Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Mar. 13, 2015 | Jun. 30, 2014 | |
Document And Entity Information | |||
Entity Registrant Name | Pacific Ethanol, Inc. | ||
Entity Central Index Key | 778164 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $315,000,000 | ||
Entity Common Stock, Shares Outstanding | 25,511,200 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2014 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current Assets: | ||
Cash and cash equivalents | $62,084 | $5,151 |
Accounts receivable, net of allowance for doubtful accounts of $6 and $187, respectively | 34,612 | 35,296 |
Inventories | 18,550 | 23,386 |
Prepaid inventory | 11,595 | 12,315 |
Other current assets | 12,710 | 3,229 |
Total current assets | 139,551 | 79,377 |
Total property and equipment, net | 155,302 | 155,194 |
Other Assets: | ||
Intangible assets, net | 2,786 | 3,260 |
Other assets | 1,863 | 3,218 |
Total other assets | 4,649 | 6,478 |
Total Assets | 299,502 | 241,049 |
Current Liabilities: | ||
Accounts payable - trade | 13,122 | 11,071 |
Accrued liabilities | 6,203 | 5,851 |
Current portion - capital leases | 4,077 | 4,830 |
Current portion - long-term debt ($0 and $750 due to a related party, respectively) | 0 | 750 |
Other current liabilities | 2,045 | 5,714 |
Total current liabilities | 25,447 | 28,216 |
Long-term debt, net of current portion | 34,533 | 98,408 |
Accrued preferred dividends | 0 | 3,657 |
Capital leases, net of current portion | 2,055 | 6,041 |
Warrant liabilities at fair value | 1,986 | 8,215 |
Derivative tax liabilities | 17,040 | 1,091 |
Other liabilities | 459 | 520 |
Total Liabilities | 81,520 | 146,148 |
Commitments and contingencies (Notes 1, 5, 6 and 11) | ||
Pacific Ethanol, Inc. Stockholders' Equity: | ||
Common stock, $0.001 par value; 300,000,000 shares authorized; 24,499,534 and 16,126,287 shares issued and outstanding as of December 31, 2014 and 2013, respectively | 25 | 16 |
Additional paid-in capital | 725,813 | 621,557 |
Accumulated deficit | -512,332 | -532,356 |
Total Pacific Ethanol, Inc. Stockholders' Equity | 213,507 | 89,218 |
Noncontrolling interests | 4,475 | 5,683 |
Total Stockholders' Equity | 217,982 | 94,901 |
Total Liabilities and Stockholders' Equity | 299,502 | 241,049 |
Series A Preferred Stock | ||
Pacific Ethanol, Inc. Stockholders' Equity: | ||
Preferred stock, $0.001 par value; 10,000,000 shares authorized: Series A: 1,684,375 shares authorized; no shares issued and outstanding as of December 31, 2014 and 2013; Series B: 1,580,790 shares authorized; 926,942 shares issued and outstanding as of December 31, 2014 and 2013; liquidation preference of $18,075 as of December 31, 2014 | 0 | 0 |
Series B Preferred Stock | ||
Pacific Ethanol, Inc. Stockholders' Equity: | ||
Preferred stock, $0.001 par value; 10,000,000 shares authorized: Series A: 1,684,375 shares authorized; no shares issued and outstanding as of December 31, 2014 and 2013; Series B: 1,580,790 shares authorized; 926,942 shares issued and outstanding as of December 31, 2014 and 2013; liquidation preference of $18,075 as of December 31, 2014 | $1 | $1 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Accounts receivable, net of allowance | $6 | $187 |
Long term debt current - due to related party | 0 | 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 | 24,499,534 | 16,126,287 |
Common stock, outstanding | 24,499,534 | 16,126,287 |
Series A Preferred Stock | ||
Stockholders' Equity: | ||
Preferred stock par value | $0.00 | $0.00 |
Preferred stock shares authorized | 1,684,375 | 1,684,375 |
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 | $18,075 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Income Statement [Abstract] | |||
Net sales | $1,107,412 | $908,437 | $816,044 |
Cost of goods sold | 998,927 | 875,507 | 835,568 |
Gross profit (loss) | 108,485 | 32,930 | -19,524 |
Selling, general and administrative expenses | 17,108 | 14,021 | 12,141 |
Income (loss) from operations | 91,377 | 18,909 | -31,665 |
Fair value adjustments and warrant inducements | -37,532 | -1,013 | 1,954 |
Interest expense, net | -9,438 | -15,671 | -13,049 |
Loss on extinguishments of debt | -2,363 | -3,035 | 0 |
Other expense, net | -905 | -352 | -595 |
Income (loss) before provision for income taxes | 41,139 | -1,162 | -43,355 |
Provision for income taxes | 15,137 | 0 | 0 |
Consolidated net income (loss) | 26,002 | -1,162 | -43,355 |
Net (income) loss attributed to noncontrolling interest | -4,713 | 381 | 24,298 |
Net income (loss) attributed to Pacific Ethanol, Inc. | 21,289 | -781 | -19,057 |
Preferred stock dividends | -1,265 | -1,265 | -1,268 |
Income (loss) available to common stockholders | $20,024 | ($2,046) | ($20,325) |
Income (loss) per share, basic | $0.96 | ($0.17) | ($2.81) |
Income (loss) per share, diluted | $0.88 | ($0.17) | ($2.81) |
Weighted-average shares outstanding, basic | 20,810,000 | 12,264,000 | 7,224,000 |
