Exhibit 99(a)
BIG RIVER RESOURCES, LLC
CONSOLIDATED FINANCIAL STATEMENTS
Years EndedDecember 31, 2013 and 2012
CHRISTIANSON & ASSOCIATES, PLLP
Certified Public Accountants and Consultants
Willmar, Minnesota
TABLE OF CONTENTS
INDEPENDENT AUDITOR’S REPORT
To the Board of Directors
Big River Resources, LLC
West Burlington, Iowa
We have audited the accompanying consolidated financial statements ofBig River Resources, LLC(an Iowa limited liability company), which comprise the consolidated balance sheets as of December 31, 2013 and 2012 and the related consolidated statements of operations, members’ equity, and cash flows for the years then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position ofBig River Resources, LLCas of December 31, 2013 and 2012 and the results of its operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
CHRISTIANSON & ASSOCIATES, PLLP
Certified Public Accountants and Consultants
February 14, 2014
BIG RIVER RESOURCES, LLC
CONSOLIDATED BALANCE SHEETS
December 31, 2013 and 2012
| | 2013 | | | 2012 | |
| ASSETS | | | | | | |
| | | | | | | |
| CURRENT ASSETS | | | | | | | | |
| Cash and cash equivalents | | $ | 66,126,647 | | | $ | 22,127,817 | |
| Receivables | | | 35,721,528 | | | | 30,084,594 | |
| Inventories | | | 52,274,728 | | | | 78,864,432 | |
| Prepaid expenses | | | 1,636,184 | | | | 1,578,818 | |
| Purchase advance on contracts | | | 883,548 | | | | — | |
| Derivative instruments | | | 7,635,696 | | | | 7,223,158 | |
| | | | | | | | | |
| TOTAL CURRENT ASSETS | | | 164,278,331 | | | | 139,878,819 | |
| | | | | | | | | |
| PROPERTY AND EQUIPMENT | | | | | | | | |
| Land and land improvements | | | 41,458,998 | | | | 41,458,998 | |
| Building structure | | | 78,457,946 | | | | 78,457,946 | |
| Grain equipment | | | 43,559,089 | | | | 43,420,966 | |
| Process equipment | | | 322,734,855 | | | | 322,265,389 | |
| Other equipment | | | 9,659,421 | | | | 9,438,351 | |
| Construction in progress | | | 5,409,868 | | | | 216,697 | |
| | | | 501,280,177 | | | | 495,258,347 | |
| Accumulated depreciation | | | (166,320,254 | ) | | | (131,153,588 | ) |
| | | | 334,959,923 | | | | 364,104,759 | |
| | | | | | | | | |
| OTHER ASSETS | | | | | | | | |
| Investments | | | 12,651,081 | | | | 9,843,490 | |
| Deposits | | | 200,000 | | | | 200,000 | |
| Notes receivable | | | 117,846 | | | | 292,351 | |
| Financing costs, net of amortization | | | 955,242 | | | | 1,362,365 | |
| | | | 13,924,169 | | | | 11,698,206 | |
| | | | | | | | | |
| TOTAL ASSETS | | $ | 513,162,423 | | | $ | 515,681,784 | |
See notes to consolidated financial statements.
BIG RIVER RESOURCES, LLC
CONSOLIDATED BALANCE SHEETS
December 31, 2013 and 2012
| | | 2013 | | | 2012 | |
| LIABILITIES AND MEMBERS’ EQUITY | | | | | | | | |
| | | | | | | | | |
| CURRENT LIABILITIES | | | | | | | | |
| Checks written in excess of funds on deposit | | $ | 2,070,436 | | | $ | 2,588,966 | |
| Payables | | | | | | | | |
| Trade | | | 34,327,008 | | | | 42,446,419 | |
| General | | | 10,418,220 | | | | 8,086,876 | |
| Construction | | | 1,426,354 | | | | — | |
| Accrued expenses | | | 6,987,480 | | | | 3,895,236 | |
| Deferred sales | | | — | | | | 6,849,007 | |
| Current maturities of long-term debt | | | 13,539,227 | | | | 26,998,477 | |
| | | | | | | | | |
| TOTAL CURRENT LIABILITIES | | | 68,768,725 | | | | 90,864,981 | |
| | | | | | | | | |
| LONG-TERM DEBT, less current maturities | | | 12,503,364 | | | | 87,301,070 | |
| | | | | | | | | |
| MEMBERS’ EQUITY | | | | | | | | |
| Members’ capital | | | 386,845,155 | | | | 308,508,860 | |
| Noncontrolling interests | | | 45,045,179 | | | | 29,006,873 | |
| | | | 431,890,334 | | | | 337,515,733 | |
| | | | | | | | | |
| TOTAL LIABILITIES AND MEMBERS’ EQUITY | | $ | 513,162,423 | | | $ | 515,681,784 | |
See notes to consolidated financial statements.
BIG RIVER RESOURCES, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 2013 and 2012
| | | 2013 | | | 2012 | |
| | | | | | | |
| SALES | | $ | 1,292,119,994 | | | $ | 1,135,955,535 | |
| | | | | | | | | |
| COST OF SALES | | | 1,167,793,125 | | | | 1,115,304,657 | |
| | | | | | | | | |
| GROSS PROFIT | | | 124,326,869 | | | | 20,650,878 | |
| | | | | | | | | |
| OPERATING EXPENSES | | | 17,239,159 | | | | 14,128,944 | |
| | | | | | | | | |
| INCOME FROM OPERATIONS | | | 107,087,710 | | | | 6,521,934 | |
| | | | | | | | | |
| OTHER INCOME (EXPENSES) | | | | | | | | |
| Interest expense | | | (3,704,145 | ) | | | (6,264,357 | ) |
| Investment income | | | 4,459,766 | | | | 4,900,699 | |
| Other income (expense) | | | 29,164 | | | | (103,683 | ) |
| | | | 784,785 | | | | (1,467,341 | ) |
| | | | | | | | | |
| NET INCOME | | | 107,872,495 | | | | 5,054,593 | |
| | | | | | | | | |
| NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | | | (17,143,578 | ) | | | (2,255,381 | ) |
| | | | | | | | | |
| NET INCOME ATTRIBUTABLE TO BIG RIVER RESOURCES, LLC MEMBERS | | $ | 90,728,917 | | | $ | 2,799,212 | |
See notes to consolidated financial statements.
BIG RIVER RESOURCES, LLC
CONSOLIDATED STATEMENTS OF MEMBERS’ EQUITY
Years Ended December 31, 2013 and 2012
| | | Members’
Equity | | | Noncontrolling Interests | |
| | | | | | | |
| Balance - December 31, 2011 | | $ | 328,429,511 | | | $ | 33,223,954 | |
| | | | | | | | | |
| Distributions to members | | | (22,719,863 | ) | | | (6,472,462 | ) |
| | | | | | | | | |
| Net income | | | 2,799,212 | | | | 2,255,381 | |
| | | | | | | | | |
| Balance - December 31, 2012 | | | 308,508,860 | | | | 29,006,873 | |
| | | | | | | | | |
| Capital contributions | | | — | | | | 250,000 | |
| | | | | | | | | |
| Distributions to members | | | (12,392,622 | ) | | | (1,355,272 | ) |
| | | | | | | | | |
| Net income | | | 90,728,917 | | | | 17,143,578 | |
| | | | | | | | | |
| Balance - December 31, 2013 | | $ | 386,845,155 | | | $ | 45,045,179 | |
See notes to consolidated financial statements.
