Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Nov. 08, 2013 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'Pacific Ethanol, Inc. | ' |
Entity Central Index Key | '0000778164 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-13 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' |
Is Entity a Voluntary Filer? | 'No | ' |
Is Entity's Reporting Status Current? | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 15,540,140 |
Document Fiscal Period Focus | 'Q3 | ' |
Document Fiscal Year Focus | '2013 | ' |
CONSOLIDATED_BALANCE_SHEETS_un
CONSOLIDATED BALANCE SHEETS (unaudited) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Current Assets: | ' | ' |
Cash and cash equivalents | $9,175 | $7,586 |
Accounts receivable, net | 27,102 | 26,051 |
Inventories | 13,729 | 16,244 |
Prepaid inventory | 11,232 | 5,422 |
Other current assets | 2,036 | 2,129 |
Total current assets | 63,274 | 57,432 |
Property and equipment, net | 156,309 | 150,409 |
Other Assets: | ' | ' |
Intangible assets, net | 3,378 | 3,734 |
Other assets | 3,508 | 3,388 |
Total other assets | 6,886 | 7,122 |
Total Assets | 226,469 | 214,963 |
Current Liabilities: | ' | ' |
Accounts payable - trade | 8,579 | 5,104 |
Accrued liabilities | 3,198 | 3,282 |
Current portion - capital leases | 5,129 | 0 |
Current portion - long-term debt (including $750 to related party) | 2,133 | 4,029 |
Total current liabilities | 19,039 | 12,415 |
Long-term debt, net of current portion | 108,834 | 117,253 |
Accrued preferred dividends | 3,657 | 5,852 |
Warrant liabilities and conversion feature at fair value | 6,630 | 4,892 |
Capital lease liabilities | 6,528 | 0 |
Other liabilities | 1,626 | 1,644 |
Total Liabilities | 146,314 | 142,056 |
Commitments and Contingencies (Notes 4, 5 and 8) | 0 | 0 |
Pacific Ethanol, Inc. Stockholders' Equity: | ' | ' |
Preferred stock, $0.001par value; 10,000,000 shares authorized; Series A: 1,684,375 shares authorized; 0 shares issued and outstanding as of September 30, 2013 and December 31, 2012; Series B: 1,580,790 shares authorized; 926,942 shares issued and outstanding as of September 30, 2013 and December 31, 2012; liquidation preference of $21,733 as of September 30, 2013 | 1 | 1 |
Common stock, $0.001par value; 300,000,000 shares authorized; 14,737,127 and 9,789,408 shares issued and outstanding as of September 30, 2013 and December 31, 2012, respectively | 15 | 10 |
Additional paid-in capital | 612,880 | 582,861 |
Accumulated deficit | -540,630 | -530,310 |
Total Pacific Ethanol, Inc. Stockholders' Equity | 72,266 | 52,562 |
Noncontrolling interest in variable interest entity | 7,889 | 20,345 |
Total Stockholders' Equity | 80,155 | 72,907 |
Total Liabilities and Stockholders' Equity | $226,469 | $214,963 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, except Share data, unless otherwise specified | ||
Current Liabilities: | ' | ' |
Current portion of long term debt to related party | $750 | $750 |
Stockholders' Equity: | ' | ' |
Preferred stock par value | $0.00 | $0.00 |
Preferred stock shares authorized | 10,000,000 | 10,000,000 |
Common stock, par value | $0.00 | $0.00 |
Common stock, authorized | 300,000,000 | 300,000,000 |
Common stock, issued | 14,737,127 | 9,789,408 |
Common stock, outstanding | 14,737,127 | 9,789,408 |
Series A Preferred Stock | ' | ' |
Stockholders' Equity: | ' | ' |
Preferred stock par value | $0.00 | $0.00 |
Preferred stock shares authorized | 1,684,375 | 1,384,375 |
Preferred stock shares issued | 0 | 0 |
Preferred stock shares outstanding | 0 | 0 |
Series B Preferred Stock | ' | ' |
Stockholders' Equity: | ' | ' |
Preferred stock par value | $0.00 | $0.00 |
Preferred stock shares authorized | 1,580,790 | 1,580,790 |
Preferred stock shares issued | 926,942 | 926,942 |
Preferred stock shares outstanding | 926,942 | 926,942 |
Preferred stock liquidation preference | $21,733 | ' |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Income Statement [Abstract] | ' | ' | ' | ' |
Net sales | $233,880 | $215,860 | $693,147 | $619,026 |
Cost of goods sold | 230,357 | 218,300 | 681,813 | 633,843 |
Gross profit (loss) | 3,523 | -2,440 | 11,334 | -14,817 |
Selling, general and administrative expenses | 2,511 | 2,898 | 9,649 | 9,400 |
Income (loss) from operations | 1,012 | -5,338 | 1,685 | -24,217 |
Fair value adjustments and warrant inducements | 762 | -900 | 1,507 | 352 |
Interest expense, net | -4,530 | -3,378 | -11,983 | -9,380 |
Loss on extinguishments of debt | -2,573 | 0 | -1,795 | 0 |
Other expense, net | -106 | -105 | -321 | -499 |
Loss before provision for income taxes | -5,435 | -9,721 | -10,907 | -33,744 |
Provision for income taxes | 0 | 0 | 0 | 0 |
Consolidated net loss | -5,435 | -9,721 | -10,907 | -33,744 |
Net loss attributed to noncontrolling interest in variable interest entity | 464 | 3,750 | 1,533 | 20,191 |
Net loss attributed to Pacific Ethanol | -4,971 | -5,971 | -9,374 | -13,553 |
Preferred stock dividends | -319 | -319 | -946 | -949 |
Loss available to common stockholders | ($5,290) | ($6,290) | ($10,320) | ($14,502) |
Net loss per share, basic and diluted | ($0.40) | ($0.82) | ($0.91) | ($2.26) |
Weighted-average shares outstanding, basic and diluted | 13,177 | 7,712 | 11,380 | 6,414 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Operating Activities: | ' | ' |
Consolidated net loss | ($10,907) | ($33,744) |
Adjustments to reconcile consolidated net loss to net cash provided by (used in) operating activities: | ' | ' |
Depreciation and amortization of intangibles | 8,979 | 9,216 |
Interest expense added to Plant Owners' debt | 4,745 | 1,407 |
Loss on extinguishments of debt | 1,795 | 0 |
Fair value adjustments on convertible debt and warrants | -2,293 | -352 |
Amortization of debt discount | 875 | 0 |
Amortization of deferred financing fees | 1,621 | 455 |
Inventory valuation | 8 | 275 |
Non-cash compensation | 1,310 | 705 |
Derivative instruments | 1,652 | -202 |
Bad debt expense (recovery) | 231 | -15 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | -1,282 | 642 |
Inventories | 2,507 | 1,482 |
Prepaid expenses and other assets | -1,696 | 1,480 |
Prepaid inventory | -5,810 | 3,144 |
Accounts payable and accrued expenses | 3,138 | 4,085 |
Net cash provided by (used in) operating activities | 4,873 | -11,422 |
Investing Activities: | ' | ' |
Additions to property and equipment | -1,936 | -2,115 |
Purchases of New PE Holdco ownership interests | -1,836 | -10,000 |
Net cash used in investing activities | -3,772 | -12,115 |
Financing Activities: | ' | ' |
Proceeds from senior unsecured notes | 22,192 | 0 |
Proceeds from Series A and B Convertible Notes | 14,000 | 0 |
Proceeds from exercise of warrants | 2,064 | 0 |
Net proceeds from sales of common stock and warrants | 0 | 20,994 |
Proceeds from Plant Owners' borrowings | 5,000 | 16,522 |
Net payments on Kinergys' line of credit | -599 | -3,273 |
Principal Payments on Plant Owners' borrowings | -8,622 | 0 |
Principal payments on senior unsecured notes | -5,303 | 0 |
Parent purchases of Plant Owners' debt | -25,273 | 0 |
Debt issuance costs | -1,560 | 0 |
Preferred stock dividends paid | -946 | -949 |
Payments on capital lease | -465 | 0 |
Net cash provided by financing activities | 488 | 33,294 |
Net increase in cash and cash equivalents | 1,589 | 9,757 |
Cash and cash equivalents at beginning of period | 7,586 | 8,914 |
Cash and cash equivalents at end of period | 9,175 | 18,671 |
Supplemental Information: | ' | ' |
Interest paid | 4,594 | 7,504 |
Noncash financing and investing activities: | ' | ' |
Corn oil separation capital lease | 12,122 | 0 |
Original discount on senrior and convertible debt | 8,558 | 0 |
Debt extinguished with issuance of common stock | 11,475 | 0 |
Notes issued for purchase of 33% ownership interest in New PE Holdco | 0 | 10,000 |
Preferred stock dividends paid in common stock | 2,195 | 732 |
Reclass of noncontrolling interest in VIE to APIC upon acquisitions of ownership interests in New PE Holdco | 9,087 | 0 |
Reclass of warrant liability to equity upon warrant exercises | $260 | $0 |
1_ORGANIZATION_AND_BASIS_OF_PR
1. ORGANIZATION AND BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
1. ORGANIZATION AND BASIS OF PRESENTATION | ' |
Organization and Business – The consolidated financial statements include, for all periods presented, the accounts of Pacific Ethanol, Inc., a Delaware corporation (“Pacific Ethanol”), and its direct and indirect subsidiaries, including its wholly-owned subsidiaries, Kinergy Marketing, LLC, an Oregon limited liability company (“Kinergy”), Pacific Ag. Products, LLC, a California limited liability company (“PAP”) and Pacific Ethanol Management Services Corp., a Delaware corporation, and including its majority-owned subsidiary, New PE Holdco LLC (“New PE Holdco”), which owns the Plant Owners (as defined below) (collectively, the “Company”). | |
The Company is the leading marketer and producer of low-carbon renewable fuels in the Western United States. The Company also sells ethanol co-products, including wet distillers grain (“WDG”), a nutritious animal feed, syrup and corn oil. Serving integrated oil companies and gasoline marketers who blend ethanol into gasoline, the Company provides transportation, storage and delivery of ethanol through third-party service providers in the Western United States, primarily in California, Arizona, Nevada, Utah, Oregon, Colorado, Idaho and Washington. The Company had an 85% and 67% ownership interest in New PE Holdco, the owner of four ethanol production facilities, as of September 30, 2013 and December 31, 2012, respectively. The facilities are near their respective fuel and feed customers, offering significant timing, transportation cost and logistical advantages. The Company sells ethanol produced by the Pacific Ethanol Plants (as defined below) and unrelated third parties to gasoline refining and distribution companies, sells its WDG to dairy operators and animal feed distributors and sells its corn oil to poultry and biodiesel customers. | |
The Company manages the production and operation of four ethanol production facilities, namely, Pacific Ethanol Madera LLC, Pacific Ethanol Columbia, LLC, Pacific Ethanol Stockton, LLC and Pacific Ethanol Magic Valley, LLC (collectively, the “Pacific Ethanol Plants”) and their holding company, Pacific Ethanol Holding Co. LLC (“PEHC,” and together with the Pacific Ethanol Plants, the “Plant Owners”). PEHC is a wholly-owned subsidiary of New PE Holdco. These four facilities have an aggregate annual ethanol production capacity of up to 200 million gallons. As of September 30, 2013, three of the facilities were operating and one of the facilities was idled. As market conditions change, the Company may increase, decrease or idle production at one or more operational facilities or resume operations at any idled facility. | |
Reverse Stock Split – On May 14, 2013, the Company effected a one-for-fifteen reverse stock split. All share and per share information has been restated to retroactively show the effect of this stock split. | |
Liquidity – During the nine months ended September 30, 2013, the Company funded its operations primarily from cash flow from operations, cash on hand, borrowings under its credit facilities and various capital raising transactions in which it raised aggregate net proceeds of $36,696,000 through the issuances of senior unsecured notes, unsecured subordinated convertible notes and in connection with the exercise of warrants. | |
The Company’s current available capital resources consist of cash on hand and amounts available for borrowing under Kinergy’s credit facility. In addition, the Plant Owners have credit facilities for use in the operations of the Pacific Ethanol Plants. The Company expects that its future available capital resources will consist primarily of its remaining cash balances, cash flow from operations, if any, amounts available for borrowing, if any, under Kinergy’s credit facility, cash generated from Kinergy’s ethanol marketing business, fees paid under the asset management agreement relating to the Company’s operation of the Pacific Ethanol Plants and distributions, if any, in respect of the Company’s ownership interest in New PE Holdco. | |
The Company believes that current and future available capital resources, revenues generated from operations, and other existing sources of liquidity, including its credit facilities, will be adequate to meet its anticipated working capital and capital expenditure requirements for at least the next twelve months. If, however, the Company’s capital requirements or cash flow vary materially from its current projections, if crush and commodity margins, which reflect ethanol and co-product sales prices relative to ethanol production inputs such as corn and natural gas, decline in any material respect, or if other unforeseen circumstances occur, the Company may require additional financing. The Company also may require additional capital to restart its Madera, California facility. The Company’s failure to raise capital, if and when needed, could restrict its growth, or hinder its ability to compete. | |
