNTING STANDARDS The Cooperative has not been impacted by any changes in Accounting Standards since the filing of its most recent 10-K.

DISTRIBUTIONS TO MEMBERS

DISTRIBUTIONS TO MEMBERS	3 Months Ended
	Mar. 31, 2017
DISTRIBUTIONS TO MEMBERS
DISTRIBUTIONS TO MEMBERS	NOTE 8 – DISTRIBUTIONS TO MEMBERS On February 16, 2017, the Cooperative made distributions to its members totaling $2,215,139 or $0.143 per outstanding membership unit. Traditionally, the Cooperative has issued distributions near $0.20/bushel. This year, however, the Cooperative issued a distribution equal to 30% of allocated income, the minimum amount required to be distributed according to the Cooperative’s Bylaws, because the ProGold LLC Board of Governors voted in January 2017 to suspend automatic distributions to its partners until such time as a final decision had been made for the use of its corn wet-milling facility starting on January 1, 2018. For more information on the lease of ProGold LLC’s wet-milling facility to Cargill, see Note 10 to the Financial Statements, Subsequent Events , below.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	3 Months Ended
	Mar. 31, 2017
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES	NOTE 9 – COMMITMENTS AND CONTINGENCIES The Cooperative contracted with Cargill in connection with the procurement of corn which includes an annual fee of $92,000 paid by the Cooperative to Cargill in quarterly installments and terminates December 31, 2017.

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	3 Months Ended
	Mar. 31, 2017
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS	NOTE 10 – SUBSEQUENT EVENTS The Cooperative, Cargill, and American Crystal Sugar Company (“American Crystal”) have entered into a Consent Agreement dated as of April 4, 2017 to be effective on January 1, 2018 relating to the lease of ProGold LLC’s wet-milling facility to Cargill and the Cooperative’s interest in ProGold LLC. ProGold LLC and Cargill entered into a Second Amended and Restated Facility Lease (as further described below), and Cargill and American Crystal entered into an Option Agreement dated as of April 4, 2017 to be effective on January 1, 2018 detailing the price, term and other conditions under which American Crystal grants to Cargill an exclusive option to purchase a 50% interest in ProGold LLC from American Crystal during the first four years of the lease. Under the Consent Agreement, the Cooperative approves and consents to the transfer of the 50% interest in ProGold LLC from American Crystal to Cargill in the event Cargill exercises its option. The Cooperative also secures the right to purchase American Crystal’s remaining 1% interest in ProGold LLC for a base price ranging from $1.7 million to $1.3 million, depending on when Cargill notifies American Crystal of its intention to exercise its option. The Cooperative would also be required to pay to American Crystal a capital adjustment in an amount equal to 1% of the portion of costs that have not been paid by Cargill to ProGold LLC through additional rent with respect to certain projects at the facility. In the event Cargill intends to exercise its option, before exercising such option, Cargill and the Cooperative will expeditiously and in good faith work together to finalize agreements for the structure, governance and operation of ProGold LLC according to certain operational principles and other guideline terms as provided in a Memorandum of Understanding attached to the Consent Agreement. The Second Amended and Restated Facility Lease entered into by ProGold LLC and Cargill dated as of April 4, 2017 commences on January 1, 2018 and continues through December 31, 2022. The lease will be automatically extended for one year in the event that either (i) Cargill has not, prior to December 31, 2021, exercised the option to purchase American Crystal’s 50% interest in ProGold LLC or (ii) if the parties have not otherwise mutually agreed to extend or terminate the lease. Cargill will pay ProGold LLC annual rent of $17 million in 2018 and 2019, $16 million in 2020, $15.5 million in 2021 and 2022, and $14 million if the lease is extended through 2023 as described above. In connection with renewing the lease between ProGold LLC and Cargill, ProGold LLC has agreed to pay at least $750,000 annually for infrastructure maintenance and may also be required to pay additional sums in order to make certain capital improvements. The payments will reduce any income available for ProGold LLC’s members at the time of such expenses. The Cooperative and American Crystal would experience any such reduction in ProGold LLC’s income proportionately based on their percentage ownership of ProGold LLC.

PROGOLD LIMITED LIABILITY COM17

PROGOLD LIMITED LIABILITY COMPANY (Tables)	3 Months Ended
	Mar. 31, 2017
PROGOLD LIMITED LIABILITY COMPANY
Schedule of financial information for ProGold LLC	March 31, December 31, (In Thousands) 2017 2016 2016 Current Assets $ 5,718 $ 463 $ 125 Long-Term Assets 41,198 50,346 42,086 Total Assets $ 46,916 $ 50,809 $ 42,211 Current Liabilities $ 307 $ 401 $ 407 Long-Term Liabilities — 300 0 Total Liabilities 307 701 407 Members’ Equity 46,609 50,108 41,804 Total Liabilities and Members’ Equity $ 46,916 $ 50,809 $ 42,211 Rent Revenue on Operating Lease $ 5,617 $ 5,756 $ 22,837 Expenses 812 2,957 11,866 Net Income $ 4,805 $ 2,799 $ 10,971

INVESTMENTS (Tables)