BIG RIVER RESOURCES, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2013 and 2012
| | | 2013 | | | 2012 | |
| OPERATING ACTIVITIES | | | | | | | | |
| Net income | | $ | 90,728,917 | | | $ | 2,799,212 | |
| Charges to net income not affecting cash and cash equivalents | | | | | | | | |
| Depreciation and amortization | | | 35,594,561 | | | | 35,096,289 | |
| Loss (gain) on derivative instruments | | | (16,223 | ) | | | 14,563,092 | |
| Investment earnings | | | (2,807,591 | ) | | | (2,508,338 | ) |
| Noncontrolling interest in subsidiaries’ gain | | | 17,143,578 | | | | 2,255,381 | |
| Decrease (increase) in current assets | | | | | | | | |
| Receivables | | | (5,636,934 | ) | | | (16,804,761 | ) |
| Inventories | | | 26,589,704 | | | | 4,450,933 | |
| Net cash paid onderivative instruments | | | (396,315 | ) | | | (7,829,703 | ) |
| Prepaid expenses | | | (57,366 | ) | | | 241,624 | |
| Purchase advance on contracts | | | (883,548 | ) | | | — | |
| Increase (decrease) in current liabilities | | | | | | | | |
| Payables | | | (5,788,067 | ) | | | 15,336,962 | |
| Accrued expenses | | | 3,092,244 | | | | (2,238,816 | ) |
| Deferred sales | | | (6,849,007 | ) | | | 4,100,884 | |
| | | | | | | | | |
| NET CASH PROVIDED BY OPERATING ACTIVITIES | | | 150,713,953 | | | | 49,462,759 | |
| | | | | | | | | |
| INVESTING ACTIVITIES | | | | | | | | |
| Purchase of property and equipment | | | (4,616,248 | ) | | | (1,697,219 | ) |
| Net payments received on notes receivable | | | 174,505 | | | | — | |
| | | | | | | | | |
| NET CASH USED IN INVESTING ACTIVITIES | | | (4,441,743 | ) | | | (1,697,219 | ) |
| | | | | | | | | |
| FINANCING ACTIVITIES | | | | | | | | |
| Payments for financing costs | | | — | | | | (170,100 | ) |
| Principal payments on Iong-term debt | | | (20,827,773 | ) | | | (20,956,684 | ) |
| Net payments on long-term revolving loan | | | (67,429,183 | ) | | | (4,129,991 | ) |
| Checks written in excess of funds on deposit | | | (518,530 | ) | | | 1,326,900 | |
| Capital contributions | | | 250,000 | | | | — | |
| Distributions to noncontrolling interests | | | (1,355,272 | ) | | | (6,472,462 | ) |
| Distributions to members | | | (12,392,622 | ) | | | (22,719,863 | ) |
| | | | | | | | | |
| NET CASH USED IN FINANCING ACTIVITIES | | | (102,273,380 | ) | | | (53,122,200 | ) |
| | | | | | | | | |
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | | | 43,998,830 | | | | (5,356,660 | ) |
| | | | | | | | | |
| CASH AND CASH EQUIVALENTS - beginning of year | | | 22,127,817 | | | | 27,484,477 | |
| | | | | | | | | |
| CASH AND CASH EQUIVALENTS - end of year | | $ | 66,126,647 | | | $ | 22,127,817 | |
See notes to consolidated financial statements.
BIG RIVER RESOURCES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS- Big River Resources, LLC, its wholly-owned subsidiaries, Big River Resources West Burlington, LLC (West Burlington), Big River Resources Galva, LLC (Galva), Big River Resources Boyceville, LLC (Boyceville), its 50% joint venture Big River Resources Grinnell, LLC (Grinnell), its 50.5% ownership in Big River United Energy, LLC, and its 51% joint venture in Big River Prairie Gold, LLC (collectively, the company) are limited liability companies.
West Burlington owns and operates an ethanol plant located in West Burlington, Iowa with an annual production nameplate capacity of 92 million gallons of denatured ethanol. The company produces ethanol, non-food oil and distillers grains for commercial sales throughout the United States. The company operates grain elevators near Monmouth and Edgington, Illinois which buy corn and soybeans from farmers as a reserve corn supply to the ethanol operations in West Burlington, Iowa and Galva, Illinois and for soybean sales throughout the United States.
Galva owns and operates a 100 million gallon annual production nameplate capacity ethanol plant near Galva, Illinois. The company produces ethanol, distillers grains and non-food oil for commercial sales throughout the United States and exports.
Boyceville owns and operates an ethanol plant located in Boyceville, Wisconsin with an annual production nameplate capacity of 55 million gallons of denatured ethanol. The company produces ethanol, distillers grains, and non-food oil for commercial sales throughout the United States.
Grinnell is a development stage company that was organized to construct an ethanol plant near Grinnell, Iowa with a planned annual nameplate capacity of 100 million gallons. As of December 31, 2013, the company has no formal plans to develop the plant.
Big River United Energy, LLC owns and operates an ethanol plant located in Dyersville, Iowa with an annual production nameplate capacity of 100 million gallons of denatured ethanol. The company produces ethanol, distillers grains and non-food oil for commercial sales throughout the United States.
Big River Prairie Gold, LLC is a development stage company that was organized with the intention of developing and operating a zein manufacturing facility with an estimated production capacity of 600,000 pounds of zein protein near Galva, Illinois. The company is in the development stage with its efforts being principally devoted to organizational activities and construction of the facility.
BIG RIVER RESOURCES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
PRINCIPLES OF CONSOLIDATION - The accompanying consolidated financial statements include the accounts of Big River Resources, LLC, and its subsidiaries. All significant intercompany account balances and transactions have been eliminated. The company accounts for its investment in Grinnell on a consolidated basis because it is a variable interest entity and the company is its primary beneficiary.
FISCAL REPORTING PERIOD - The company has adopted a fiscal year ending December 31 for reporting financial operations.
USE OF ESTIMATES - The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates.
REVENUE RECOGNITION - Revenues from the production of ethanol, distillers grains, and non-food oil are recorded at the time title to the goods and all risks of ownership transfer to customers and the settlement price is realizable. Denatured ethanol, distillers grains and non-food oil are generally shipped FOB shipping point. Undenatured ethanol is generally shipped FOB destination.
CASH AND CASH EQUIVALENTS - The company considers all highly liquid investments with a maturity of three months or less to be cash equivalents.
CONCENTRATIONS OF CREDIT RISK-The company extends credit to its customers in the ordinary course of business. The company performs periodic credit evaluations of its customers and generally does not require collateral. The company’s operations may vary with the volatility of the commodity markets. The company’s cash balances are maintained in bank depositories and periodically exceed federally insured limits.
RECEIVABLES- The company has engaged the services of national marketers to sell substantially all of its ethanol and a portion of its distillers production. The marketers handle nearly all sales functions including billing, logistics, and sales pricing. Once product is shipped, the marketers assume the risk of payment from the consumer and handle all delinquent payment issues. The company markets its own grain, local distillers grains and non-food oil. The company generally bills weekly with payments due within 10 days of the invoice date, and considers accounts older than 30 days from the stated due date to be delinquent and would generally initiate collection procedures. If the collection procedures have not provided collection within one year of the invoice date, management generally will write off the account as a bad debt. Trade receivables are recorded net of anticipated uncollectible amounts. As of December 31, 2013 and 2012, there was no allowance for uncollectible amounts.
BIG RIVER RESOURCES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
INVENTORIES - The company’s method of accounting for ethanol, ethanol production in process, co-products, corn inventories, and soybeans and corn held at the elevators is valued at net realizable value (NRV). The parts, chemicals and ingredients inventories are recorded at the lower of cost (average cost method) or market method (LCM).
PROPERTY AND EQUIPMENT -Property and equipment are stated at the lower of cost or fair value. Significant additions and betterments are capitalized with expenditures for maintenance, repairs and minor renewals being charged to operations as incurred.
Depreciation is computed using the straight-line method over the following estimated useful lives:
| Land improvements | 15-20 years |
| Building structure | 5-20 years |
| Grain equipment | 5-20 years |
| Process equipment | 5-20 years |
| Other equipment | 3-15 years |
Construction in progress includes the following projects, and will be depreciated using the straight-line method over various estimated useful lives once the assets are placed into service:
Grain drying and handling facility at Big River Resources West Burlington, LLC. The estimated cost of the project is approximately $9,498,000 which is expected to be completed June 2014.
Grain drying and handling facility at Big River United Energy, LLC. The estimated cost of the project is approximately $7,145,000 which is expected to be completed September 2014.
Development of the zein manufacturing facility for Big River Prairie Gold, LLC. The estimated cost of the project is approximately $12,050,000 which is expected to be completed November 2014.
The company reviews its property and equipment for impairment whenever events indicate that the carrying amount of the asset may not be recoverable. An impairment loss is recorded when the sum of the future cash flows is less than the carrying amount of the asset. The company did not recognize any long-lived asset impairment loss for the years ended December 31, 2013 and 2012.
BIG RIVER RESOURCES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
DERIVATIVE INSTRUMENTS -The company recognizes its derivatives in the balance sheet and measures these instruments 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. Derivatives qualify for treatment as hedges when there is a high correlation between the change in fair value of the derivative instrument and the related change in value of the underlying hedged item.