Accounts Receivable and Allowance for Doubtful Accounts – Trade accounts receivable are presented at face value, net of the allowance for doubtful accounts. The Company sells ethanol to gasoline refining and distribution companies and sells WDG to dairy operators and animal feed distributors generally without requiring collateral. | |
The Company maintains an allowance for doubtful accounts for balances that appear to have specific collection issues. The collection process is based on the age of the invoice and requires attempted contacts with the customer at specified intervals. If, after a specified number of days, the Company has been unsuccessful in its collection efforts, a bad debt allowance is recorded for the balance in question. Delinquent accounts receivable are charged against the allowance for doubtful accounts once uncollectibility has been determined. The factors considered in reaching this determination are the apparent financial condition of the customer and the Company’s success in contacting and negotiating with the customer. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of ability to make payments, additional allowances may be required. | |
Of the accounts receivable balance, approximately $22,284,000 and $20,627,000 at September 30, 2013 and December 31, 2012, respectively, were used as collateral under Kinergy’s working capital line of credit. The allowance for doubtful accounts was $249,000 and $18,000 as of September 30, 2013 and December 31, 2012, respectively. The Company recorded net bad debt expense of $38,000 and $15,000 for the three months ended September 30, 2013 and 2012, respectively. The Company recorded net bad debt expense of $231,000 and $15,000 for the nine months ended September 30, 2013 and 2012, respectively. | |
Basis of Presentation–Interim Financial Statements – The accompanying unaudited consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Results for interim periods should not be considered indicative of results for a full year. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. The accounting policies used in preparing these consolidated financial statements are the same as those described in Note 1 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the results for interim periods have been included. All significant intercompany accounts and transactions have been eliminated in consolidation. | |
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates are required as part of determining the consolidation of variable interest entities, fair value of convertible notes and warrants, allowance for doubtful accounts, estimated lives of property and equipment and intangibles, long-lived asset impairments, valuation allowances on deferred income taxes and the potential outcome of future tax consequences of events recognized in the Company’s financial statements or tax returns. Actual results and outcomes may materially differ from management’s estimates and assumptions. | |
Reclassifications of prior year’s data have been made to conform to 2013 classifications. Such classifications had no effect on net income (loss) reported in the consolidated statements of operations. |
2_VARIABLE_INTEREST_ENTITY
2. VARIABLE INTEREST ENTITY | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
Variable Interest Entity | ' | ||||
2. VARIABLE INTEREST ENTITY | ' | ||||
The Company concluded that at all times since New PE Holdco’s inception, New PE Holdco has been a variable interest entity because the other owners of New PE Holdco, due to the Company’s involvement through its contractual arrangements, have at all times lacked the power to direct the activities that most significantly impacted its economic performance. Some of these activities include efficient management and operation of the Pacific Ethanol Plants, sale of ethanol, the procurement of feedstock, sale of co-products and implementation of risk management strategies. At the time of New PE Holdco’s inception, however, the Company did not have an obligation to absorb losses or receive benefits that could potentially be significant to New PE Holdco and, as a result, it was determined that the Company was not New PE Holdco’s primary beneficiary. Upon the Company’s purchase of its 20% initial ownership interest in New PE Holdco on October 6, 2010, the Company, through its ownership interest, had an obligation to absorb losses and receive benefits that could potentially be significant to New PE Holdco. As a result, the Company then became the primary beneficiary of New PE Holdco and began consolidating the financial results of New PE Holdco. | |||||
In January, March and June 2013, the Company purchased an additional 13%, 3% and 2% of the ownership interests in New PE Holdco for $1,308,000, $331,000 and $197,000 in cash, respectively, bringing its total ownership interest to 85% as of June 30, 2013. | |||||
Because the Company has a controlling financial interest in New PE Holdco, it did not record any gain or loss on these purchases, but instead reduced the amount of noncontrolling interest in variable interest entity on the consolidated balance sheets by an aggregate $10,923,000 and recorded the difference of $9,087,000 for the nine months ended September 30, 2013, which represents the fair value of these purchases above the price paid by the Company, to additional paid-in capital on the consolidated balance sheets. | |||||
Because New PE Holdco’s results are consolidated with the Company’s financial results for financial reporting purposes, the acquisition of additional interests in New PE Holdco did not impact the Company’s reported consolidated net income (loss). However, the portion of New PE Holdco’s net income (loss) that is allocated to the Company increased from 34% to 67% during 2012 and from 67% to 85% in 2013, thus changing the net income (loss) attributable to Pacific Ethanol after reducing the net income (loss) attributable to the noncontrolling interests and the Company’s earnings per share. | |||||
The Company recognized approximately $124,251,000 and $117,544,000 in net sales and $1,010,000 in net income and $2,327,000 in net loss attributed to New PE Holdco for the three months ended September 30, 2013 and 2012, respectively. Had the Company held an 85% ownership interest in New PE Holdco, for the three months ended September 30, 2012, the Company would have reported a net loss available to common stockholders of $8,560,000 and would have reported a loss per share of $1.11. | |||||
The Company recognized approximately $374,967,000 and $332,207,000 in net sales and $2,565,000 in net income and $16,011,000 in net loss attributed to New PE Holdco for the nine months ended September 30, 2013 and 2012, respectively. Had the Company held an 85% ownership interest in New PE Holdco, for the nine months ended September 30, 2013 and 2012, the Company’s reported net loss available to common stockholders would have been $10,759,000 and $29,690,000, respectively, and loss per share would have been $0.94 and $4.63, respectively. | |||||
The carrying values and classification of assets that are collateral for the obligations of New PE Holdco as of September 30, 2013 were as follows (in thousands): | |||||
Cash and cash equivalents | $ | 60 | |||
Other current assets | 7,821 | ||||
Property and equipment | 151,612 | ||||
Other assets | 2,947 | ||||
Total assets | $ | 162,440 | |||
The liabilities of New PE Holdco for which creditors do not have recourse to the general credit of Pacific Ethanol, Inc. as of September 30, 2013 were as follows (in thousands): | |||||
Current liabilities | $ | 5,665 | |||
Long-term debt | 101,944 | ||||
Other liabilities | 11,900 | ||||
Total liabilities | $ | 119,509 | |||
The Company’s acquisition of its ownership interest in New PE Holdco does not impact the Company’s rights or obligations under any of its contractual agreements. Further, creditors of New PE Holdco do not have recourse to the Company. Since its acquisition, the Company has not provided any additional support to New PE Holdco beyond the terms of its contractual agreements. |
3_INVENTORIES
3. INVENTORIES | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
3. INVENTORIES | ' | ||||||||
Inventories consisted primarily of bulk ethanol and unleaded fuel, and are valued at the lower-of-cost-or-market, with cost determined on a first-in, first-out basis. Inventory balances consisted of the following (in thousands): | |||||||||
30-Sep-13 | 31-Dec-12 | ||||||||
Finished goods | $ | 7,937 | $ | 10,230 | |||||
Work in progress | 3,622 | 3,846 | |||||||
Raw materials | 1,282 | 1,363 | |||||||
Other | 888 | 805 | |||||||
Total | $ | 13,729 | $ | 16,244 |
4_DERIVATIVES
4. DERIVATIVES | 9 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
Derivative Asset, Fair Value, Amount Not Offset Against Collateral [Abstract] | ' | ||||||||||
4. DERIVATIVES | ' | ||||||||||
The business and activities of the Company expose it to a variety of market risks, including risks related to changes in commodity prices and interest rates. The Company monitors and manages these financial exposures as an integral part of its risk management program. This program recognizes the unpredictability of financial markets and seeks to reduce the potentially adverse effects that market volatility could have on operating results. | |||||||||||
Commodity Risk – Cash Flow Hedges – The Company uses derivative instruments to protect cash flows from fluctuations caused by volatility in commodity prices for periods of up to twelve months in order to protect gross profit margins from potentially adverse effects of market and price volatility on ethanol sale and purchase commitments where the prices are set at a future date and/or if the contracts specify a floating or index-based price for ethanol. In addition, the Company hedges anticipated sales of ethanol to minimize its exposure to the potentially adverse effects of price volatility. These derivatives may be designated and documented as cash flow hedges and effectiveness is evaluated by assessing the probability of the anticipated transactions and regressing commodity futures prices against the Company’s purchase and sales prices. Ineffectiveness, which is defined as the degree to which the derivative does not offset the underlying exposure, is recognized immediately in cost of goods sold. For the three and nine months ended September 30, 2013 and 2012, the Company did not designate any of its derivatives as cash flow hedges. | |||||||||||
Commodity Risk – Non-Designated Hedges – The Company uses derivative instruments to lock in prices for certain amounts of corn and ethanol by entering into forward contracts for those commodities. These derivatives are not designated for special hedge accounting treatment. The changes in fair value of these contracts are recorded on the balance sheet and recognized immediately in cost of goods sold. The Company recognized losses of $1,168,000 and $52,000 as the change in the fair value of these contracts for the three months ended September 30, 2013 and 2012, respectively. The Company recognized losses of $1,652,000 and gains of $202,000 as the change in the fair value of these contracts for the nine months ended September 30, 2013 and 2012, respectively. | |||||||||||
Non-Designated Derivative Instruments – The Company classified its derivative instruments not designated as hedging instruments of $128,000 and $44,000 in other current assets and accrued liabilities, respectively, as of September 30, 2013 and $189,000 and $167,000 in other current assets and accrued liabilities, respectively, as of December 31, 2012. | |||||||||||
The classification and amounts of the Company’s recognized gains (losses) for its derivatives not designated as hedging instruments are as follows (in thousands): | |||||||||||
Realized Losses | |||||||||||
Three Months Ended September 30, | |||||||||||
Type of Instrument | Statements of Operations Location | 2013 | 2012 | ||||||||
Commodity contracts | Cost of goods sold | $ | (1,612 | ) | $ | (440 | ) | ||||
Unrealized Gains | |||||||||||
Three Months Ended September 30, | |||||||||||
Type of Instrument | Statements of Operations Location | 2013 | 2012 | ||||||||
Commodity contracts | Cost of goods sold | $ | 444 | $ | 388 | ||||||
Realized Gains (Losses) | |||||||||||
Nine Months Ended September 30, | |||||||||||
Type of Instrument | Statements of Operations Location | 2013 | 2012 | ||||||||
Commodity contracts | Cost of goods sold | $ | (1,714 | ) | $ | 277 | |||||
Unrealized Gains (Losses) | |||||||||||
Nine Months Ended September 30, | |||||||||||
Type of Instrument | Statements of Operations Location | 2013 | 2012 | ||||||||
Commodity contracts | Cost of goods sold | $ | 62 | $ | (479 | ) |
5_DEBT
5. DEBT | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
5. DEBT | ' | ||||||||