INVESTMENTS (Tables)	3 Months Ended
	Mar. 31, 2017
INVESTMENTS
Schedule of investments held to maturity	The Cooperative’s investments held to maturity are as follows as of March 31, 2017 and December 31, 2016 (in thousands): Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value March 31, 2017: Money Market & CD’s $ 220 $ — $ — $ 220 December 31, 2016: Money Market & CD’s $ 219 $ — $ — $ 219

EMPLOYEE BENEFIT PLANS (Tables)

EMPLOYEE BENEFIT PLANS (Tables)	3 Months Ended
	Mar. 31, 2017
EMPLOYEE BENEFIT PLANS
Components of Net Periodic Benefit Cost	The following schedules provide the components of Net Periodic Benefit Cost for the three-months ended March 31, 2017 and March 31 , 2016 (in thousands) : March 31, March 31, 2017 2016 Service Cost $ — $ — Interest Cost 8 37 Expected Return on Plan Assets (12) (47) Amortization of Net (Gain) Loss 1 8 Net Periodic Pension Cost $ (3) $ (2)

EXPENSES (Details)

EXPENSES (Details)	3 Months Ended
	Mar. 31, 2017USD ($)
EXPENSES
Annual contractual payments to Cargill to arrange for the delivery of the corn and other agency services	$ 92,000

PROGOLD LIMITED LIABILITY COM21

PROGOLD LIMITED LIABILITY COMPANY (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Financial information for ProGold LLC
Current Assets	$ 5,718	$ 463	$ 125
Long-Term Assets	41,198	50,346	42,086
Total Assets	46,916	50,809	42,211
Current Liabilities	307	401	407
Long-Term Liabilities		300	0
Total Liabilities	307	701	407
Members' Equity	46,609	50,108	41,804
Total Liabilities and Members' Equity	46,916	50,809	42,211
Rent Revenue on Operating Lease	5,617	5,756	22,837
Expenses	812	2,957	11,866
Net Income	$ 4,805	$ 2,799	$ 10,971
ProGold LLC
ProGold Limited Liability Company
Ownership percentage in joint venture	49.00%

INVESTMENTS (Details)

INVESTMENTS (Details) - Money Market & CD's. - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Investments held to maturity
Amortized Cost	$ 220	$ 219
Fair Value	$ 220	$ 219

EMPLOYEE BENEFIT PLANS (Details

EMPLOYEE BENEFIT PLANS (Details)	1 Months Ended	3 Months Ended		12 Months Ended
	Dec. 31, 2012USD ($)employee	Mar. 31, 2017USD ($)	Mar. 31, 2016USD ($)	Dec. 31, 2016USD ($)
Components of Net Periodic Benefit Cost
Service Cost
Interest Cost		8,000	37,000
Expected return on plan assets		(12,000)	(47,000)
Amortization of net (gain) loss		1,000	8,000
Net periodic pension cost		(3,000)	(2,000)
Cooperative contributions		0	$ 6,000	$ 20,000
Anticipated 2017 Contributions	$ 0	$ 9,000
Number of new employees eligible under the plan | employee	0

DISTRIBUTIONS TO MEMBERS (Detai

DISTRIBUTIONS TO MEMBERS (Details)	Feb. 16, 2017USD ($)$ / shares$ / bu	Mar. 31, 2017USD ($)	Mar. 31, 2016USD ($)
DISTRIBUTIONS TO MEMBERS
Member distributions paid | $	$ 2,215,139	$ 2,215,000	$ 3,098,000
Distribution to members per outstanding membership unit (in dollars per unit) | $ / shares	$ 0.143
Prior Year Approximate Distribution Paid to Memers, per Bushel | $ / bu	0.20
Distribution issued (as a percent of allocated income)	30.00%

COMMITMENTS AND CONTINGENCIES (

COMMITMENTS AND CONTINGENCIES (Details)	3 Months Ended
	Mar. 31, 2017USD ($)
COMMITMENTS AND CONTINGENCIES
Annual contractual payments to Cargill for procurement of corn	$ 92,000

SUBSEQUENT EVENTS (Details)

SUBSEQUENT EVENTS (Details) - Subsequent Event	Apr. 04, 2017USD ($)
Second Amended and Restated Facility Lease
SUBSEQUENT EVENTS
Annual rent payable in 2018 and 2019	$ 17,000,000
Annual rent payable in 2020	16,000,000
Annual rent payable in 2021 and 2022	15,500,000
Annual rent payable in 2023	$ 14,000,000
Automatic lease renewal term	1 year
Option Agreement
SUBSEQUENT EVENTS
Percentage of exclusive ownership under the Option Agreement that may be purchased	50.00%
Term when option can be purchased	4 years
Consent Agreement
SUBSEQUENT EVENTS
Remaining interest that may be purchased (as a percent)	1.00%
Minimum | Second Amended and Restated Facility Lease
SUBSEQUENT EVENTS
Infrastructure maintenance cost	$ 750,000
Minimum | Consent Agreement
SUBSEQUENT EVENTS
Base price	1,700,000
Maximum | Consent Agreement
SUBSEQUENT EVENTS
Base price	$ 1,300,000
Capital adjustment amount (as a percent)	1.00%