Furthermore, the company must designate the hedging instruments based upon the exposure being hedged as a fair value hedge or a cash flow hedge. The company’s derivatives are not designated as hedges for accounting purposes. For derivative instruments that are not accounted for as hedges, the change in fair value is recorded through earnings in the period of change.
The company records its forward purchase and sales commitments at fair value as derivative instruments which the company believes to represent more accurate financial reporting. These contracts are marked to market as an asset or liability and a corresponding gain or loss is recognized for the change in market value.
INVESTMENTS-Investments include stock in a lending cooperative bank and in the company’s cooperative ethanol marketer and membership units in an ethanol plant located in Mitchell County, Iowa. The company records the investments in the cooperative bank and ethanol marketer at cost which includes its share of the allocated patronage equities. The membership units in the ethanol plant are recorded at cost.
DEPOSITS - Deposits include monies deposited for a distilled spirits bond and is recorded at the scheduled recoverable value.
NOTES RECEIVABLE- The company has sold real estate properties and provided long term financing to the purchasers in the form of notes which are carried as other non-current assets. The notes are on a 30 year amortization schedule and bear interest at 5.5%. The current portion of these notes as of December 31, 2013 and 2012 is approximately $3,800 and $7,600, respectively, which is included in receivables. In 2013, one of the notes receivable was paid off.
FINANCING COSTS- Financing costs are recorded at cost and include expenditures directly related to securing debt financing. Amortization is computed using the straight-line method over the loans’ terms.
BIG RIVER RESOURCES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
DEFERRED SALES - The company receives advances for ethanol shipments based on provisional pricing prior to the recognition of the sale. These advances are carried as current liabilities on the balance sheet until the criteria to recognize the revenue is met and the sale is recognized. As of December 31, 2013 and 2012, the company has received $0 and $6,849,007 respectively in advances for shipments which have not met the revenue recognition criteria.
NONCONTROLLING INTERESTS - Noncontrolling interests represents the noncontrolling partners’ share of the equity and income of Big River Resources Grinnell, LLC, Big River United Energy, LLC, and Big River Prairie Gold, LLC. Noncontrolling interests are classified in the consolidated statements of operations as a part of net income and the accumulated amount of noncontrolling interests are classified in the consolidated balance sheets as a part of members’ equity.
FAIR VALUE OF FINANCIAL INSTRUMENTS -Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market. The fair value of an asset or liability is determined based on a hierarchy. The fair value hierarchy has three levels of inputs, both observable and unobservable.
Fair value is determined using the lowest possible level of input. Level 1 inputs include quoted market prices in an active market for identical assets or liabilities. Level 2 inputs are market data, other than Level 1, that are observable either directly or indirectly. Level 2 inputs include quoted market prices for similar assets or liabilities, quoted market prices in an inactive market, and other observable information that can be corroborated by market data. Level 3 inputs are unobservable and corroborated by little or no market data.
Except for those assets and liabilities which are required by authoritative accounting guidance to be recorded at fair value in its balance sheets, the company has elected not to record any other assets or liabilities at fair value. No events occurred during the years ended December 31, 2013 and 2012 that would require adjustment to the recognized balances of assets or liabilities which are recorded at fair value on a nonrecurring basis.
The carrying value of cash, accounts receivable, accounts payable and accrued expenses approximates fair value. It is not currently practicable to estimate the fair value of the debt financing. Because these agreements contain certain unique terms, covenants, and restrictions, as discussed in Note F, there are no readily determinable similar instruments on which to base an estimate of fair value.
BIG RIVER RESOURCES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
INCOME TAXES - The company is organized as a limited liability company under state law and is treated as a partnership for income tax purposes. Under this type of organization, the company’s earnings pass through to the members and are taxed at the member level. The company files income tax returns in the U.S. federal jurisdiction and in the states of Iowa, Illinois and Wisconsin. As of December 31, 2013, the company is no longer subject to U.S. federal and state income tax examinations by tax authorities for tax years before 2010.
NOTE B: INVENTORIES
| | | 2013 | | | 2012 | |
| | | | | | | |
| Ethanol | | $ | 17,109,470 | | | $ | 23,820,559 | |
| Production in process | | | 7,983,352 | | | | 8,900,880 | |
| Distiller grains | | | 1,915,102 | | | | 2,357,447 | |
| Corn | | | 11,253,281 | | | | 18,407,059 | |
| Non-food oil | | | 138,427 | | | | 184,801 | |
| Spare parts | | | 5,123,759 | | | | 4,566,848 | |
| Chemicals and ingredients | | | 1,694,139 | | | | 1,602,529 | |
| Corn and soybeans held at elevators | | | 7,057,198 | | | | 19,024,309 | |
| | | $ | 52,274,728 | | | $ | 78,864,432 | |
NOTE C: DERIVATIVE INSTRUMENTS
The company enters into derivative transactions to hedge its exposure to commodity price fluctuations. The company does not enter into derivative transactions for trading or speculative purposes.
The company hedges substantially all of its corn, soybeans, ethanol, and co-product inventories as well as its future purchase and sales contracts to the extent considered necessary for minimizing risk from market price fluctuations. In connection with the execution of forward contracts, the company normally elects to create a hedging relationship by executing an exchange traded futures contract as an offsetting position. In this situation, the forward contract is valued at market price until delivery is made against the contract.
The amounts recorded on the balance sheet represent the current fair market value of the instruments as determined by the broker with adjustments made by management for local basis and cash margin deposits. The company has categorized the cash flows related to the derivative activities in the same category as the item being hedged. Management expects all open positions outstanding as of December 31, 2013 to be realized within the next fiscal year.
BIG RIVER RESOURCES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE C: DERIVATIVE INSTRUMENTS (continued)
The open derivative instruments as of December 31, 2013 are as follows:
| Ethanol Plants | | | | |
| | | | | |
| Forward purchase contracts | | | | |
| Corn | | 9,883,000 | | Bu |
| | | | | |
| Forward sales contracts | | | | |
| Ethanol | | 1,795,000 | | Gal |
| Distillers grains | | 170,000 | | Ton |
| Non-food oil | | 5,611,000 | | Pounds |
| | | | | |
| Positions on the Chicago Board of Trade | | | �� | |
| Corn (short) | | 7,345,000 | | Bu |
| Corn (long) | | 390,000 | | Bu |
| Ethanol (short) | | 18,900,000 | | Gal |
| | | | | |
| Grain Elevators | | | | |
| | | | | |
| Forward purchase contracts | | | | |
| Corn | | 336,000 | | Bu |
| Soybeans | | 52,000 | | Bu |
| | | | | |
| Forward sales contracts | | | | |
| Corn | | 296,000 | | Bu |
| Soybeans | | 50,000 | | Bu |
| | | | | |
| Positions on the Chicago Board of Trade | | | | |
| Corn (short) | | 845,000 | | Bu |
| Corn (long) | | 80,000 | | Bu |
| Soybeans (short) | | 275,000 | | Bu |
| Soybeans (long) | | 190,000 | | Bu |
BIG RIVER RESOURCES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE C: DERIVATIVE INSTRUMENTS (continued)
The following tables provide details regarding the company’s derivative financial instruments at December 31, 2013 and 2012, none of which are designated as hedging instruments:
| | | 2013 | |
| | | | |
| | | Balance Sheet location | | Assets | | | Liabilities | |
| Commodity contracts | | Derivative instruments | | $ | 7,635,696 | | | $ | — | |
| | | Statement of
Operations location | | Gain recognized for the year
ended December 31, 2013 | |
| Commodity contracts | | Cost of sales | | $ | 16,223 | |
| | | 2012 | |
| | | | |
| | | Balance Sheet location | | Assets | | | Liabilities | |
| Commodity contracts | | Derivative instruments | | $ | 7,223,158 | | | $ | — | |
| | | Statement of
Operations location | | Loss recognized for the year
ended December 31, 2012 | |
| Commoditycontracts | | Cost of sales | | $ | (14,563,092 | ) |
NOTE D: FAIR VALUE MEASUREMENTS
The following tables provide information on those assets measured at fair value on a recurring basis as of December 31, 2013 and 2012:
| | | 2013 | |
| | | | |
| | | Carrying Value
in Balance
Sheet at
December 31,
2013 | | | Quoted
prices in
active
markets
(Level 1) | | | Significant
other
observable
inputs
(Level 2) | | | Significant
unobservable
inputs
(Level 3) | |
| Financial Assets | | | | | | | | | | | | |
| Derivative instruments | | $ | 7,635,696 | | | $ | 3,987,988 | | | $ | 3,647,708 | | | $ | — | |
BIG RIVER RESOURCES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE D: FAIR VALUE MEASUREMENTS (continued)
| | | 2012 | |
| | | | |
| | | Carrying Value
in Balance
Sheet at
December 31,
2012 | | | Quoted
prices in
active
markets
(Level 1) | | | Significant
other
observable
inputs
(Level 2) | | | Significant
unobservable
inputs
(Level 3) | |
| Financial Assets | | | | | | | | | | | | |
| Derivative instruments | | $ | 7,223,158 | | | $ | 5,824,832 | | | $ | 1,398,326 | | | $ | — | |
The company determines the fair value of the derivative instruments shown in the tables above by obtaining fair value measurements from an independent pricing service. The fair value measurements for Level 1 inputs consider observable data that may include dealer quotes and live exchange trading levels. The fair value measurements for Level 2 inputs consider observable data that may include dealer quotes and live exchange trading levels adjusted for local basis.