Long-term borrowings are summarized as follows (in thousands): | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Kinergy operating line of credit | $ | 19,112 | $ | 19,711 | |||||
Senior unsecured notes | 16,889 | – | |||||||
Subordinated convertible notes | 2,525 | – | |||||||
Plant Owners’ term debt and accrued interest | 59,565 | 54,821 | |||||||
Plant Owners’ operating lines of credit | 42,378 | 46,000 | |||||||
Note payable to related party | 750 | 750 | |||||||
141,219 | 121,282 | ||||||||
Less: Parent purchased Plant Owners’ term debt | (27,088 | ) | – | ||||||
Less: Unamortized discount on senior unsecured notes | (2,022 | ) | – | ||||||
Less: Unamortized discount on convertible notes | (1,142 | ) | – | ||||||
110,967 | 121,282 | ||||||||
Less short-term portion | (2,133 | ) | (4,029 | ) | |||||
Long-term debt | $ | 108,834 | $ | 117,253 | |||||
Kinergy Operating Line of Credit – For the nine months ended September 30, 2013, Kinergy repaid $599,000, net of borrowings, on its operating line of credit. As of September 30, 2013, Kinergy had an available borrowing base under the credit facility of $5,451,000 and an outstanding principal balance of $19,112,000. At September 30, 2013, the interest rate was approximately 2.75%. | |||||||||
Senior Unsecured Notes – On January 11, 2013, under the terms of a securities purchase agreement dated December 19, 2012 among the Company and five accredited investors, the Company issued and sold to the investors in a private offering $22,192,000 in aggregate principal amount of its senior unsecured notes (“January 2013 Notes”) and warrants to purchase an aggregate of 1,708,700 shares of the Company’s common stock (“January 2013 Financing Transaction”) for aggregate net proceeds of $22,072,000. The warrants have an exercise price of $6.60 per share and expire in January 2018. | |||||||||
Upon closing of the January 2013 Financing Transaction, the Company recorded a debt discount of $2,657,000, associated with the value of the warrants issued in connection with the financing. The debt discount will be amortized over the life of the January 2013 Notes to approximate a yield adjustment. | |||||||||
If at any time the Company receives net cash proceeds from an issuance of equity or equity-linked securities of the Company, interest received from any purchased and outstanding Plant Owners’ term debt, certain sales of assets or as a result of incurring certain indebtedness, then the Company will be obligated to prepay the January 2013 Notes using 100% of all such net cash proceeds, provided that any net proceeds received in connection with an equity-linked issuance must be used to either prepay the January 2013 Notes or purchase certain outstanding debt issued by the Plant Owners. During the nine months ended September 30, 2013, the Company made principal payments on the January 2013 Notes in the aggregate amount of $5,303,000. In addition, the Company purchased $3,500,000 in certain outstanding debt issued by the Plant Owners. | |||||||||
The January 2013 Notes mature on March 30, 2016 and bear interest at a rate of 5% per annum, subject to adjustment. As of the filing of this report, the Company has repaid certain amounts and purchased outstanding debt issued by the Plant Owners in the aggregate principal amount of $8,803,000. If, by January 15, 2014, the principal balance of the January 2013 Notes is not less than $14,269,000, the interest rate will increase commencing on January 15, 2014 by 1% per annum on each of January 15, April 15, July 15 and October 15 until the aggregate outstanding principal balance is less than $14,269,000. Payments due under the January 2013 Notes rank senior to all other indebtedness of the Company and its subsidiaries, other than certain permitted senior indebtedness. | |||||||||
Interest on the January 2013 Notes is payable in cash in arrears on the fifteenth calendar day of each month beginning on March 15, 2013 (each, an “Interest Payment Date”). Subject to the satisfaction of certain equity conditions, at the option of the Company, the Company may elect to pay interest due and payable in shares of its common stock, provided that the interest rate applicable to any outstanding amounts the Company pays in shares will increase by 2% per annum from the then applicable interest rate for the period for which such interest is paid. The number of shares to be issued on any particular Interest Payment Date equals the quotient of (x) the amount of interest payable (assuming payment in shares) on such Interest Payment Date, divided by (y) the product of (i) the weighted average price of the Company’s common stock for the thirty trading days immediately preceding (but excluding) the Interest Payment Date, and (ii) 0.95. As of September 30, 2013, the Company had not made any interest payments in shares of its common stock. | |||||||||
As of September 30, 2013, the aggregate outstanding principal balance of the January 2013 Notes was $16,889,000. | |||||||||
Restrictive Covenants | |||||||||
The January 2013 Notes prohibit the Company from engaging in various activities, including the following: (i) the Company and its subsidiaries may not incur other indebtedness, except for certain permitted indebtedness; (ii) the Company and its subsidiaries may not incur any liens, except for certain permitted liens; (iii) the Company and its subsidiaries may not, directly or indirectly, redeem or repay all or any portion of any indebtedness (except for certain permitted indebtedness) if at the time such payment is due or is made or, after giving effect to such payment, an event constituting, or that with the passage of time and without being cured would constitute, an event of default has occurred and is continuing; (iv) the Company and its subsidiaries may not redeem, repurchase or pay any dividend or distribution on its respective capital stock without the prior consent of the holders of the January 2013 Notes, other than certain permitted distributions; and (v) the Company and its subsidiaries may not sell, lease, assign, transfer or otherwise dispose of any assets of the Company or any subsidiary, except for certain permitted dispositions (including the sales of inventory or receivables in the ordinary course of business). | |||||||||
Registration Rights Agreement | |||||||||
The January 2013 Notes include registration rights which required that the Company file a registration statement with the Securities and Exchange Commission within 30 days of the closing date for the resale by the January 2013 Note holders of up to 2,200,000 shares of common stock underlying the warrants and 491,300 shares of common stock that may be issued as interest shares under the January 2013 Notes. The Company filed the initial registration statement by the 30 day deadline. As part of the Company’s issuance of subordinated convertible notes in March 2013, the initial registration statement was withdrawn with the permission of the January 2013 Note holders. The Company filed another registration statement with the Securities and Exchange Commission covering the warrant shares and interest shares on June 28, 2013, which has been declared effective. | |||||||||
Subordinated Convertible Notes – On March 28, 2013, the Company issued $6,000,000 in aggregate principal amount of its Series A Subordinated Convertible Notes (“Series A Notes”), and warrants to purchase an aggregate of 1,839,600 shares of common stock for aggregate gross proceeds of $6,000,000. On June 21, 2013, the Company issued $8,000,000 in aggregate principal amount of its Series B Subordinated Convertible Notes (“Series B Notes”) for aggregate gross proceeds of $8,000,000. The warrants have an exercise price of $7.70 per share. Of the warrants issued in the transaction, warrants to purchase 788,400 shares of common stock expire in March 2015 and warrants to purchase 1,051,200 shares of common stock expire in June 2015. The net proceeds of these offerings of $12,560,000 were used to (i) purchase $6,665,000 of the Plant Owners’ debt maturing in June 2013, the maturity of which was also extended at the time from June 2013 to June 2016, and of which the Company immediately retired $1,122,000; (ii) acquire an additional 5% ownership interest in New PE Holdco; and (iii) purchase and immediately retire an additional $3,500,000 of the Plant Owners’ term debt. | |||||||||
Unless converted or redeemed earlier, the Series A and B Notes will mature on March 28, 2014. The Series A and B Notes bear interest at 5% per annum, compounded monthly. All amounts due under the Series A and B Notes are convertible at any time, in whole or in part, at the option of the holders into shares of the Company’s common stock at a conversion price (“Fixed Conversion Price”), which is subject to adjustment as described below. | |||||||||
The Series A and B Notes were initially convertible into shares of the Company’s common stock at the initial Fixed Conversion Price of $15.00 per share. If the Company sells or issues any securities with “floating” conversion prices based on the market price of its common stock, the holder of a Series A or B Note will have the right thereafter to substitute the “floating” conversion price for the Fixed Conversion Price upon conversion of all or part of the Series A or B Note. | |||||||||
Amortization payments, together with accrued and unpaid interest on the Series A and B Notes, are payable on monthly installment dates. On or prior to the tenth calendar day before each installment date, the Company is required to deliver a notice electing to effect a redemption in cash or a conversion of the installment amount due on the installment date into shares of its common stock. The Company’s ability to pay an installment amount in shares of its common stock is subject to numerous equity conditions, the failure of any of which, unless waived, will require that the Company pay an installment amount solely in cash. On the applicable installment date, the Company is required to deliver to the holders of Series A and B Notes an amount of shares of common stock equal to that portion of the installment amount being converted divided by the lesser of the then existing Fixed Conversion Price and 85% of the Market Price on the installment date (“Company Conversion Price”). The “Market Price” on any given date is equal to the lesser of (i) the volume weighted average price on the trading day immediately preceding the date of determination, and (ii) the average of the three lowest volume weighted average prices during the ten trading day period ending on the trading day immediately prior to the date of determination. | |||||||||
The holder of a Series A or B Note may, at the holder’s election by giving notice to the Company, defer the payment of the installment amount due on any installment date to another installment date, in which case the amount deferred will become part of the subsequent installment date and will continue to accrue interest. | |||||||||
On any day during the period commencing on an installment date and ending on the trading day prior to the next installment date, the holder of a Series A or B Note may, at its election, convert the installment amounts due on up to four future installment dates at the Company Conversion Price in effect on the current installment date, provided that if the Company had elected to convert the installment amount due on the current installment date, the holder may only convert up to three future installment amounts. Upon the occurrence of certain events of default, there will be no limitation on the number of installment amounts that the holder may accelerate and the Company Conversion Price applicable to conversions made pursuant to this acceleration feature will equal the lesser of (i) the Company Conversion Price on the current installment date, (ii) 85% of the Market Price, and (iii) the Fixed Conversion Price then in effect. At September 30, 2013, based on the Company’s most recent conversion price of $3.07, the Series B Notes were convertible into an aggregate of 888,000 shares of the Company’s common stock. | |||||||||
The Company has determined that the conversion feature in the Series A and B Notes and the related warrants require bifurcation and liability classification and measurement, at fair value, and require evaluation at each reporting period. The initial fair values of the conversion feature of the Series A Notes of $1,400,800 and the warrants of $882,500 are accounted for as a debt discount and will be amortized into interest expense as a yield adjustment over the term of the Series A Notes. The initial fair values of the conversion feature of the Series B Notes of $2,928,500 and the warrants of $689,300 are accounted for as a debt discount and will be amortized into interest expense as a yield adjustment over the term of the Series B Notes. | |||||||||