NOTE E: SHORT-TERM DEBT
West Burlington
The company has a revolving line of credit with CoBank. The company may advance up to a maximum of $25 million until expiration on August 1, 2014. Interest is paid in accordance with one or more of the following interest rate options: a rate equal to 2.95% above the rate quoted by the British Bankers Association on the one-month LIBOR index, an agent quoted fixed per annum rate or a fixed rate of LIBOR plus 2.95% (3.12% at December 31, 2013). The company shall select the applicable rate option at the time of each loan request. Advances under the agreement are limited based on the borrowing base report. The loan is secured by substantially all assets and a mortgage on real estate.
In addition, the company agrees to pay a monthly commitment fee at a rate of 0.30% of the average daily unused portion of the commitment. As of December 31, 2013 and 2012, the company has no amounts drawn under this line of credit.
Galva
The company has a revolving line of credit with CoBank. The company can advance up to a maximum of $7,500,000 until expiration on October 1, 2014. Interest is paid in accordance with one or more of the following interest rate options: a rate equal to 2.95% above the rate quoted by the British Bankers Association on the one-month LIBOR index, an agent quoted fixed per annum rate or a fixed rate of LIBOR plus 2.95% (3.12% as of December 31, 2013). The company shall select the applicable rate option at the time of each loan request. Advances under the agreement are limited based on the borrowing base report. The loan is secured by substantially all assets and a mortgage on real estate.
BIG RIVER RESOURCES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE E: SHORT-TERM DEBT (continued)
Galva (continued)
In addition, the company agrees to pay a monthly commitment fee at a rate of 0.30% of the average daily unused portion of the commitment. As of December 31, 2013 and 2012, the company has no amounts drawn under this line of credit.
Boyceville
The company has a revolving line of credit with Agstar Financial Services. The company can advance up to a maximum of $10,000,000 until expiration on August 1, 2014. Interest is paid in accordance with one or more of the following interest rate options: a rate equal to 3.25% above the rate quoted by the British Bankers Association on the one-month LIBOR index, an agent quoted fixed per annum rate or a fixed rate of LIBOR plus 3.25% (3.42% at December 31, 2013). The company shall select the applicable rate option at the time of each loan request. Advances under the agreement are limited based on the borrowing base report. The loan is secured by substantially all assets and a mortgage on real estate.
In addition, the company agrees to pay a monthly commitment fee at a rate of 0.40% of the average daily unused portion of the commitment. As of December 31, 2013 and 2012, the company has no amounts drawn under this line of credit.
Big River United Energy, LLC
The company has a revolving line of credit with CoBank. The company may advance up to a maximum of $25 million until expiration on October 1, 2014. Interest is paid in accordance with one or more of the following interest rate options: a rate equal to 2.90% above the rate quoted by the British Bankers Association on the one-month LIBOR index, an agent quoted fixed per annum rate or a fixed rate of LIBOR plus 2.90% (3.07% at December 31, 2013). The company shall select the applicable rate option at the time of each loan request. Advances under the agreement are limited based on the borrowing base report. The loan is secured by substantially all assets and a mortgage on real estate.
In addition, the company agrees to pay a monthly commitment fee at a rate of 0.30% of the average daily unused portion of the commitment. As of December 31, 2013 and 2012, the company has no amounts drawn under this line of credit.
BIG RIVER RESOURCES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE F: LONG-TERM DEBT
| | | 2013 | | | 2012 | |
| Promissory note payable to CHS Capital LLC due in monthly installments of $83,333 plus interestat a variable rate of 5% plus the one-month LIBOR(currently 5.169%), maturing December 2016,secured by personal property including investments. | | $ | 8,000,008 | | | $ | 9,000,004 | |
| | | | | | | | | |
| West Burlington | | | | | | | | |
| Term loan, further terms detailed below. | | | 14,250,000 | | | | 23,250,000 | |
| | | | | | | | | |
| Non-interest bearing note payable to Eastern IowaLight and Power payable at $4,167 per monthbeginning in January 2010 until January 2018secured byletter of credit, paid off during 2013. | | | — | | | | 250,000 | |
| | | | | | | | | |
| Non-interest bearing note payable to Eastern Iowa Light and Power payable at $3,704 per month until October 2014, secured by letter of credit, paid off during 2013. | | | — | | | | 77,777 | |
| | | | | | | | | |
| Galva | | | | | | | | |
| Term loan, further terms detailed below. | | | 3,539,227 | | | | 14,039,227 | |
| | | | | | | | | |
| Revolving term loan, further terms detailed below. | | | — | | | | 7,582,068 | |
| | | | | | | | | |
| Boyce ville | | | | | | | | |
| Revolving term loan, further terms detailed below. | | | — | | | | 10,977,408 | |
| | | | | | | | | |
| Revolving term loan 2, further terms detailed below. | | | — | | | | 4,000,000 | |
| | | | | | | | | |
| Big River United Energy, LLC | | | | | | | | |
| Revolving term loan, further terms detailed below. | | | 253,356 | | | | 42,404,032 | |
| | | | | | | | | |
| Revolving term loan, further terms detailed below. | | | — | | | | 2,719,031 | |
| | | | 26,042,591 | | | | 114,299,547 | |
| Current maturities | | | (13,539,227 | ) | | | (26,998,477 | ) |
| | | $ | 12,503,364 | | | $ | 87,301,070 | |
BIG RIVER RESOURCES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE F: LONG-TERM DEBT (continued)
Long-term debt maturities are as follows:
| Years Ending December 31, | | | | |
| 2014 | | $ | 13,539,227 | |
| 2015 | | | 6,249,992 | |
| 2016 | | | 6,000,016 | |
| 2017 | | | — | |
| 2018 | | | 253,356 | |
| | | $ | 26,042,591 | |
West Burlington
The company entered into a credit agreement with CoBank which includes a term loan for $18,750,000 and revolving term loans of $16,000,000 and $4,000,000. The loans are secured by substantially all assets and a mortgage on real estate.
For each of the loans, the company is required to pay interest monthly on the unpaid balance in accordance with one or more of the following interest rate options: a rate equal to 2.95% above the rate quoted by the British Bankers Association on the one-month LIBOR index, an agent quoted fixed per annum rate or a fixed rate of LIBOR plus 2.95% (3.12% at December 31, 2013). The company shall select the applicable rate option at the time of each loan request.
The loans described above are subject to a common credit agreement with various financial and non-financial covenants that limit distributions, and include net worth and working capital requirements. As of December 31, 2013 and 2012, the company was in compliance with all financial and non-financial covenants.
Specific terms for each loan are as follows:
Term loan
The company is required to make 12 quarterly principal installments of $2,250,000 beginning in May 2012 until February 2015 with a final installment in an amount equal to the remaining unpaid balance in May 2015.
Revolving term loans
For the $16,000,000 revolving term loan, the company is required to make semi-annual principal payments beginning on November 2015 until May 2017 of a reducing commitment amount as follows:
| Payment Date | | Commitment
Amount | |
| November 1, 2015 | | $ | 12,000,000 | |
| May 1, 2016 | | | 8,000,000 | |
| November 1, 2016 | | | 4,000,000 | |
| May 1, 2017 | | | — | |
BIG RIVER RESOURCES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE F: LONG-TERM DEBT (continued)
West Burlington (continued)
For the $4,000,000 revolving term loan, the company is required to repay the outstanding loan balance at the time the commitment expires on November 1, 2017.
In addition, on each of the revolving term loans, the company agrees to pay a monthly commitment fee at a rate of 0.50% of the average daily unused portion of the commitment. As of December 31, 2013 and 2012, the company has no amounts outstanding on the revolving term loans.
Galva
The company entered into a credit agreement with CoBank to partially finance the construction of the plant. Under the credit agreement, the lender has provided a term loan for $70,000,000 and a revolving term loan of $20,000,000. The loans are secured by substantially all assets and mortgage on real estate.
For each of the loans, the company is required to pay interest monthly on the unpaid balance in accordance with one or more of the following interest rate options: a rate equal to 2.95% above the rate quoted by the British Bankers Association on the one-month LIBOR index, an agent quoted fixed per annum rate or a fixed rate of LIBOR plus 2.95% (3.12% as of December 31, 2013). The company shall select the applicable rate option at the time of each loan request.
The loans described above are subject to a common credit agreement with various financial and non-financial covenants that limit distributions, and include net worth and working capital requirements. As of December 31, 2013 and 2012, the company was in compliance with all financial and non-financial covenants.
Specific terms for each loan are as follows:
Term loan
The company is required to make quarterly principal installments of $2,625,000 which began in December 2009 until March 2014 with a final installment in an amount equal to the remaining unpaid balance in June 2014
Revolving term loan
The company is required to repay the outstanding loan balance at the time the commitment expires on June 1, 2016. In addition, the company agrees to pay a monthly commitment fee at a rate of 0.50% of the average daily unused portion of the commitment.
BIG RIVER RESOURCES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE F: LONG-TERM DEBT (continued)
Boyceville
The company entered into a credit agreement with AgStar Financial Services which includes revolving term loans of $25,500,000 and $4,000,000. The loans are secured by substantially all assets and a mortgage on real estate.
The loans described above are subject to a common credit agreement with various financial and non-financial covenants that limit distributions, require minimum debt service coverage, net worth and working capital requirements. As of December 31, 2013 and 2012, the company was in compliance with all financial and non-financial covenants.
Specific terms for each loan are as follows:
The $25,500,000 revolving term loan requires the company to pay interest monthly on the unpaid balance in accordance with one or more of the following interest rate options: a rate equal to 3.5% above the rate quoted by the British Bankers Association on the one-month LIBOR index, an agent quoted fixed per annum rate or a fixed rate of LIBOR plus 3.5% (3.67% at December 31, 2013). The company shall select the applicable rate option at the time of each loan request. The company is required to make quarterly principal payments beginning on October 20, 2012 until July 20, 2017 reducing the commitment available under the agreement by $1,500,000 each quarter. In December 2013, the company made a prepayment on this revolving term loan which can be drawn against for future working capital in an amount not to exceed $21,000,000 less the required quarterly principal payments. In December 2012, the company made a $13,522,592 prepayment which was drawn on for future working capital.
The $4,000,000 revolving term loan 2 requires the company to pay interest monthly on the unpaid balance based on a rate equal to 3.5% above the rate quoted by the British Bankers Association on the one-month LIBOR index. This note was paid in full and cancelled in July 2013.
In addition, on each of the revolving term loans, the company agrees to pay monthly commitment fee at a rate of 0.65% of the average daily unused portion of the commitment.
Big River United Energy, LLC
The company has a credit agreement with CoBank which includes revolving term loans of $44,000,000 and $6,000,000. The loans are secured by substantially all assets and a mortgage on real estate.
BIG RIVER RESOURCES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE F: LONG-TERM DEBT (continued)
Big River United Energy, LLC (continued)
For each of the revolving term loans, the company is required to pay interest monthly on the unpaid balance in accordance with one or more of the following interest rate options: a rate equal to 3.15% above the rate quoted by the British Bankers Association on the one-month LIBOR index, an agent quoted fixed per annum rate or a fixed rate of LIBOR plus 3.15% (3.32% at December 31, 2013). The company shall select the applicable rate option at the time of each loan request.
The loans described above are subject to a common credit agreement with various financial and non-financial covenants that limit distributions, and include net worth and working capital requirements. As of December 31, 2013 and 2012, the company was in compliance with all financial and non-financial covenants.
Specific terms for each loan are as follows:
For the $44,000,000 revolving term loan, the company is required to repay the outstanding loan balance as of the maturity date of June 1, 2018. The available balance has a reducing commitment amount of $4,000,000 every six months beginning June 2013 until the maturity date. In 2013, the company made a prepayment on this revolving term loan which can be drawn against for future working capital in an amount not to exceed $36,000,000 less the required principal payments.
For the $6,000,000 revolving term loan, the company is required to repay the outstanding loan balance at the time the commitment expires on December 1, 2018.
In addition, the company agrees to pay a monthly commitment fee at a rate of 0.60% of the average daily unused portion of the commitment on each of the revolving term loans.
NOTE G: MEMBERS’ EQUITY
The company was formed on March 6, 2006 as an Iowa Limited Liability Company and has a perpetual life. The company’s ownership is divided into four classes of units: Class A, B, C and D membership units. The profits and losses of the company will be allocated among the unit holders in proportion to the total units held. Distributions will be made to unit holders in proportion to the total units held. Each member is entitled to one vote for each unit held as to matters submitted to the membership.
The Class A member appoints eleven directors, Class B members appoint eight directors and Class C members appoint two directors to the board of directors. The total number of directors appointed by the Class A members shall increase by one director for each additional Class B, Class C or Class D director appointed under the terms of the operating agreement.
BIG RIVER RESOURCES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE G: MEMBERS’ EQUITY (continued)
As of December 31, 2013, there are eleven Class A, eight Class B and two Class C directors. Transfer of the units is restricted pursuant to the operating agreement and to the applicable tax and securities laws and requires approval of the board of directors.
As of December 31, 2013 and 2012, the company had 378 and 367 members and the following membership units issued, respectively:
| | | 2013 | | | 2012 | |
| Class A | | | 5,033.40 | | | | 5,033.40 | |
| Class B | | | 3,666.00 | | | | 3,666.00 | |
| Class C | | | 3,500.00 | | | | 3,500.00 | |
| Class D | | | 8,455.00 | | | | 8,455.00 | |
| | | | 20,654.40 | | | | 20,654.40 | |
NOTE H: SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
The following is a schedule of supplemental disclosure of cash flow information for the years ended December 31, 2013 and 2012:
| | | 2013 | | | 2012 | |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | | | | | | |
| Cash paid for interest | | $ | 3,866,244 | | | $ | 6,541,537 | |
| | | | | | | | | |
| SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES | | | | | | | | |
| Refinance of long-term debt borrowings | | $ | — | | | $ | 45,838,942 | |
| Accounts payable incurred for construction in progress | | $ | 1,426,354 | | | $ | — | |
NOTE I: CONCENTRATIONS
The company has ethanol marketing agreements with an unrelated party which cover the entire ethanol marketing for the company. The initial term of the agreement ended in August 2012 for Big River United Energy, LLC and will expire in January 2016 for all other facilities. The agreements automatically renew for one year terms thereafter, unless either party provides notice of non-renewal ninety days prior to the end of the term. The agreement requires payment of an agreed upon percentage of the net sales price as defined in the agreement.
BIG RIVER RESOURCES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE I: CONCENTRATIONS (continued)
The company has a co-products marketing agreement with an unrelated party which covers the entire distillers grain marketing for Big River United Energy, LLC. The initial term of the agreement ended August 2013 and will automatically renew for one year terms thereafter, unless either party provides a 90 day written notice of termination. The agreement requires payment of an agreed upon percentage of the net sales price as defined in the agreement.
The company has a distiller grains marketing agreement with an unrelated party which covers the entire non truck grains marketing for Big River Resources Galva, LLC. The agreement automatically renews for one year terms, unless either party provides notice of non-renewal ninety days prior to the end of the then-current term. The agreement requires payment of an agreed upon percentage of the net sales price as defined in the agreement.
The ethanol and co-products could be marketed by other marketers without any significant effect on operations. Receivables relating to sales under these agreements totaled $30,009,653 and $25,250,592 as of December 31, 2013 and 2012, respectively.
NOTE J: EMPLOYEE BENEFIT PLAN
The company has a defined contribution plan which covers full-time employees who meet age and length of service eligibility requirements. The company matches the participants’ contribution up to a maximum of 4% of wages. For the years ended December 31, 2013 and 2012, company matching contributions to the plan were $436,352 and $431,081, respectively.
NOTE K: LEASES
The company leases rail cars under long-term operating lease agreements expiring at various times through October 2019. The company is required to pay executory costs such as maintenance and insurance.