From April 1, 2013 through September 30, 2013, the Company made two installment payments and processed a number of conversions. In the aggregate, the Company issued 3,557,000 shares of its common stock in payment of principal and interest in an aggregate amount of $11,554,000 in respect of the Series A and B Notes. In connection with these installment payments and conversions, the Company recorded losses on extinguishments of debt of $2,573,000 and $3,611,000 for the three and nine months ended September 30, 2013, respectively. | |||||||||
As of September 30, 2013, the Series A Notes were fully retired and the aggregate outstanding principal balance of the Series B Notes was $2,525,000. See Note 11 - Subsequent Events. | |||||||||
Plant Owners’ Term Debt and Operating Lines of Credit – The Plant Owners’ debt as of September 30, 2013 consisted of a $33,286,000 tranche A-1 term loan, a $26,279,000 tranche A-2 term loan and a $42,378,000 revolving credit facility. The term and revolving debt require monthly interest payments at a floating rate equal to the three-month LIBOR or the Prime Rate of interest, at the Plant Owners’ election, plus 10.0%. At September 30, 2013, the interest rate was approximately 13.25%. Repayments of principal are based on available free cash flow of the Plant Owners, until maturity, when all principal amounts are due. | |||||||||
From July 13, 2012 through June 30, 2013, the Plant Owners entered into transactions which amended the term and revolving debt and extended the maturity dates in respect of the combined term loans and revolving debt from June 25, 2013 to June 30, 2016. | |||||||||
Monthly interest payments due to certain lenders on both the term and revolving debt was deferred and added to the principal amount of the loans. As of September 30, 2013, the extended principal balances above included $8,279,000 of accrued interest that was deferred by the Plant Owners. | |||||||||
Acquisitions of Plant Debt – On January 11, 2013, the Company used $21,500,000 of the proceeds of the January 2013 Financing Transaction to purchase from certain lenders an aggregate amount of $21,500,000 of the Plant Owners’ tranche A-2 term loans. The Company determined that the acquisition of the plant debt was a modification of terms because the lenders who held the acquired plant debt were the lenders under the January 2013 Notes. Based on the Company’s review of the present value of cash flows of the January 2013 Notes compared to the older plant debt, which resulted in a less than 10% change, the modification was not significant and the Company did not record a gain or loss associated with the modification. The Company expensed certain legal costs associated with the debt modification of approximately $408,000, rather than amortizing those expenses over the life of the debt. Because the plant debt acquired is now held by Pacific Ethanol, this specific debt is eliminated in consolidation. | |||||||||
On March 28, 2013, the Company used proceeds from the issuance of its Series A Notes and warrants to purchase $3,500,000 of revolving credit facility debt, at par, from a lender. Under the terms of the amended credit facility, the Company was obligated to immediately forgive the purchased amount of revolving credit facility debt and has permanently reduced the maximum commitment on this facility to $36,500,000. | |||||||||
On March 28, 2013, the Company also used proceeds from the issuance of its Series A Notes and warrants to purchase $2,636,000 of tranche A-2 term loans and an additional 3% ownership interest in New PE Holdco for a combined purchase price of $2,150,000. The Company first allocated $331,000 of this payment to the New PE Holdco ownership interest and the remainder was allocated to the tranche A-2 term loans. The $817,000 difference between the amount the Company allocated to the term loans and the face amount of $2,636,000 was recorded as a gain on extinguishment of debt. | |||||||||
On June 21, 2013, the Company used proceeds from the issuance of its Series B Notes to purchase $1,122,000 of revolving credit facility debt at a discount. Under the terms of the amended credit facility, the Company was obligated to immediately forgive the purchased amount of revolving credit facility debt and has permanently reduced the maximum commitment on this facility to $35,378,000. | |||||||||
On June 21, 2013, the Company also used proceeds from the issuance of its Series B Notes to purchase $2,907,000 of tranche A-1 and A-2 term loans at a discount and an additional 2% ownership interest in New PE Holdco for $197,000. | |||||||||
The Company recorded a gain on extinguishment of debt of $998,000 related to the discount it paid for the revolving and term loans. | |||||||||
New Operating Line of Credit – On October 29, 2012, the Plant Owners entered into a new revolving credit facility that initially provided for up to an additional $10,000,000. The Plant Owners may request increases in the amount of the facility in increments of not less than $1,000,000, up to a maximum additional credit limit of $5,000,000. The Plant Owners have the right at any time, and from time to time, but subject to limitations imposed by an intercreditor agreement, to prepay in whole or in part the revolving loans and tranche A-1 loans (and the tranche A-2 loans following the payment in full of the revolving loans and tranche A-1 loans). However, in the event of any prepayment of the tranche A-1 loans that have a maturity date of June 30, 2016, the Plant Owners must pay a premium equal to the present value of all interest payments that would have accrued from the date of such payment through June 30, 2016, calculated using a discount rate, applied quarterly, equal to the Treasury Rate as of such prepayment date plus 50 basis points. The credit agreement also provides for mandatory prepayments in connection with certain customary events, including any sale of material assets; however, certain mandatory prepayments are not subject to the prepayment premium. On January 4, 2013, the Plant Owners entered into an amendment to the new revolving credit facility and extended the maturity date of the facility from June 25, 2013 to June 25, 2015. On March 28, 2013, the lenders approved $5,000,000 in additional availability for a maximum total credit limit of $15,000,000 under the facility. At September 30, 2013, the interest rate was approximately 8.75%. As of September 30, 2013, the Plant Owners had unused availability under the new revolving credit facility of $8,000,000. | |||||||||
All of the term loans and revolving credit facilities represent permanent financing and are secured by a perfected, first-priority security interest in all of the assets, including inventories and all rights, title and interest in all tangible and intangible assets, of the Plant Owners. The Plant Owners’ creditors do not have recourse to Pacific Ethanol, Inc. | |||||||||
Note Payable to Related Party – The Company had a note payable to its Chief Executive Officer totaling $750,000 as of September 30, 2013 and December 31, 2012. Interest on the unpaid principal amount accrues at a rate of 8.00% per annum. On February 7, 2013, the maturity date was extended to March 31, 2014. |
6_CAPITAL_LEASE_LIABILITIES
6. CAPITAL LEASE LIABILITIES | 9 Months Ended |
Sep. 30, 2013 | |
Capital Lease Liabilities | ' |
CAPITAL LEASE LIABILITIES | ' |
The Company financed capital expenditures in connection with the implementation of corn oil separation technology at its Magic Valley and Stockton facilities. The Company initially recorded aggregate capital lease liabilities of $12,122,000. The Company is required to pay these liabilities with the proceeds from a portion of its corn oil sales, subject to certain minimum payment amounts. The Company has estimated, based on its projected corn oil sales and future minimum payment amounts that its future minimum lease payments are to be $1,147,000 for the remainder of 2013, and $6,769,000, $3,005,000, $900,000, $900,000 and $675,000 for 2014, 2015, 2016, 2017 and 2018, respectively. |
7_COMMON_STOCK_AND_WARRANTS
7. COMMON STOCK AND WARRANTS | 9 Months Ended |
Sep. 30, 2013 | |
Stockholders' Equity Note [Abstract] | ' |
7. COMMON STOCK AND WARRANTS | ' |
Grants of stock – In January 2013, the Company granted 63,334 shares of restricted stock to members of the Company’s Board of Directors, with the exception of its Chief Executive Officer, that vest on the earlier of the date of the Company’s 2013 annual meeting of stockholders, or July 31, 2013, and had a grant date fair value of $5.25 per share. In January 2013, the Company granted an additional 94,171 shares of restricted stock to the Company’s non-executive employees that vest in equal amounts on each of April 1, 2013, 2014 and 2015 and had a grant date fair value of $5.25 per share. In March and April 2013, the Company granted an additional 130,002 shares of restricted common stock to its executive employees that vest in equal installments on each of April 1, 2013, 2014 and 2015 and had a grant date fair value of $5.70 per share. In June 2013, the Company granted an additional 327,775 shares of restricted stock and 229,025 options to the Company’s directors and employees that vest in equal amounts on each of April 1, 2014, 2015 and 2016 and had grant date fair values of $3.74 and $1.68 per share, respectively. | |
Warrant issuances – In connection with the January 2013 Financing Transaction, the Company issued warrants to purchase an aggregate of 1,708,700 shares of common stock. The warrants have an exercise price of $6.60 per share and expire in January 2018. | |
In connection with the Company’s issuance of its Series A and B Notes, the Company issued warrants to purchase up to 788,400 and 1,051,200 shares of common stock. The warrants have an exercise price of $7.70 per share and expire in March 2015 and June 2015, respectively. | |
The Company has determined that the warrants issued in the above transactions did not meet the conditions for classification in stockholders’ equity. As a result, the Company has recorded the warrants as a liability at fair value. The Company will revalue the warrants at each reporting period. | |
Warrant exercises – During February 2013, certain holders exercised warrants and received 267,733 shares of the Company’s common stock upon payment of an aggregate of $2,064,000 in cash. The Company paid $785,800 in cash to the warrant holders as an inducement for these exercises, which was recorded as an expense. In March 2013, a holder exercised warrants on a cashless basis and received 11,356 shares of the Company’s common stock. |
8_COMMITMENTS_AND_CONTINGENCIE
8. COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
8. COMMITMENTS AND CONTINGENCIES | ' |
Sales Commitments – At September 30, 2013, the Company had entered into sales contracts with its major customers to sell certain quantities of ethanol, WDG, syrup and corn oil. The Company had open ethanol indexed-price contracts for 102,600,000 gallons of ethanol as of September 30, 2013. The Company had open WDG, syrup and corn oil fixed-price sales contracts valued at $134,000 and open indexed-price sales contracts for 2,500 tons of WDG and syrup as of September 30, 2013. These sales contracts are expected to be completed over the next twelve months. | |
Purchase Commitments – At September 30, 2013, the Company had fixed-price purchase contracts with its suppliers to purchase $14,200,000 of ethanol. These contracts are expected to be satisfied over the next twelve months. | |
Litigation – General – The Company is subject to various claims and contingencies in the ordinary course of its business, including those related to litigation, business transactions, employee-related matters, and others. When the Company is aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, the Company will record a liability for the loss. If the loss is not probable or the amount of the loss cannot be reasonably estimated, the Company discloses the claim if the likelihood of a potential loss is reasonably possible and the amount involved could be material. While there can be no assurances, the Company does not expect that any of its pending legal proceedings will have a material financial impact on the Company’s operating results. | |
On May 24, 2013, GS CleanTech Corporation (“GS CleanTech”), filed a suit in the United States District Court for the Eastern District of California, Sacramento Division (Case No.: 2:13-CV-01042-JAM-AC), naming Pacific Ethanol, Inc. as a defendant. The suit alleges infringement of a patent assigned to GS CleanTech by virtue of certain corn oil separation technology in use at one or more of the ethanol production facilities in which the Company has an interest, including Pacific Ethanol Stockton, LLC, located in Stockton, California. The complaint seeks preliminary and permanent injunctions against the Company, prohibiting future infringement on the patent owned by GS CleanTech and damages in an unspecified amount adequate to compensate GS CleanTech for the alleged patent infringement, but in any event no less than a reasonable royalty for the use made of the inventions of the patent, plus attorney’s fees. Pacific Ethanol, Inc. does not itself use any corn oil separation technology and may seek a dismissal on those grounds. Further, although two of the Company’s majority-owned subsidiaries do separate and market corn oil, the Company and its majority-owned subsidiaries strongly disagree that any of the subsidiaries use corn oil separation technology that infringes the patent owned by GS CleanTech. The Company has since answered the complaint and counterclaimed that the patent claims at issue are invalid and that the Company is not infringing. |