Minimum fixed future lease payments consist of:
| Years Ending December 31, | | | |
| 2014 | | $ | 5,080,055 | |
| 2015 | | | 4,592,760 | |
| 2016 | | | 4,577,410 | |
| 2017 | | | 4,163,460 | |
| 2018 | | | 3,917,285 | |
| Thereafter | | | 3,819,135 | |
| Total minimum future lease payments | $ | 26,150,105 | |
BIG RIVER RESOURCES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE K: LEASES (continued)
Total rent expense of $6,181,768 and $5,272,922 was incurred in 2013 and 2012, respectively.
NOTE L: RELATED PARTY TRANSACTIONS
The company purchases corn from the patrons of one of the members and the noncontrolling members of the company. The corn supply could be purchased from other suppliers without any significant effect on operations.
NOTE M: COMMITMENTS AND CONTINGENCIES
Substantially all of the companies’ facilities are subject to federal, state, and local regulations relating to the discharge of materials into the environment. Compliance with these provisions has not had, nor does management expect to have, any material effect upon operations. Management believes that the current practices and procedures for the control and disposition of such wastes will comply with the applicable federal and state requirements.
In addition to the forward contracts marked to market and identified as derivative instruments, the company had entered into unpriced forward ethanol sales contracts for delivery in 2014 of approximately 114,700,000 gallons.
Big River Resources United Energy, LLC has issued letters of credit totaling $1,716,426 through February 2014 as security to certain vendors and lenders. There are no amounts drawn against these letters of credit as of December 31, 2013.
In January 2010, GS Clean Tech Corp. filed a lawsuit against Big River Resources West Burlington, LLC in the U.S. District Court for infringement rights on its patent covering corn oil extraction technology. On July 1, 2009, Big River Resources Galva, LLC entered into a Corn Oil Tricanter Purchase and Installation Agreement with ICM, Inc. This agreement includes an indemnification clause that holds Big River Resources West Burlington, LLC and Big River Resources Galva, LLC harmless from all claims, liabilities, and costs including attorney fees arising out of the infringement of adversely owned patents. However, if GS Clean Tech Corp. were to prevail in this lawsuit and ICM, Inc. was not able to pay the claims, the company would be liable for any amounts not paid by ICM, Inc. under the indemnification clause. Due to this indemnification clause, the company does not expect to incur any costs related to the litigation and no liability has been recorded as of December 31, 2013.
BIG RIVER RESOURCES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE M: COMMITMENTS AND CONTINGENCIES (continued)
In October 2006, Big River Resources Galva, LLC entered into a development agreement with the City of Kewanee for the extension of the Enterprise Zone, to include land east of Galva upon which the company constructed the ethanol facility. The company is obligated to pay an amount equal to 20% of the gross value of the state use tax exemption that results from the purchase of any utility product, commodity or resource that such tax may be exempted from under the regulations of the enterprise zone before an extension and as it may be amended. Based on the estimated usage of natural gas at the time of the execution of the agreement, an amount of $160,000 per year is estimated to be payable in quarterly installments. The term of the agreement expires on December 31, 2017. For the years ended December 31, 2013 and 2012, the company made payments of $160,000 under this agreement.
The company has a sponsorship agreement which requires annual sponsorship payments totaling $375,000. The initial term of the agreement expires September 2015 and shall automatically renew for a single three year renewal term unless terminated by either party with a written notice of termination at least one hundred-eighty days before the end of the then-current term. The annual fee shall increase by $17,500 each subsequent year during the term of this agreement. For the years ended December 31, 2013 and 2012, the company incurred $427,500 and $410,000, respectively, under the sponsorship agreement.
NOTE N: SUBSEQUENT EVENTS
In preparing these financial statements, the company has evaluated events and transactions for potential recognition or disclosure through February 14, 2014, the date the financial statements were available to be issued.
SUPPLEMENTARY INFORMATION
INDEPENDENT AUDITOR’S REPORT ON SUPPLEMENTARY INFORMATION
To the Board of Directors
Big River Resources, LLC
West Burlington, Iowa
We have audited the financial statements of Big River Resources, LLC as of and for the years ended December 31, 2013 and 2012, and our report thereon dated February 14, 2014, which expressed an unqualified opinion on those financial statements, appears on pages one and two. Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The supplementary information shown on pages 29 - 33 is presented for purposes of additional analysis. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audits of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.
CHRISTIANSON & ASSOCIATES, PLLP
Certified Public Accountants and Consultants
February 14, 2014
BIG RIVER RESOURCES, LLC
CONSOLIDATING BALANCE SHEET
December 31, 2013
| | Big River
Resources, LLC | | | Big River
Resources West
Burlington, LLC | | | Big River
Resources
Galva, LLC | | | Big River
Resources
Boyceville, LLC | | | Big River
United
Energy, LLC | | | Big River
Resources
Grinnell, LLC | | Big River
Prairie Gold, LLC | | ELIMINATION
ENTRIES | | | CONSOLIDATED | |
| ASSETS | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| CURRENT ASSETS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash and cash equivalents | | $ | 7,652,127 | | | $ | 34,748,148 | | | $ | 20,090,064 | | | $ | 2,982,871 | | | $ | 391,083 | | | $ | 169,213 | | $ | 93,141 | | $ | — | | | $ | 66,126,647 | |
| Receivables | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Trade | | | 40 | | | | 9,908,614 | | | | 5,395,642 | | | | 6,494,688 | | | | 13,920,359 | | | | 2,185 | | | — | | | — | | | | 35,721,528 | |
| Related party | | | 2,186,747 | | | | 137,113 | | | | — | | | | — | | | | — | | | | — | | | — | | | (2,323,860 | ) | | | — | |
| Inventories | | | — | | | | 16,425,748 | | | | 18,285,284 | | | | 6,754,752 | | | | 10,809,944 | | | | — | | | — | | | — | | | | 52,274,728 | |
| Prepaid expenses | | | 60,464 | | | | 445,947 | | | | 463,254 | | | | 285,440 | | | | 368,552 | | | | 3,342 | | | 9,185 | | | — | | | | 1,636,184 | |
| Purchase advance on contract | | | — | | | | — | | | | — | | | | 421,713 | | | | 4,618,35 | | | | — | | | — | | | — | | | | 883,548 | |
| Derivative instruments | | | — | | | | 1,163,569 | | | | 3,185,401 | | | | 947,530 | | | | 2,339,196 | | | | — | | | — | | | — | | | | 7,635,696 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| TOTAL CURRENT ASSETS | | | 9,899,378 | | | | 62,829,139 | | | | 47,419,645 | | | | 17,886,994 | | | | 28,289,969 | | | | 174,740 | | | 102,326 | | | (2,323,860 | ) | | | 164,278,331 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| PROPERTY AND EQUIPMENT | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Land and land improvements | | | — | | | | 7,242,974 | | | | 12,294,993 | | | | 9,099,390 | | | | 11,481,641 | | | | 1,340,000 | | | — | | | — | | | | 41,458,998 | |
| Building structure | | | — | | | | 13,045,669 | | | | 31,597,310 | | | | 13,966,577 | | | | 19,848,390 | | | | — | | | — | | | — | | | | 78,457,946 | |
| Grain equipment | | | — | | | | 21,990,075 | | | | 7,647,145 | | | | 6,059,575 | | | | 7,862,294 | | | | — | | | — | | | — | | | | 43,559,089 | |
| Process equipment | | | — | | | | 100,493,241 | | | | 122,277,772 | | | | 43,077,497 | | | | 56,886,345 | | | | — | | | — | | | — | | | | 322,734,855 | |
| Other equipment | | | 310,032 | | | | 2,977,936 | | | | 2,608,832 | | | | 960,222 | | | | 2,802,399 | | | | — | | | — | | | — | | | | 9,659,421 | |
| Construction in progress | | | — | | | | 3,436,300 | | | | 140,164 | | | | — | | | | 1,123,122 | | | | — | | | 710,282 | | | — | | | | 5,409,868 | |
| | | | 310,032 | | | | 149,186,195 | | | | 176,566,216 | | | | 73,163,261 | | | | 100,004,191 | | | | 1,340,000 | | | 710,282 | | | — | | | | 501,280,177 | |
| Accumulated depreciation | | | (157,651 | ) | | | (67,767,435 | ) | | | (53,992,392 | ) | | | (14,554,794 | ) | | | (29,874,982 | ) | | | — | | | — | | | — | | | | (166,320,254 | ) |
| | | | 152,381 | | | | 81,418,760 | | | | 122,573,824 | | | | 58,608,467 | | | | 70,156,209 | | | | 1,340,000 | | | 710,282 | | | — | | | | 334,959,923 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| OTHER ASSETS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Investments in subsidiaries | | | 387,025,234 | | | | — | | | | — | | | | — | | | | — | | | | — | | | — | | | (387,025,234 | ) | | | — | |
| Investments | | | 32,775 | | | | 6,319,563 | | | | 2,438,122 | | | | 577,839 | | | | 3,282,728 | | | | — | | | — | | | — | | | | 12,651,081 | |
| Deposits | | | — | | | | — | | | | — | | | | — | | | | 200,000 | | | | — | | | — | | | — | | | | 200,000 | |
| Notes receivable | | | — | | | | — | | | | — | | | | — | | | | 177,864 | | | | — | | | — | | | — | | | | 117,846 | |
| Financing costs, net of amortization | | | 7,387 | | | | 288,331 | | | | 414,942 | | | | 103,916 | | | | 140,666 | | | | — | | | — | | | — | | | | 955,242 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| TOTAL OTHER ASSETS | | | 387,065,396 | | | | 6,607,894 | | | | 2,853,064 | | | | 681,755 | | | | 3,741,294 | | | | — | | | — | | | (387,025,234 | ) | | | 13,924,169 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| TOTAL ASSETS | | $ | 397,117,155 | | | $ | 150,855,793 | | | $ | 172,846,533 | | | $ | 77,177,216 | | | $ | 102,187,472 | | | $ | 1,514,740 | | $ | 812,608 | | $ | (389,349,094 | ) | | $ | 513,162,423 | |
See independent auditor’s report on supplementary information.