9_FAIR_VALUE_MEASUREMENTS
9. FAIR VALUE MEASUREMENTS | 9 Months Ended | ||||||||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ' | ||||||||||||||||||||||||||||
9. FAIR VALUE MEASUREMENTS. | ' | ||||||||||||||||||||||||||||
The fair value hierarchy prioritizes the inputs used in valuation techniques into three levels as follows: | |||||||||||||||||||||||||||||
· | Level 1 – Observable inputs – unadjusted quoted prices in active markets for identical assets and liabilities; | ||||||||||||||||||||||||||||
· | Level 2 – Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with market data; and | ||||||||||||||||||||||||||||
· | Level 3 – Unobservable inputs – includes amounts derived from valuation models where one or more significant inputs are unobservable. For fair value measurements using significant unobservable inputs, a description of the inputs and the information used to develop the inputs is required along with a reconciliation of Level 3 values from the prior reporting period. | ||||||||||||||||||||||||||||
The Company recorded its warrants issued from 2010 through 2013 at fair value and designated them as Level 3 on their issuance dates. | |||||||||||||||||||||||||||||
Warrants – Except for the warrants issued September 26, 2012, the warrants were valued using a Monte Carlo Binomial Lattice-Based valuation methodology, adjusted for marketability restrictions. The warrants issued September 26, 2012, did not contain any anti-dilution protection features. As a result, the warrants were valued using the Black-Scholes Valuation Model. Of the various inputs used, the volatility and the current price of the Company’s common stock most significantly impact the fair value adjustments of the warrants. As the Company’s common stock increases or decreases, the valuation of the warrants will increase or decrease, respectively. As the estimated volatility of the Company’s common stock increases or decreases, the valuation of the warrants will increase or decrease, respectively. These changes may result in significantly higher or lower fair value measurements from period to period. | |||||||||||||||||||||||||||||
Significant assumptions used and related fair values for the warrants as of September 30, 2013 were as follows: | |||||||||||||||||||||||||||||
Original Issuance | Exercise Price | Volatility | Risk-Free | Term | Discount for marketability restrictions | Warrants Outstanding | Fair Value | ||||||||||||||||||||||
Interest | (years) | ||||||||||||||||||||||||||||
Rate | |||||||||||||||||||||||||||||
6/21/13 | $ | 7.7 | 58.70% | 0.22% | 1.49 | 27.70% | 1,051,200 | $ | 494,600 | ||||||||||||||||||||
3/28/13 | $ | 7.7 | 58.70% | 0.22% | 1.49 | 27.70% | 788,400 | 370,300 | |||||||||||||||||||||
1/11/13 | $ | 6.6 | 64.70% | 1.01% | 4.28 | 46.50% | 1,708,700 | 1,940,500 | |||||||||||||||||||||
9/26/12 | $ | 8.85 | 61.60% | 0.33% | 1.99 | 46.50% | 1,770,800 | 315,000 | |||||||||||||||||||||
7/3/12 | $ | 6.36 | 63.70% | 1.01% | 3.76 | 43.50% | 1,812,400 | 2,018,100 | |||||||||||||||||||||
7/3/12 | $ | 5.68 | 48.20% | 0.02% | 0.26 | 42.80% | 803,900 | 34,700 | |||||||||||||||||||||
12/13/11 | $ | 8.92 | 61.00% | 0.63% | 3.21 | 39.90% | 305,700 | 318,000 | |||||||||||||||||||||
$ | 5,491,200 | ||||||||||||||||||||||||||||
Significant assumptions used and related fair values for the warrants as of December 31, 2012 were as follows: | |||||||||||||||||||||||||||||
Original Issuance | Exercise Price | Volatility | Risk-Free | Term | Discount for marketability restrictions | Warrants Outstanding | Fair Value | ||||||||||||||||||||||
Interest | (years) | ||||||||||||||||||||||||||||
Rate | |||||||||||||||||||||||||||||
9/26/12 | $ | 8.85 | 70.20% | 0.36% | 2.74 | 53.90% | 1,833,000 | $ | 1,112,000 | ||||||||||||||||||||
7/3/12 | $ | 7.5 | 76.10% | 0.72% | 4.51 | 55.50% | 1,867,000 | 2,756,000 | |||||||||||||||||||||
7/3/12 | $ | 6.45 | 69.30% | 0.16% | 1.01 | 55.50% | 930,000 | 509,000 | |||||||||||||||||||||
12/13/11 | $ | 12.45 | 74.40% | 0.54% | 3.95 | 52.30% | 330,000 | 480,000 | |||||||||||||||||||||
10/6/10 | $ | 1.8 | 76.00% | 0.72% | 4.8 | 46.40% | 17,000 | 35,000 | |||||||||||||||||||||
$ | 4,892,000 | ||||||||||||||||||||||||||||
Convertible Notes – The conversion feature imbedded in the convertible notes was valued using a combination of a Monte Carlo Binomial Lattice-Based valuation methodology, adjusted for marketability restrictions. Significant assumptions used and related fair value for the conversion feature as of September 30, 2013 were as follows: | |||||||||||||||||||||||||||||
Instrument | Initial | Volatility | Risk-Free | Term | Discount for marketability restrictions | Fair Value | |||||||||||||||||||||||
Conversion | Interest | (years) | |||||||||||||||||||||||||||
Price | Rate | ||||||||||||||||||||||||||||
Series B Notes | $ | 15 | 50.70% | 0.04% | 0.5 | 14.20% | $ | 1,139,100 | |||||||||||||||||||||
Other Derivative Instruments – The Company’s other derivative instruments consist of commodity positions. The fair value of the commodity positions are based on quoted prices on the commodity exchanges and are designated as Level 1. | |||||||||||||||||||||||||||||
The following table summarizes fair value measurements by level at September 30, 2013 (in thousands): | |||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||
Commodity contracts(1) | $ | 128 | $ | – | $ | – | $ | 128 | |||||||||||||||||||||
Total Assets | $ | 128 | $ | – | $ | – | $ | 128 | |||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||
Warrants(2) | $ | – | $ | – | $ | 5,491 | $ | 5,491 | |||||||||||||||||||||
Conversion feature(2) | – | – | 1,139 | 1,139 | |||||||||||||||||||||||||
Commodity contracts(3) | 44 | – | – | 44 | |||||||||||||||||||||||||
Total Liabilities | $ | 44 | $ | – | $ | 6,630 | $ | 6,674 | |||||||||||||||||||||
__________ | |||||||||||||||||||||||||||||
(1) Included in other current assets in the consolidated balance sheets. | |||||||||||||||||||||||||||||
(2) Included in warrant liabilities and conversion features at fair value in the consolidated balance sheets. | |||||||||||||||||||||||||||||
(3) Included in accrued liabilities in the consolidated balance sheets. | |||||||||||||||||||||||||||||
The following table summarizes fair value measurements by level at December 31, 2012 (in thousands): | |||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||
Commodity contracts(1) | $ | 189 | $ | – | $ | – | $ | 189 | |||||||||||||||||||||
Total Assets | $ | 189 | $ | – | $ | – | $ | 189 | |||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||
Warrants(2) | $ | – | $ | – | $ | 4,892 | $ | 4,892 | |||||||||||||||||||||
Commodity contracts(3) | 167 | – | – | 167 | |||||||||||||||||||||||||
Total Liabilities | $ | 167 | $ | – | $ | 4,892 | $ | 5,059 | |||||||||||||||||||||
__________ | |||||||||||||||||||||||||||||
(1) Included in other current assets in the consolidated balance sheets. | |||||||||||||||||||||||||||||
(2) Included in warrant liabilities and conversion features at fair value in the consolidated balance sheets. | |||||||||||||||||||||||||||||
(3) Included in accrued liabilities in the consolidated balance sheets. | |||||||||||||||||||||||||||||
For fair value measurements using significant unobservable inputs (Level 3), a description of the inputs and the information used to develop the inputs is required along with a reconciliation of Level 3 values from the prior reporting period. The changes in the Company’s fair value of its Level 3 inputs were as follows (in thousands): | |||||||||||||||||||||||||||||
Warrants | Conversion Features | ||||||||||||||||||||||||||||
Balance, December 31, 2012 | $ | 4,892 | $ | – | |||||||||||||||||||||||||
Issuance of warrants in January offering | 2,657 | – | |||||||||||||||||||||||||||
Issuance of notes and warrants on March 28, 2013 | 1,572 | 1,401 | |||||||||||||||||||||||||||
Issuance of notes on June 21, 2013 | – | 2,929 | |||||||||||||||||||||||||||
Conversions of notes | – | (4,269 | ) | ||||||||||||||||||||||||||
Exercises of warrants | (260 | ) | – | ||||||||||||||||||||||||||
Adjustments to fair value | (3,370 | ) | 1,078 | ||||||||||||||||||||||||||
Balance, September 30, 2013 | $ | 5,491 | $ | 1,139 | |||||||||||||||||||||||||
Other financial instruments not measured at fair value on a recurring basis include accounts receivable, net, accounts payable – trade, accrued liabilities, current portion – long-term debt, accrued preferred dividends, other liabilities and long-term debt. With the exception of long-term debt, the carrying amount approximates fair value because of the short maturity of these instruments as reported on the Company’s consolidated balance sheets as of September 30, 2013 and December 31, 2012. The carrying value of the long-term debt either has a short period to maturity or bears interest at a variable rate and therefore is also considered to approximate fair value. |
10_EARNINGS_PER_SHARE
10. EARNINGS PER SHARE | 9 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
Earnings Per Share [Abstract] | ' | ||||||||||||
10. EARNINGS PER SHARE | ' | ||||||||||||
The following tables compute basic and diluted earnings per share (in thousands, except per share data): | |||||||||||||
Three Months Ended September 30, 2013 | |||||||||||||
Loss | Shares | Per-Share | |||||||||||
Numerator | Denominator | Amount | |||||||||||
Net loss attributed to Pacific Ethanol | $ | (4,971 | ) | ||||||||||
Less: Preferred stock dividends | (319 | ) | |||||||||||
Basic and diluted loss per share: | |||||||||||||
Loss available to common stockholders | $ | (5,290 | ) | 13,177 | $ | (0.40 | ) | ||||||
Three Months Ended September 30, 2012 | |||||||||||||
Loss | Shares | Per-Share | |||||||||||
Numerator | Denominator | Amount | |||||||||||
Net loss attributed to Pacific Ethanol | $ | (5,971 | ) | ||||||||||
Less: Preferred stock dividends | (319 | ) | |||||||||||
Basic and diluted loss per share: | |||||||||||||
Loss available to common stockholders | $ | (6,290 | ) | 7,712 | $ | (0.82 | ) | ||||||
Nine Months Ended September 30, 2013 | |||||||||||||
Loss | Shares | Per-Share | |||||||||||
Numerator | Denominator | Amount | |||||||||||
Net loss attributed to Pacific Ethanol | $ | (9,374 | ) | ||||||||||
Less: Preferred stock dividends | (946 | ) | |||||||||||
Basic and diluted loss per share: | |||||||||||||
Loss available to common stockholders | $ | (10,320 | ) | 11,380 | $ | (0.91 | ) | ||||||
Nine Months Ended September 30, 2012 | |||||||||||||
Loss | Shares | Per-Share | |||||||||||
Numerator | Denominator | Amount | |||||||||||
Net loss attributed to Pacific Ethanol | $ | (13,553 | ) | ||||||||||
Less: Preferred stock dividends | (949 | ) | |||||||||||
Basic and diluted loss per share: | |||||||||||||
Loss available to common stockholders | $ | (14,502 | ) | 6,414 | $ | (2.26 | ) | ||||||
There were an aggregate of 2,094,000 and 1,503,000 potentially dilutive weighted-average shares from convertible securities outstanding for the three and nine months ended September 30, 2013, respectively. These convertible securities were not considered in calculating diluted net loss per share for the three and nine months ended September 30, 2013, as their effect would have been anti-dilutive. |
11_RELATED_PARTY_TRANSACTIONS
11. RELATED PARTY TRANSACTIONS | 9 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
Related Party Transactions [Abstract] | ' | ||||||||||
11. RELATED PARTY TRANSACTIONS | ' | ||||||||||
Preferred Dividends – The Company accrues dividends quarterly in respect of its Series B Preferred Stock. Since the beginning of 2012, the Company has paid these dividends quarterly in cash. During 2009, 2010 and 2011, however, the Company accrued but did not pay dividends aggregating $7,315,000. Beginning in 2012, the Company has entered into a series of agreements with the holders of its Series B Preferred Stock under which the Company issued shares of its common stock in satisfaction of a portion of the accrued and unpaid dividends. In connection with the Company’s payment of accrued and unpaid dividends, the holders of its Series B Preferred Stock agreed to forebear from exercising any rights they may have with the respect to accrued and unpaid dividends. The following table summarizes the details of the Company’s agreements with the holders of its Series B Preferred Stock: | |||||||||||
Agreement Date | Amount of | Shares of Common | Extended | ||||||||
Dividends Paid | Stock Issued | Forbearance Date | |||||||||
12-Aug-12 | $ | 732,000 | 157,000 | 1-Jan-14 | |||||||
26-Dec-12 | $ | 732,000 | 144,500 | 30-Jun-14 | |||||||
27-Mar-13 | $ | 732,000 | 139,000 | 30-Sep-14 | |||||||
26-Jul-13 | $ | 731,000 | 175,000 | 31-Dec-14 | |||||||
17-Sep-13 | $ | 731,000 | 197,000 | 31-Mar-15 | |||||||
Total | $ | 3,658,000 | 812,500 | ||||||||
Accrued and unpaid dividends | $ | 3,657,000 | |||||||||
The Company believes it has adequate liquidity to continue to pay quarterly dividends in cash for at least the next twelve months. The Company may continue to pay down the balance of accrued and unpaid dividends in respect of its Series B Preferred Stock by issuing additional shares of common stock. The Company does not believe that these contemplated dividend payments in cash and stock will materially impact its liquidity. If the Company fails to make ongoing quarterly cash dividend payments, it will be in default under the terms of its agreements with the holders of its Series B Preferred Stock and the holders’ current forbearance through March 31, 2015 will be ineffective. The Company could experience a material adverse effect on its liquidity if it is required to pay in cash the entire current balance of accrued and unpaid dividends; however, the Company believes such an outcome is remote. | |||||||||||
Note Payable to Related Party – The Company had a note payable to its Chief Executive Officer totaling $750,000 as of September 30, 2013 and December 31, 2012. On February 7, 2013, the maturity date was extended to March 31, 2014. |
12_SUBSEQUENT_EVENTS
12. SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2013 | |
Subsequent Events [Abstract] | ' |
12. SUBSEQUENT EVENT | ' |
Series B Notes – From October 1, 2013 through November 8, 2013, the Company processed a number of conversions in respect of the Series B Notes. In the aggregate, the Company issued 773,000 shares of its common stock in payment of principal in an aggregate amount of $2,275,000 plus interest in respect of the Series B Notes. As of November 8, 2013, the Series B Notes had an aggregate outstanding principal balance of $250,000. | |
Sugar Feedstock Purchase – On October 1, 2013, the Company purchased $6,800,000 of raw beet sugar to be used as feedstock over the next twelve months. The Company paid $1,900,000 in cash and financed $5,000,000, which amount is to be repaid in weekly installments based on the amount of sugar shipped to the Company with any remaining principal amount and accrued interest due and payable at maturity on September 30, 2014. |
1_ORGANIZATION_AND_BASIS_OF_PR1
1. ORGANIZATION AND BASIS OF PRESENTATION (Policies) | 9 Months Ended |
Sep. 30, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Organization and Business | ' |
Organization and Business – The consolidated financial statements include, for all periods presented, the accounts of Pacific Ethanol, Inc., a Delaware corporation (“Pacific Ethanol”), and its direct and indirect subsidiaries, including its wholly-owned subsidiaries, Kinergy Marketing, LLC, an Oregon limited liability company (“Kinergy”), Pacific Ag. Products, LLC, a California limited liability company (“PAP”) and Pacific Ethanol Management Services Corp., a Delaware corporation, and including its majority-owned subsidiary, New PE Holdco LLC (“New PE Holdco”), which owns the Plant Owners (as defined below) (collectively, the “Company”). | |
The Company is the leading marketer and producer of low-carbon renewable fuels in the Western United States. The Company also sells ethanol co-products, including wet distillers grain (“WDG”), a nutritious animal feed, syrup and corn oil. Serving integrated oil companies and gasoline marketers who blend ethanol into gasoline, the Company provides transportation, storage and delivery of ethanol through third-party service providers in the Western United States, primarily in California, Arizona, Nevada, Utah, Oregon, Colorado, Idaho and Washington. The Company had an 85% and 67% ownership interest in New PE Holdco, the owner of four ethanol production facilities, as of September 30, 2013 and December 31, 2012, respectively. The facilities are near their respective fuel and feed customers, offering significant timing, transportation cost and logistical advantages. The Company sells ethanol produced by the Pacific Ethanol Plants (as defined below) and unrelated third parties to gasoline refining and distribution companies, sells its WDG to dairy operators and animal feed distributors and sells its corn oil to poultry and biodiesel customers. | |
The Company manages the production and operation of four ethanol production facilities, namely, Pacific Ethanol Madera LLC, Pacific Ethanol Columbia, LLC, Pacific Ethanol Stockton, LLC and Pacific Ethanol Magic Valley, LLC (collectively, the “Pacific Ethanol Plants”) and their holding company, Pacific Ethanol Holding Co. LLC (“PEHC,” and together with the Pacific Ethanol Plants, the “Plant Owners”). PEHC is a wholly-owned subsidiary of New PE Holdco. These four facilities have an aggregate annual ethanol production capacity of up to 200 million gallons. As of September 30, 2013, three of the facilities were operating and one of the facilities was idled. As market conditions change, the Company may increase, decrease or idle production at one or more operational facilities or resume operations at any idled facility. | |
Reverse Stock Split | ' |
Reverse Stock Split – On May 14, 2013, the Company effected a one-for-fifteen reverse stock split. All share and per share information has been restated to retroactively show the effect of this stock split. | |
Liquidity | ' |
Liquidity – During the nine months ended September 30, 2013, the Company funded its operations primarily from cash flow from operations, cash on hand, borrowings under its credit facilities and various capital raising transactions in which it raised aggregate net proceeds of $36,696,000 through the issuances of senior unsecured notes, unsecured subordinated convertible notes and in connection with the exercise of warrants. | |
The Company’s current available capital resources consist of cash on hand and amounts available for borrowing under Kinergy’s credit facility. In addition, the Plant Owners have credit facilities for use in the operations of the Pacific Ethanol Plants. The Company expects that its future available capital resources will consist primarily of its remaining cash balances, cash flow from operations, if any, amounts available for borrowing, if any, under Kinergy’s credit facility, cash generated from Kinergy’s ethanol marketing business, fees paid under the asset management agreement relating to the Company’s operation of the Pacific Ethanol Plants and distributions, if any, in respect of the Company’s ownership interest in New PE Holdco. | |
The Company believes that current and future available capital resources, revenues generated from operations, and other existing sources of liquidity, including its credit facilities, will be adequate to meet its anticipated working capital and capital expenditure requirements for at least the next twelve months. If, however, the Company’s capital requirements or cash flow vary materially from its current projections, if crush and commodity margins, which reflect ethanol and co-product sales prices relative to ethanol production inputs such as corn and natural gas, decline in any material respect, or if other unforeseen circumstances occur, the Company may require additional financing. The Company also may require additional capital to restart its Madera, California facility. The Company’s failure to raise capital, if and when needed, could restrict its growth, or hinder its ability to compete. | |
Accounts Receivable and Allowance for Doubtful Accounts | ' |
Accounts Receivable and Allowance for Doubtful Accounts – Trade accounts receivable are presented at face value, net of the allowance for doubtful accounts. The Company sells ethanol to gasoline refining and distribution companies and sells WDG to dairy operators and animal feed distributors generally without requiring collateral. | |
The Company maintains an allowance for doubtful accounts for balances that appear to have specific collection issues. The collection process is based on the age of the invoice and requires attempted contacts with the customer at specified intervals. If, after a specified number of days, the Company has been unsuccessful in its collection efforts, a bad debt allowance is recorded for the balance in question. Delinquent accounts receivable are charged against the allowance for doubtful accounts once uncollectibility has been determined. The factors considered in reaching this determination are the apparent financial condition of the customer and the Company’s success in contacting and negotiating with the customer. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of ability to make payments, additional allowances may be required. | |
Of the accounts receivable balance, approximately $22,284,000 and $20,627,000 at September 30, 2013 and December 31, 2012, respectively, were used as collateral under Kinergy’s working capital line of credit. The allowance for doubtful accounts was $249,000 and $18,000 as of September 30, 2013 and December 31, 2012, respectively. The Company recorded net bad debt expense of $38,000 and $15,000 for the three months ended September 30, 2013 and 2012, respectively. The Company recorded net bad debt expense of $231,000 and $15,000 for the nine months ended September 30, 2013 and 2012, respectively. | |
Basis of Presentation-Interim Financial Statements | ' |
Basis of Presentation–Interim Financial Statements – The accompanying unaudited consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Results for interim periods should not be considered indicative of results for a full year. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. The accounting policies used in preparing these consolidated financial statements are the same as those described in Note 1 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the results for interim periods have been included. All significant intercompany accounts and transactions have been eliminated in consolidation. | |
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates are required as part of determining the consolidation of variable interest entities, fair value of convertible notes and warrants, allowance for doubtful accounts, estimated lives of property and equipment and intangibles, long-lived asset impairments, valuation allowances on deferred income taxes and the potential outcome of future tax consequences of events recognized in the Company’s financial statements or tax returns. Actual results and outcomes may materially differ from management’s estimates and assumptions. | |
Reclassifications of prior year’s data have been made to conform to 2013 classifications. Such classifications had no effect on net income (loss) reported in the consolidated statements of operations. |
2_VARIABLE_INTEREST_ENTITY_Tab
2. VARIABLE INTEREST ENTITY (Tables) | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
Variable Interest Entity | ' | ||||
Value and classification of assets that are collateral for obligations of New PE Holdco | ' | ||||
The carrying values and classification of assets that are collateral for the obligations of New PE Holdco as of September 30, 2013 were as follows (in thousands): | |||||
Cash and cash equivalents | $ | 60 | |||
Other current assets | 7,821 | ||||
Property and equipment | 151,612 | ||||
Other assets | 2,947 | ||||
Total assets | $ | 162,440 | |||
The liabilities of New PE Holdco for which creditors do not have recourse to the general credit of Pacific Ethanol, Inc. as of September 30, 2013 were as follows (in thousands): | |||||
Current liabilities | $ | 5,665 | |||
Long-term debt | 101,944 | ||||
Other liabilities | 11,900 | ||||
Total liabilities | $ | 119,509 |
3_INVENTORIES_Tables
3. INVENTORIES (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Inventories | ' | ||||||||
Inventories consisted primarily of bulk ethanol and unleaded fuel, and are valued at the lower-of-cost-or-market, with cost determined on a first-in, first-out basis. Inventory balances consisted of the following (in thousands): | |||||||||
30-Sep-13 | 31-Dec-12 | ||||||||
Finished goods | $ | 7,937 | $ | 10,230 | |||||
Work in progress | 3,622 | 3,846 | |||||||
Raw materials | 1,282 | 1,363 | |||||||
Other | 888 | 805 | |||||||
Total | $ | 13,729 | $ | 16,244 |
4_DERIVATIVES_Tables
4. DERIVATIVES (Tables) | 9 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
Derivative Asset, Fair Value, Amount Not Offset Against Collateral [Abstract] | ' | ||||||||||
Derivatives not designated as hedging instruments | ' | ||||||||||