BIG RIVER RESOURCES, LLC
CONSOLIDATING BALANCE SHEET
December 31, 2013
| | | Big River
Resources, LLC | | Big River
Resources West
Burlington, LLC | | Big River
Resources
Galva, LLC | | Big River
Resources
Boyceville, LLC | | Big River
United
Energy, LLC | | Big River
Resources
Grinnell, LLC | | | Big River
Prairie Gold, LLC | | | ELIMINATION
ENTRIES | | | CONSOLIDATED | |
| LIABILITIES AND MEMBERS’ EQUITY | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| CURRENT LIABILITIES | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Checks written in excess of funds on deposit | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 2,070,436 | | $ | — | | | $ | — | | | $ | — | | | $ | 2,070,436 | |
| Payables | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Trade | | | — | | | 25,518,332 | | | 1,836,924 | | | 3,850,766 | | | 3,120,986 | | | — | | | | — | | | | — | | | | 34,327,008 | |
| General | | | 175,290 | | | 3,010,418 | | | 2,795,888 | | | 1,624,997 | | | 2,794,759 | | | 4,850 | | | | 12,018 | | | | — | | | | 10,418,220 | |
| Related party | | | — | | | 243,800 | | | 267,206 | | | 172,896 | | | 1,639,958 | | | — | | | | — | | | | (2,323,860 | ) | | | — | |
| Construction | | | — | | | 716,072 | | | — | | | — | | | — | | | — | | | | 710,282 | | | | | | | | 1,426,354 | |
| Accrued expenses | | | 2,096,702 | | | 1,399,220 | | | 802,173 | | | 516,775 | | | 2,130,298 | | | 23,882 | | | | 18,430 | | | | — | | | | 6,987,480 | |
| Current maturities of long-term debt | | | 1,000,000 | | | 9,000,000 | | | 3,539,227 | | | — | | | — | | | — | | | | — | | | | — | | | | 13,539,227 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| TOTAL CURRENT LIABILITIES | | | 3,271,992 | | | 39,887,842 | | | 9,241,418 | | | 6,165,434 | | | 11,756,437 | | | 28,732 | | | | 740,730 | | | | (2,323,860 | ) | | | 68,768,725 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| LONG-TERM DEBT, less current maturities | | | 7,000,008 | | | 5,250,000 | | | — | | | — | | | 253,356 | | | — | | | | — | | | | — | | | | 12,503,364 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| MEMBERS’ EQUITY | | | 296,116,238 | | | 79,033,568 | | | 131,916,608 | | | 56,142,447 | | | 55,210,006 | | | 1,495,289 | | | | 400,000 | | | | (324,197,918 | ) | | | 296,116,238 | |
| Net income (loss) | | | 90,728,917 | | | 26,684,383 | | | 31,688,507 | | | 14,869,335 | | | 34,967,673 | | | (9,281 | ) | | | (328,122 | ) | | | (107,872,495 | ) | | | 90,728,917 | |
| Noncontrolling interest - Grinnell | | | — | | | — | | | — | | | — | | | — | | | — | | | | — | | | | 743,004 | | | | 743,004 | |
| Noncontrolling interest - United Energy | | | — | | | — | | | — | | | — | | | — | | | — | | | | — | | | | 44,212,955 | | | | 44,212,955 | |
| Noncontrolling interest - Prairie Gold | | | — | | | — | | | — | | | — | | | — | | | — | | | | — | | | | 89,220 | | | | 89,220 | |
| | | | 386,845,155 | | | 105,717,951 | | | 163,605,115 | | | 71,011,782 | | | 90,177,679 | | | 1,486,008 | | | | 71,878 | | | | (387,025,234 | ) | | | 431,890,334 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| TOTAL LIABILITIES AND MEMBERS’ EQUITY | | $ | 397,117,155 | | $ | 150,855,793 | | $ | 172,846,533 | | $ | 77,177,216 | | $ | 102,187,472 | | $ | 1,514,740 | | | $ | 812,608 | | | $ | (389,349,094 | ) | | $ | 513,162,423 | |
See independent auditor’s report on supplementary information.
BIG RIVER RESOURCES, LLC
CONSOLIDATING STATEMENT OF OPERATIONS AND EBITDA
Year Ended December 31, 2013
| | | Big River
Resources, LLC | | | Big River
Resources West
Burlington, LLC | | | Big River
Resources
Galva, LLC | | | Big River
Resources
Boyceville, LLC | | | Big River
United
Energy, LLC | | | Big River
Resources
Grinnell, LLC | | | Big River
Praire Gold, LLC | | | ELIMINATION
ENTRIES | | | CONSOLIDATED | |
| SALES | | $ | — | | | $ | 395,810,193 | | | $ | 361,942,149 | | | $ | 177,437,603 | | | $ | 378,787,725 | | | $ | — | | | $ | — | | | $ | (21,857,676 | ) | | $ | 1,292,119,994 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| COST OF SALES | | | 7,441 | | | | 363,912,884 | | | | 326,797,097 | | | | 160,145,606 | | | | 338,787,773 | | | | — | | | | — | | | | (21,857,676 | ) | | | 1,167,793,125 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| GROSS PROFIT (LOSS) | | | (7,441 | ) | | | 31,897,309 | | | | 35,145,052 | | | | 17,291,997 | | | | 39,999,952 | | | | — | | | | — | | | | — | | | | 124,326,869 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| OPERATING EXPENSES | | | 1,828,227 | | | | 5,456,190 | | | | 3,936,935 | | | | 2,700,362 | | | | 5,259,851 | | | | 29,082 | | | | 328,122 | | | | (2,299,610 | ) | | | 17,239,159 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| INCOME (LOSS) FROM OPERATIONS | | | (1,835,668 | ) | | | 26,441,119 | | | | 31,208,117 | | | | 14,591,635 | | | | 34,740,101 | | | | (29,082 | ) | | | (328,122 | ) | | | 2,299,610 | | | | 107,087,710 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| OTHER INCOME (EXPENSES) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Equity in earnings of subsidiaries | | | 90,728,917 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (90,728,917 | ) | | | — | |
| Management fee income | | | 2,283,610 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (2,283,610 | ) | | | — | |
| Interest expense | | | (447,026 | ) | | | (993,328 | ) | | | (529,998 | ) | | | (526,443 | ) | | | (1,207,350 | ) | | | — | | | | — | | | | — | | | | (3,704,145 | ) |
| Investment income | | | — | | | | 1,181,597 | | | | 1,110,839 | | | | 813,863 | | | | 1,353,467 | | | | — | | | | — | | | | — | | | | 4,459,766 | |
| Other income (expense) | | | (916 | ) | | | 54,995 | | | | (100,451 | ) | | | (9,720 | ) | | | 81,455 | | | | 19,801 | | | | — | | | | (16,000 | ) | | | 29,164 | |
| | | | 92,564,585 | | | | 243,264 | | | | 480,390 | | | | 277,700 | | | | 227,572 | | | | 19,801 | | | | — | | | | (93,028,527 | ) | | | 784,785 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| NET INCOME (LOSS) | | $ | 90,728,917 | | | $ | 26,684,383 | | | $ | 31,688,507 | | | $ | 14,869,335 | | | $ | 34,967,673 | | | $ | (9,281 | ) | | $ | (328,122 | ) | | $ | (90,728,917 | ) | | $ | 107,872,495 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| EBITDA | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income (loss) | | $ | 90,728,917 | | | $ | 26,684,383 | | | $ | 31,688,507 | | | $ | 14,869,335 | | | $ | 34,967,673 | | | $ | (9,281 | ) | | $ | (328,122 | ) | | $ | (93,728,917 | ) | | $ | 107,872,495 | |
| Interest | | | 447,026 | | | | 993,328 | | | | 529,998 | | | | 526,443 | | | | 1,207,350 | | | | — | | | | — | | | | — | | | | 3,704,145 | |
| Income taxes | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Depreciation | | | 51,347 | | | | 9,538,986 | | | | 11,667,574 | | | | 6,994,046 | | | | 6,935,485 | | | | — | | | | — | | | | — | | | | 35,187,438 | |
| Amortization | | | 1,250 | | | | 96,435 | | | | 169,892 | | | | 8,067 | | | | 131,479 | | | | — | | | | — | | | | — | | | | 407,123 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total EBITDA | | $ | 91,228,540 | | | $ | 37,313,132 | | | $ | 44,055,971 | | | $ | 22,397,891 | | | $ | 43,241,987 | | | $ | (9,281 | ) | | $ | (328,122 | ) | | $ | (90,728,917 | ) | | $ | 147,171,201 | |
See independent auditor’s report on supplementary information.