The classification and amounts of the Company’s recognized gains (losses) for its derivatives not designated as hedging instruments are as follows (in thousands): | |||||||||||
Realized Losses | |||||||||||
Three Months Ended September 30, | |||||||||||
Type of Instrument | Statements of Operations Location | 2013 | 2012 | ||||||||
Commodity contracts | Cost of goods sold | $ | (1,612 | ) | $ | (440 | ) | ||||
Unrealized Gains | |||||||||||
Three Months Ended September 30, | |||||||||||
Type of Instrument | Statements of Operations Location | 2013 | 2012 | ||||||||
Commodity contracts | Cost of goods sold | $ | 444 | $ | 388 | ||||||
Realized Gains (Losses) | |||||||||||
Nine Months Ended September 30, | |||||||||||
Type of Instrument | Statements of Operations Location | 2013 | 2012 | ||||||||
Commodity contracts | Cost of goods sold | $ | (1,714 | ) | $ | 277 | |||||
Unrealized Gains (Losses) | |||||||||||
Nine Months Ended September 30, | |||||||||||
Type of Instrument | Statements of Operations Location | 2013 | 2012 | ||||||||
Commodity contracts | Cost of goods sold | $ | 62 | $ | (479 | ) |
5_DEBT_Tables
5. DEBT (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Long Term Debt | ' | ||||||||
Long-term borrowings are summarized as follows (in thousands): | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Kinergy operating line of credit | $ | 19,112 | $ | 19,711 | |||||
Senior unsecured notes | 16,889 | – | |||||||
Subordinated convertible notes | 2,525 | – | |||||||
Plant Owners’ term debt and accrued interest | 59,565 | 54,821 | |||||||
Plant Owners’ operating lines of credit | 42,378 | 46,000 | |||||||
Note payable to related party | 750 | 750 | |||||||
141,219 | 121,282 | ||||||||
Less: Parent purchased Plant Owners’ term debt | (27,088 | ) | – | ||||||
Less: Unamortized discount on senior unsecured notes | (2,022 | ) | – | ||||||
Less: Unamortized discount on convertible notes | (1,142 | ) | – | ||||||
110,967 | 121,282 | ||||||||
Less short-term portion | (2,133 | ) | (4,029 | ) | |||||
Long-term debt | $ | 108,834 | $ | 117,253 |
9_FAIR_VALUE_MEASUREMENTS_Tabl
9. FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ' | ||||||||||||||||||||||||||||
Assumptions used and related fair values for warrants | ' | ||||||||||||||||||||||||||||
Significant assumptions used and related fair values for the warrants as of September 30, 2013 were as follows: | |||||||||||||||||||||||||||||
Original Issuance | Exercise Price | Volatility | Risk-Free | Term | Discount for marketability restrictions | Warrants Outstanding | Fair Value | ||||||||||||||||||||||
Interest | (years) | ||||||||||||||||||||||||||||
Rate | |||||||||||||||||||||||||||||
6/21/13 | $ | 7.7 | 58.70% | 0.22% | 1.49 | 27.70% | 1,051,200 | $ | 494,600 | ||||||||||||||||||||
3/28/13 | $ | 7.7 | 58.70% | 0.22% | 1.49 | 27.70% | 788,400 | 370,300 | |||||||||||||||||||||
1/11/13 | $ | 6.6 | 64.70% | 1.01% | 4.28 | 46.50% | 1,708,700 | 1,940,500 | |||||||||||||||||||||
9/26/12 | $ | 8.85 | 61.60% | 0.33% | 1.99 | 46.50% | 1,770,800 | 315,000 | |||||||||||||||||||||
7/3/12 | $ | 6.36 | 63.70% | 1.01% | 3.76 | 43.50% | 1,812,400 | 2,018,100 | |||||||||||||||||||||
7/3/12 | $ | 5.68 | 48.20% | 0.02% | 0.26 | 42.80% | 803,900 | 34,700 | |||||||||||||||||||||
12/13/11 | $ | 8.92 | 61.00% | 0.63% | 3.21 | 39.90% | 305,700 | 318,000 | |||||||||||||||||||||
$ | 5,491,200 | ||||||||||||||||||||||||||||
Significant assumptions used and related fair values for the warrants as of December 31, 2012 were as follows: | |||||||||||||||||||||||||||||
Original Issuance | Exercise Price | Volatility | Risk-Free | Term | Discount for marketability restrictions | Warrants Outstanding | Fair Value | ||||||||||||||||||||||
Interest | (years) | ||||||||||||||||||||||||||||
Rate | |||||||||||||||||||||||||||||
9/26/12 | $ | 8.85 | 70.20% | 0.36% | 2.74 | 53.90% | 1,833,000 | $ | 1,112,000 | ||||||||||||||||||||
7/3/12 | $ | 7.5 | 76.10% | 0.72% | 4.51 | 55.50% | 1,867,000 | 2,756,000 | |||||||||||||||||||||
7/3/12 | $ | 6.45 | 69.30% | 0.16% | 1.01 | 55.50% | 930,000 | 509,000 | |||||||||||||||||||||
12/13/11 | $ | 12.45 | 74.40% | 0.54% | 3.95 | 52.30% | 330,000 | 480,000 | |||||||||||||||||||||
10/6/10 | $ | 1.8 | 76.00% | 0.72% | 4.8 | 46.40% | 17,000 | 35,000 | |||||||||||||||||||||
$ | 4,892,000 | ||||||||||||||||||||||||||||
Assumptions used and related fair value for conversion feature | ' | ||||||||||||||||||||||||||||
Significant assumptions used and related fair value for the conversion feature as of September 30, 2013 were as follows: | |||||||||||||||||||||||||||||
Instrument | Initial | Volatility | Risk-Free | Term | Discount for marketability restrictions | Fair Value | |||||||||||||||||||||||
Conversion | Interest | (years) | |||||||||||||||||||||||||||
Price | Rate | ||||||||||||||||||||||||||||
Series B Notes | $ | 15 | 50.70% | 0.04% | 0.5 | 14.20% | $ | 1,139,100 | |||||||||||||||||||||
Summary of fair value measurements by level | ' | ||||||||||||||||||||||||||||
The following table summarizes fair value measurements by level at September 30, 2013 (in thousands): | |||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||
Commodity contracts(1) | $ | 128 | $ | – | $ | – | $ | 128 | |||||||||||||||||||||
Total Assets | $ | 128 | $ | – | $ | – | $ | 128 | |||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||
Warrants(2) | $ | – | $ | – | $ | 5,491 | $ | 5,491 | |||||||||||||||||||||
Conversion feature(2) | – | – | 1,139 | 1,139 | |||||||||||||||||||||||||
Commodity contracts(3) | 44 | – | – | 44 | |||||||||||||||||||||||||
Total Liabilities | $ | 44 | $ | – | $ | 6,630 | $ | 6,674 | |||||||||||||||||||||
__________ | |||||||||||||||||||||||||||||
(1) Included in other current assets in the consolidated balance sheets. | |||||||||||||||||||||||||||||
(2) Included in warrant liabilities and conversion features at fair value in the consolidated balance sheets. | |||||||||||||||||||||||||||||
(3) Included in accrued liabilities in the consolidated balance sheets. | |||||||||||||||||||||||||||||
The following table summarizes fair value measurements by level at December 31, 2012 (in thousands): | |||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||
Commodity contracts(1) | $ | 189 | $ | – | $ | – | $ | 189 | |||||||||||||||||||||
Total Assets | $ | 189 | $ | – | $ | – | $ | 189 | |||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||
Warrants(2) | $ | – | $ | – | $ | 4,892 | $ | 4,892 | |||||||||||||||||||||
Commodity contracts(3) | 167 | – | – | 167 | |||||||||||||||||||||||||
Total Liabilities | $ | 167 | $ | – | $ | 4,892 | $ | 5,059 | |||||||||||||||||||||
__________ | |||||||||||||||||||||||||||||
(1) Included in other current assets in the consolidated balance sheets. | |||||||||||||||||||||||||||||
(2) Included in warrant liabilities and conversion features at fair value in the consolidated balance sheets. | |||||||||||||||||||||||||||||
(3) Included in accrued liabilities in the consolidated balance sheets. | |||||||||||||||||||||||||||||
Changes in fair value of Level 3 inputs | ' | ||||||||||||||||||||||||||||
The changes in the Company’s fair value of its Level 3 inputs were as follows (in thousands): | |||||||||||||||||||||||||||||
Warrants | Conversion Features | ||||||||||||||||||||||||||||
Balance, December 31, 2012 | $ | 4,892 | $ | – | |||||||||||||||||||||||||
Issuance of warrants in January offering | 2,657 | – | |||||||||||||||||||||||||||
Issuance of notes and warrants on March 28, 2013 | 1,572 | 1,401 | |||||||||||||||||||||||||||
Issuance of notes on June 21, 2013 | – | 2,929 | |||||||||||||||||||||||||||
Conversions of notes | – | (4,269 | ) | ||||||||||||||||||||||||||
Exercises of warrants | (260 | ) | – | ||||||||||||||||||||||||||
Adjustments to fair value | (3,370 | ) | 1,078 | ||||||||||||||||||||||||||
Balance, September 30, 2013 | $ | 5,491 | $ | 1,139 |
10_EARNINGS_PER_SHARE_Tables
10. EARNINGS PER SHARE (Tables) | 9 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
Earnings Per Share [Abstract] | ' | ||||||||||||
Computation of basic and diluted earnings per share | ' | ||||||||||||
The following tables compute basic and diluted earnings per share (in thousands, except per share data): | |||||||||||||
Three Months Ended September 30, 2013 | |||||||||||||
Loss | Shares | Per-Share | |||||||||||
Numerator | Denominator | Amount | |||||||||||
Net loss attributed to Pacific Ethanol | $ | (4,971 | ) | ||||||||||
Less: Preferred stock dividends | (319 | ) | |||||||||||
Basic and diluted loss per share: | |||||||||||||
Loss available to common stockholders | $ | (5,290 | ) | 13,177 | $ | (0.40 | ) | ||||||
Three Months Ended September 30, 2012 | |||||||||||||
Loss | Shares | Per-Share | |||||||||||
Numerator | Denominator | Amount | |||||||||||
Net loss attributed to Pacific Ethanol | $ | (5,971 | ) | ||||||||||
Less: Preferred stock dividends | (319 | ) | |||||||||||
Basic and diluted loss per share: | |||||||||||||
Loss available to common stockholders | $ | (6,290 | ) | 7,712 | $ | (0.82 | ) | ||||||
Nine Months Ended September 30, 2013 | |||||||||||||
Loss | Shares | Per-Share | |||||||||||
Numerator | Denominator | Amount | |||||||||||
Net loss attributed to Pacific Ethanol | $ | (9,374 | ) | ||||||||||
Less: Preferred stock dividends | (946 | ) | |||||||||||
Basic and diluted loss per share: | |||||||||||||
Loss available to common stockholders | $ | (10,320 | ) | 11,380 | $ | (0.91 | ) | ||||||
Nine Months Ended September 30, 2012 | |||||||||||||
Loss | Shares | Per-Share | |||||||||||
Numerator | Denominator | Amount | |||||||||||
Net loss attributed to Pacific Ethanol | $ | (13,553 | ) | ||||||||||
Less: Preferred stock dividends | (949 | ) | |||||||||||
Basic and diluted loss per share: | |||||||||||||
Loss available to common stockholders | $ | (14,502 | ) | 6,414 | $ | (2.26 | ) |
Disclosure_11_RELATED_PARTY_TR
Disclosure - 11. RELATED PARTY TRANSACTIONS (Tables) | 9 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
Disclosure - 11. Related Party Transactions Tables | ' | ||||||||||
Related party transactions table | ' | ||||||||||
The following table summarizes the related details of each agreement: | |||||||||||
Agreement Date | Amount of | Shares of Common | Extended Date | ||||||||
Dividends Paid | Stock Issued | of Forbearance | |||||||||
12-Aug-12 | $ | 732,000 | 157,000 | 1-Jan-14 | |||||||
26-Dec-12 | $ | 732,000 | 144,500 | 30-Jun-14 | |||||||
27-Mar-13 | $ | 732,000 | 139,000 | 30-Sep-14 | |||||||
26-Jul-13 | $ | 731,000 | 175,000 | 31-Dec-14 | |||||||
17-Sep-13 | $ | 731,000 | 197,000 | 31-Mar-15 | |||||||
Total | $ | 3,658,000 | 812,500 | ||||||||
Accrued and unpaid dividends | $ | 3,657,000 |
1_ORGANIZATION_AND_BASIS_OF_PR2
1. ORGANIZATION AND BASIS OF PRESENTATION (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ' | ' | ' | ' |
Proceeds from issuances of senior unsecured notes, unsecured subordinated convertible notes and in connection with the exercise of warrants | ' | ' | $36,696,000 | ' | ' |
Accounts receivable used as collateral | 22,284,000 | ' | 22,284,000 | ' | 20,627,000 |
Allowance for doubtful accounts | 249,000 | ' | 249,000 | ' | 18,000 |
Bad debt recoveries | $38,000 | $15,000 | $231,000 | $15,000 | ' |
2_VARIABLE_INTEREST_ENTITY_Det
2. VARIABLE INTEREST ENTITY (Details) (New PE Holdco, USD $) | Sep. 30, 2013 |
In Thousands, unless otherwise specified | |
Variable Interest Entity [Line Items] | ' |
Total assets | $162,440 |
Total liabilities | 119,509 |
Cash and Cash Equivalents [Member] | ' |
Variable Interest Entity [Line Items] | ' |
Total assets | 60 |
Other Current Assets [Member] | ' |
Variable Interest Entity [Line Items] | ' |
Total assets | 7,821 |
Property, Plant and Equipment [Member] | ' |
Variable Interest Entity [Line Items] | ' |
Total assets | 151,612 |
Other Assets [Member] | ' |
Variable Interest Entity [Line Items] | ' |
Total assets | 2,947 |
Other Current Liabilities [Member] | ' |
Variable Interest Entity [Line Items] | ' |
Total liabilities | 5,665 |
Long-term Debt [Member] | ' |
Variable Interest Entity [Line Items] | ' |
Total liabilities | 101,944 |
Other Liabilities [Member] | ' |
Variable Interest Entity [Line Items] | ' |
Total liabilities | $11,900 |
2_VARIABLE_INTEREST_ENTITY_Nar
2. VARIABLE INTEREST ENTITY (Narrative) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Variable Interest Entity | ' | ' | ' | ' |
Net sales attributed to New PE Holdco | $124,251,000 | $124,251,000 | $374,967,000 | $332,207,000 |
Net income (loss) attributed to New PE Holdco | $1,010,000 | $1,010,000 | $2,565,000 | $16,011,000 |
3_INVENTORIES_Details
3. INVENTORIES (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Finished goods | $7,937 | $10,230 |
Work in progress | 3,622 | 3,846 |
Raw materials | 1,282 | 1,363 |
Other inventory | 888 | 805 |
Total Inventories | $13,729 | $16,244 |
4_DERIVATIVES_Details
4. DERIVATIVES (Details) (Commodity contracts [Member], Non Designated Derivative Instruments [Member], Cost of goods sold [Member], USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Commodity contracts [Member] | Non Designated Derivative Instruments [Member] | Cost of goods sold [Member] | ' | ' | ' | ' |
Derivative Instruments, Gain (Loss) [Line Items] | ' | ' | ' | ' |
Realized Gains (Losses) | ($1,612) | ($440) | ($1,714) | $277 |
Unrealized Gains (Losses) | $444 | $388 | $62 | ($479) |
4_DERIVATIVES_Details_Narrativ
4. DERIVATIVES (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Derivative Asset, Fair Value, Amount Not Offset Against Collateral [Abstract] | ' | ' | ' | ' |
Recognized gains and losses due to change in fair value | $1,168 | $52 | $1,652 | ($202) |
5_DEBT_Details
5. DEBT (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Long-term borrowings are summarized as follows | ' | ' |
Kinergy operating line of credit | $19,112 | $19,711 |
Senior unsecured notes | 16,889 | 0 |
Subordinated convertible notes | 2,525 | 0 |
Plant Owner's term debt and accrued interest | 59,565 | 54,821 |
Plant Owner's operating lines of credit | 42,378 | 46,000 |
Note payable to related party | 750 | 750 |
Total debt | 141,219 | 121,282 |
Less: Parent purchased Plant Owners' term debt | -27,088 | 0 |
Less: Unamortized discount on senior unsecured notes | -2,022 | 0 |
Less: Unamortized discount on convertible notes | -1,142 | 0 |
Long-term Debt, current and non-current | 110,967 | 121,282 |
Less short-term portion | -2,133 | -4,029 |
Long-term debt | $108,834 | $117,253 |
5_DEBT_Details_Narrative
5. DEBT (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | |
Outstanding principal | $141,219,000 | ' | $141,219,000 | ' | $121,282,000 |
Gain (loss) on extinguishment of debt | -2,573,000 | 0 | -1,795,000 | 0 | ' |
Credit line balance | 19,112,000 | ' | 19,112,000 | ' | 19,711,000 |
Note payable to related party | 750,000 | ' | 750,000 | ' | 750,000 |
Chief Executive Officer [Member] | ' | ' | ' | ' | ' |
Note payable to related party | 750,000 | ' | 750,000 | ' | 750,000 |
Note payable maturity date | ' | ' | 31-Mar-14 | ' | ' |
Kinergy [Member] | ' | ' | ' | ' | ' |
Payments on line of credit | ' | ' | 599,000 | ' | ' |
Line of credit borrowings | 19,112,000 | ' | 19,112,000 | ' | ' |
Availability under the revolving credit facility | 5,451,000 | ' | 5,451,000 | ' | ' |
Senior Unsecured Notes | ' | ' | ' | ' | ' |
Outstanding principal | 16,889,000 | ' | 16,889,000 | ' | ' |
Principal payments made on notes | ' | ' | 5,303,000 | ' | ' |
Series A Notes | ' | ' | ' | ' | ' |
Gain (loss) on extinguishment of debt | ' | ' | 2,636,000 | ' | ' |
Series B Notes | ' | ' | ' | ' | ' |
Outstanding principal | 2,525,000 | ' | 2,525,000 | ' | ' |
Gain (loss) on extinguishment of debt | ' | ' | 998,000 | ' | ' |
Plant Owners | ' | ' | ' | ' | ' |
Availability under the revolving credit facility | 8,000,000 | ' | 8,000,000 | ' | ' |
Maximum commitment on facility | 15,000,000 | ' | 15,000,000 | ' | ' |
Credit line interest rate | 13.25% | ' | 13.25% | ' | ' |
Credit line expiration date | ' | ' | 30-Jun-16 | ' | ' |
Credit line balance | 8,279,000 | ' | 8,279,000 | ' | ' |
Accrued interest | ' | ' | 8,279,000 | ' | ' |
Subordinated Convertible Notes | ' | ' | ' | ' | ' |
Common stock issued in payment of principal, shares | ' | ' | 3,557,000 | ' | ' |
Common stock issued in payment of principal, value | ' | ' | 11,554,000 | ' | ' |
Gain (loss) on extinguishment of debt | $2,573,000 | ' | $3,611,000 | ' | ' |
6_CAPITAL_LEASE_LIABILITIES_De
6. CAPITAL LEASE LIABILITIES (Details Narrative) (USD $) | Sep. 30, 2013 |
Capital Lease Liabilities Details Narrative | ' |
2013 | $1,147,000 |
2014 | 6,769,000 |
2015 | 3,005,000 |
2016 | 900,000 |
2017 | 900,000 |
2018 | $675,000 |
8_COMMITMENTS_AND_CONTINGENCIE1
8. COMMITMENTS AND CONTINGENCIES (Details Narrative) (EthanolMember, USD $) | Sep. 30, 2013 |
EthanolMember | ' |
Open ethanol indexed-price sales commitment | '102,600,000 |
Open WDG and syrup fixed-price sales contracts | $134,000 |
Open indexed-price sales contracts | '2,500 tons |
Fixed-price purchase contract, value | $14,200,000 |
9_Significant_assumption_used_
9. Significant assumption used on warrants (Details) (USD $) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Dec. 31, 2012 | |
Fair value | $5,491,200 | $4,892,000 |
Issued 6/21/2013 | ' | ' |
Exercise price | $7.70 | ' |
Volatility | 58.70% | ' |
Risk free interest rate | 0.22% | ' |
Term (years) | '1 year 5 months 27 days | ' |
Discount for Marketability restrictions | 27.70% | ' |
Warrants Outstanding | 1,051,200 | ' |
Fair value | 494,600 | ' |
Issued 3/28/2013 | ' | ' |
Exercise price | $7.70 | ' |
Volatility | 58.70% | ' |
Risk free interest rate | 0.22% | ' |
Term (years) | '1 year 5 months 27 days | ' |
Discount for Marketability restrictions | 27.70% | ' |
Warrants Outstanding | 788,400 | ' |
Fair value | 370,300 | ' |
Issued 1/11/2013 | ' | ' |
Exercise price | $6.60 | ' |
Volatility | 64.70% | ' |
Risk free interest rate | 1.01% | ' |
Term (years) | '4 years 3 months 11 days | ' |
Discount for Marketability restrictions | 46.50% | ' |
Warrants Outstanding | 1,708,700 | ' |
Fair value | 1,940,500 | ' |
Issued 9/26/2012 | ' | ' |
Exercise price | $8.85 | $8.85 |
Volatility | 61.60% | 70.20% |
Risk free interest rate | 0.33% | 0.36% |
Term (years) | '1 year 11 months 27 days | '2 years 8 months 26 days |
Discount for Marketability restrictions | 46.50% | 53.90% |
Warrants Outstanding | 1,770,800 | 1,833,000 |
Fair value | 315,000 | 1,112,000 |
Issued 7/3/2012 | ' | ' |
Exercise price | $6.36 | $7.50 |
Volatility | 63.70% | 76.10% |
Risk free interest rate | 1.01% | 0.72% |
Term (years) | '3 years 9 months 4 days | '4 years 6 months 4 days |
Discount for Marketability restrictions | 43.50% | 55.50% |
Warrants Outstanding | 1,812,400 | 1,867,000 |
Fair value | 2,018,100 | 2,756,000 |
Issued 7/3/2012 | ' | ' |
Exercise price | $5.68 | $6.45 |
Volatility | 48.20% | 69.30% |
Risk free interest rate | 0.02% | 0.16% |
Term (years) | '3 months 4 days | '1 year 4 days |
Discount for Marketability restrictions | 42.80% | 55.50% |
Warrants Outstanding | 803,900 | 930,000 |
Fair value | 34,700 | 509,000 |
Issued 12/13/2011 | ' | ' |
Exercise price | $8.92 | $12.45 |
Volatility | 61.00% | 74.40% |
Risk free interest rate | 0.63% | 0.54% |
Term (years) | '3 years 2 months 16 days | '3 years 11 months 12 days |
Discount for Marketability restrictions | 39.90% | 52.30% |
Warrants Outstanding | 305,700 | 330,000 |
Fair value | 318,000 | 480,000 |
Issued 10/6/2010 | ' | ' |
Exercise price | ' | $1.80 |
Volatility | ' | 76.00% |
Risk free interest rate | ' | 0.72% |
Term (years) | ' | '4 years 9 months 18 days |
Discount for Marketability restrictions | ' | 46.40% |
Warrants Outstanding | ' | 17,000 |
Fair value | ' | $35,000 |
9_Assumptions_used_for_convers
9. Assumptions used for conversion feature (Details) (Convertible Notes [Member], USD $) | 9 Months Ended |
Sep. 30, 2013 | |
Convertible Notes [Member] | ' |
Exercise price | $15 |
Volatility | 50.70% |
Risk free interest rate | 0.04% |
Term (years) | '6 months |
Marketability discount | 14.20% |
Fair value of conversion feature | $1,139,100 |
9_Fair_value_measurements_Deta
9. Fair value measurements (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Assets: | ' | ' |
Assets | $128 | $189 |
Liabilities: | ' | ' |
Liabilities | 6,674 | 5,059 |
Commodity contracts [Member] | ' | ' |
Assets: | ' | ' |
Assets | 128 | 189 |
Liabilities: | ' | ' |
Liabilities | 44 | 167 |
Warrants [Member] | ' | ' |
Liabilities: | ' | ' |
Liabilities | 5,491 | 4,892 |
Conversion Features [Member] | ' | ' |
Liabilities: | ' | ' |
Liabilities | 1,139 | ' |
Level 1 [Member] | ' | ' |
Assets: | ' | ' |
Assets | 128 | 189 |
Liabilities: | ' | ' |
Liabilities | 44 | 167 |
Level 1 [Member] | Commodity contracts [Member] | ' | ' |
Assets: | ' | ' |
Assets | 128 | 189 |
Liabilities: | ' | ' |
Liabilities | 44 | 167 |
Level 1 [Member] | Warrants [Member] | ' | ' |
Liabilities: | ' | ' |
Liabilities | 0 | 0 |
Level 1 [Member] | Conversion Features [Member] | ' | ' |
Liabilities: | ' | ' |
Liabilities | 0 | ' |
Level 2 [Member] | ' | ' |
Assets: | ' | ' |
Assets | 0 | 0 |
Liabilities: | ' | ' |
Liabilities | 0 | 0 |
Level 2 [Member] | Commodity contracts [Member] | ' | ' |
Assets: | ' | ' |
Assets | 0 | 0 |
Liabilities: | ' | ' |
Liabilities | 0 | 0 |
Level 2 [Member] | Warrants [Member] | ' | ' |
Liabilities: | ' | ' |
Liabilities | 0 | 0 |
Level 2 [Member] | Conversion Features [Member] | ' | ' |
Liabilities: | ' | ' |
Liabilities | 0 | ' |
Level 3 [Member] | ' | ' |
Assets: | ' | ' |
Assets | 0 | 0 |
Liabilities: | ' | ' |
Liabilities | 6,630 | 4,892 |
Level 3 [Member] | Commodity contracts [Member] | ' | ' |
Assets: | ' | ' |
Assets | 0 | 0 |
Liabilities: | ' | ' |
Liabilities | 0 | 0 |
Level 3 [Member] | Warrants [Member] | ' | ' |
Liabilities: | ' | ' |
Liabilities | 5,491 | 4,892 |
Level 3 [Member] | Conversion Features [Member] | ' | ' |
Liabilities: | ' | ' |
Liabilities | $1,139 | ' |
9_Level_3_fair_value_inputs_De
9. Level 3 fair value inputs (Details) (Level 3 [Member], USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2013 |
Warrants [Member] | ' |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ' |
Beginning Balance | $4,892 |
Issuance of warrants | 2,657 |
Issuance of notes and warrants | 1,572 |
Issuance of notes | 0 |
Conversion of notes | 0 |
Exercises of warrants | -260 |
Adjustments to fair value for the period | -3,370 |
Ending Balance | 5,491 |
Warrants [Member] | Issuance In January [Member] | ' |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ' |
Issuance of warrants | 2,657 |
Warrants [Member] | Issuance In March [Member] | ' |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ' |
Issuance of notes and warrants | 1,572 |
Warrants [Member] | Issuance In June [Member] | ' |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ' |
Issuance of notes | 0 |
Conversion Features [Member] | ' |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ' |
Beginning Balance | 0 |
Issuance of warrants | 0 |
Issuance of notes and warrants | 1,401 |
Issuance of notes | 2,929 |
Conversion of notes | 4,269 |
Exercises of warrants | 0 |
Adjustments to fair value for the period | 1,078 |
Ending Balance | 1,139 |
Conversion Features [Member] | Issuance In January [Member] | ' |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ' |
Issuance of warrants | 0 |
Conversion Features [Member] | Issuance In March [Member] | ' |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ' |
Issuance of notes and warrants | 1,401 |
Conversion Features [Member] | Issuance In June [Member] | ' |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ' |
Issuance of notes | $2,929 |
10_EARNINGS_PER_SHARE_Details
10. EARNINGS PER SHARE (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Loss Numerator | ' | ' | ' | ' |
Net loss/Income | ($4,971) | ($5,971) | ($9,374) | ($13,553) |
Less: Preferred stock dividends | -319 | -319 | -946 | -949 |
Basic and Diluted income per share | ' | ' | ' | ' |
Loss available to common stockholders | ($5,290) | ($6,290) | ($946) | ($14,502) |
Share Denominator | ' | ' | ' | ' |
Loss available to common stockholders | 13,177 | 7,712 | 11,380 | 6,414 |
Earning per share basic and diluted | ($0.40) | ($0.82) | ($0.91) | ($2.26) |
10_EARNINGS_PER_SHARE_Details_
10. EARNINGS PER SHARE (Details Narrative) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2013 | Sep. 30, 2013 | |
Dilutive securities | ' | ' |
Potentially dilutive weighted-average shares from convertible securities not considered in calculation of diluted shares | 2,094,000 | 1,503,000 |
11_RELATED_PARTY_TRANSACTIONS_
11. RELATED PARTY TRANSACTIONS (Details) (USD $) | Sep. 30, 2013 |
Amount of Dividends Paid | $3,658,000 |
Amount of Dividends Unpaid | 3,657,000 |
Shares of Common Stock Issued | 812,500 |
August 12, 2012 [Member] | ' |
Agreement Date | 12-Aug-12 |
Amount of Dividends Paid | 732,000 |
Shares of Common Stock Issued | 157,000 |
Extended Date of Forbearance | 1-Jan-14 |
December 26, 2012 [Member] | ' |
Agreement Date | 26-Dec-12 |
Amount of Dividends Paid | 732,000 |
Shares of Common Stock Issued | 144,500 |
Extended Date of Forbearance | 30-Jun-14 |
March 27, 2013 [Member] | ' |
Agreement Date | 27-Mar-13 |
Amount of Dividends Paid | 732,000 |
Shares of Common Stock Issued | 139,000 |
Extended Date of Forbearance | 30-Sep-14 |
July 26, 2013 [Member] | ' |
Agreement Date | 26-Jul-13 |
Amount of Dividends Paid | 731,000 |
Shares of Common Stock Issued | 175,000 |
Extended Date of Forbearance | 31-Dec-14 |
September 17, 2013 [Member] | ' |
Agreement Date | 17-Sep-13 |
Amount of Dividends Paid | $731,000 |
Shares of Common Stock Issued | 197,000 |
Extended Date of Forbearance | 31-Mar-15 |
11_RELATED_PARTY_TRANSACTIONS_1
11. RELATED PARTY TRANSACTIONS (Details Narrative) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Note payable to CEO | $750,000 | $750,000 |
Series B Preferred Stock | ' | ' |
Accrued and unpaid dividends, amount | $3,657,000 | $5,852,000 |