BIG RIVER RESOURCES, LLC
CONSOLIDATED SCHEDULES OF SALES AND COST OF SALES
Years Ended December 31, 2013 and 2012
| SALES | | 2013 | | | % | | | AVG
PRICE | | | 2012 | | | % | | | AVG
PRICE | |
| Ethanol | | $ | 950,320,101 | | | | 73.55 | | | $ | 2.50 | | | $ | 837,750,584 | | | | 73.75 | | | $ | 2.31 | |
| Dried distillers grains | | | 239,977,285 | | | | 18.57 | | | | 237.41 | | | | 198,527,478 | | | | 17.48 | | | | 223.36 | |
| Modified distillers grains | | | 22,804,493 | | | | 1.76 | | | | 100.55 | | | | 26,856,947 | | | | 2.36 | | | | 104.27 | |
| Non-food oil | | | 29,477,887 | | | | 2.28 | | | | 0.38 | | | | 28,076,653 | | | | 2.47 | | | | 0.38 | |
| Elevator corn sales | | | 71,299,108 | | | | 1.14 | | | | 2.91 | | | | 85,309,010 | | | | 0.84 | | | | 6.81 | |
| Less: intercompany corn sales | | | (58,567,712 | ) | | | | | | | | | | | (75,712,147 | ) | | | | | | | | |
| Elevator soybean sales | | | 30,201,297 | | | | 2.34 | | | | 14.30 | | | | 31,257,316 | | | | 2.75 | | | | 14.80 | |
| Elevator drying, storage & handling | | | 4,607,535 | | | | 0.37 | | | | — | | | | 3,889,694 | | | | 0.35 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 1,292,119,994 | | | | 100.00 | | | | | | | $ | 1,135,955,535 | | | | 100.00 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| COST OF SALES | | | | | | | | | | | | | | | | | | | | | | | | |
| Corn purchases | | $ | 836,867,641 | | | | 64.92 | | | $ | 6.53 | | | $ | 792,297,856 | | | | 69.75 | | | $ | 6.81 | |
| Derivative instruments | | | (16,223 | ) | | | (0.00 | ) | | | | | | | 14,563,092 | | | | 1.28 | | | | | |
| Change in inventory | | | 8,110,795 | | | | 0.63 | | | | | | | | 2,324,687 | | | | 0.20 | | | | | |
| Chemical ingredients | | | 38,461,012 | | | | 2.98 | | | | | | | | 36,143,206 | | | | 3.18 | | | | | |
| Natural gas | | | 45,669,915 | | | | 3.53 | | | | | | | | 33,638,361 | | | | 2.96 | | | | | |
| Utilities | | | 14,264,493 | | | | 1.10 | | | | | | | | 13,326,003 | | | | 1.17 | | | | | |
| Wages | | | 11,565,599 | | | | 0.90 | | | | | | | | 11,356,975 | | | | 1.00 | | | | | |
| Maintenance | | | 10,054,905 | | | | 0.78 | | | | | | | | 9,155,087 | | | | 0.81 | | | | | |
| Supplies | | | 3,233,446 | | | | 0.25 | | | | | | | | 2,073,336 | | | | 0.18 | | | | | |
| Insurance | | | 619,145 | | | | 0.05 | | | | | | | | 658,834 | | | | 0.06 | | | | | |
| Freight | | | 44,573,950 | | | | 3.45 | | | | | | | | 38,451,828 | | | | 3.38 | | | | | |
| Equipment leases | | | 6,181,768 | | | | 0.48 | | | | | | | | 5,272,922 | | | | 0.46 | | | | | |
| Depreciation | | | 35,136,091 | | | | 2.72 | | | | | | | | 34,710,248 | | | | 3.06 | | | | | |
| Marketing | | | 7,696,185 | | | | 0.60 | | | | | | | | 7,042,512 | | | | 0.62 | | | | | |
| Elevator corn and soybean purchases | | | 101,886,132 | | | | 7.89 | | | | | | | | 112,384,671 | | | | 9.89 | | | | | |
| Miscellaneous | | | 1,488,271 | | | | 0.12 | | | | | | | | 1,905,038 | | | | 0.17 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 1,167,793,125 | | | | 90.37 | | | | | | | $ | 1,115,304,657 | | | | 98.17 | | | | | |
See independent auditor’s report on supplementary information.
BIG RIVER RESOURCES, LLC
CONSOLIDATED SCHEDULES OF OPERATING EXPENSES AND OTHER INCOME
Years Ended December 31, 2013 and 2012
| | | 2013 | | | 2012 | |
| OPERATING EXPENSES | | | | | | | | |
| Wages | | $ | 13,289,991 | | | | $ 10,365,496 | |
| Payroll taxes | | | 293,706 | | | | 268,536 | |
| Employee benefits | | | 1,102,118 | | | | 1,224,932 | |
| Insurance | | | 795,079 | | | | 800,711 | |
| Materials and supplies | | | 475,258 | | | | 339,003 | |
| Professional fees | | | 636,401 | | | | 611,150 | |
| Holding company allocations | | | (5,143,654 | ) | | | (5,496,101 | ) |
| Travel, meals and entertainment | | | 183,107 | | | | 190,725 | |
| Training | | | 46,128 | | | | 70,756 | |
| Repairs and maintenance | | | 75,433 | | | | 122,629 | |
| Office | | | 667,360 | | | | 677,479 | |
| Property taxes | | | 1,455,677 | | | | 1,416,747 | |
| Advertising | | | 1,672,119 | | | | 1,592,532 | |
| Amortization | | | 458,470 | | | | 386,041 | |
| Contributions | | | 34,864 | | | | 38,953 | |
| Utilities and telephone | | | 547,009 | | | | 657,002 | |
| Memberships, dues, licenses and permits | | | 176,312 | | | | 198,101 | |
| Miscellaneous | | | 473,781 | | | | 664,252 | |
| | | | | | | | | |
| | | $ | 17,239,159 | | | $ | 14,128,944 | |
| | | | | | | | | |
| OTHER INCOME (EXPENSE) | | | | | | | | |
| Interest income | | $ | 14,371 | | | $ | 18,840 | |
| Interest expense | | | (3,704,145 | ) | | | (6,264,357 | ) |
| Investment income | | | 4,459,766 | | | | 4,900,699 | |
| Other income (expense) | | | 14,793 | | | | (122,523 | ) |
| | | | | | | | | |
| | | $ | 784,785 | | | $ | (1,467,341 | ) |
See independent auditor’s report on supplementary information.