Weighted-average shares outstanding, diluted | 22,669,000 | 12,264,000 | 7,224,000 |
CONSOLIDATED_STATEMENTS_OF_STO
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $) | Preferred Stock | Common Stock | Additional Paid-In Capital | Retained Earnings / Accumulated Deficit | Noncontrolling Interest | Total |
In Thousands, except Share data | ||||||
Beginning balance, value at Dec. 31, 2011 | $1 | $6 | $556,952 | ($509,985) | $72,290 | $119,264 |
Beginning balance, shares at Dec. 31, 2011 | 927,000 | 5,775,000 | ||||
Stock-based compensation expense - restricted stock and options to employees and directors, net of cancellations, value | 806 | 806 | ||||
Stock-based compensation expense - restricted stock and options to employees and directors, net of cancellations, shares | -3,000 | |||||
Shares issued on equity offerings, stock issued | 3,700,000 | |||||
Shares issued on equity offerings, value | 4 | 15,856 | 15,860 | |||
Warrant exercises, shares issued | 15,000 | |||||
Warrant exercises, value | 139 | 139 | ||||
Shares issued as payment of prior unpaid Series B preferred dividends, shares | 302,000 | |||||
Shares issued as payment of prior unpaid Series B preferred dividends, value | 1,462 | 1,462 | ||||
Purchases of interests in PE Op Co. | 7,646 | -27,647 | -20,001 | |||
Preferred stock dividends | -1,268 | -1,268 | ||||
Net income (loss) | -19,057 | -24,298 | -43,355 | |||
Ending balance, value at Dec. 31, 2012 | 1 | 10 | 582,861 | -530,310 | 20,345 | 72,907 |
Ending balance, shares at Dec. 31, 2012 | 927,000 | 9,789,000 | ||||
Stock-based compensation expense - restricted stock and options to employees and directors, net of cancellations, value | 1 | 1,696 | 1,697 | |||
Stock-based compensation expense - restricted stock and options to employees and directors, net of cancellations, shares | 600,000 | |||||
Shares issued on convertible notes, shares issued | 4,446,000 | |||||
Shares issued on convertible notes, value | 4 | 18,551 | 18,555 | |||
Shares issued on senior notes, shares issued | 500,000 | |||||
Shares issued on senior notes, value | 2,000 | 2,000 | ||||
Warrant exercises, shares issued | 280,000 | |||||
Warrant exercises, value | 2,317 | 2,317 | ||||
Shares issued as payment of prior unpaid Series B preferred dividends, shares | 511,000 | |||||
Shares issued as payment of prior unpaid Series B preferred dividends, value | 1 | 2,192 | 2,193 | |||
Purchases of interests in PE Op Co. | 11,940 | -14,281 | -2,341 | |||
Preferred stock dividends | -1,265 | -1,265 | ||||
Net income (loss) | -781 | -381 | -1,162 | |||
Ending balance, value at Dec. 31, 2013 | 1 | 16 | 621,557 | -532,356 | 5,683 | 94,901 |
Ending balance, shares at Dec. 31, 2013 | 927,000 | 16,126,000 | ||||
Stock-based compensation expense - restricted stock and options to employees and directors, net of cancellations, value | 1,890 | 1,890 | ||||
Stock-based compensation expense - restricted stock and options to employees and directors, net of cancellations, shares | 90,000 | |||||
Shares issued on equity offerings, stock issued | 1,750,000 | |||||
Shares issued on equity offerings, value | 2 | 26,071 | 26,073 | |||
Warrant exercises, shares issued | 6,413,000 | |||||
Warrant exercises, value | 6 | 85,156 | 85,162 | |||
Shares issued as payment of prior unpaid Series B preferred dividends, shares | 120,000 | |||||
Shares issued as payment of prior unpaid Series B preferred dividends, value | 1 | 1,462 | 1,463 | |||
Purchases of interests in PE Op Co. | -79 | -5,921 | -6,000 | |||
Tax impact of purchases of interests in PE Op Co. | -10,244 | -10,244 | ||||
Preferred stock dividends | -1,265 | -1,265 | ||||
Net income (loss) | 21,289 | 4,713 | 26,002 | |||
Ending balance, value at Dec. 31, 2014 | $1 | $25 | $725,813 | ($512,332) | $4,475 | $217,982 |
Ending balance, shares at Dec. 31, 2014 | 927,000 | 24,499,000 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Operating Activities: | |||
Consolidated net income (loss) | $26,002 | ($1,162) | ($43,355) |
Adjustments to reconcile consolidated net income (loss) to cash provided by (used in) operating activities: | |||
Depreciation and amortization of intangibles | 13,186 | 12,136 | 12,205 |
Fair value adjustments | 35,260 | 227 | -1,954 |
Loss on extinguishments of debt | 2,363 | 3,035 | 0 |
Deferred income taxes | 5,129 | 0 | 0 |
Inventory valuation | 970 | 8 | 816 |
Change in fair value on derivative instruments | 808 | 1,821 | -999 |
Amortization of deferred financing fees | 1,217 | 2,009 | 736 |
Amortization of debt discount | 1,815 | 1,272 | 0 |
Non-cash compensation | 1,838 | 1,724 | 806 |
Bad debt expense (recovery) | -42 | 169 | -6 |
Loss on disposals of assets | 439 | 0 | 0 |
Interest expense added to Plant Owners' debt | 0 | 4,745 | 3,542 |
Interest on convertible debt paid with stock | 0 | 111 | 0 |
Changes in operating assets and liabilities: | |||
Accounts receivable | 726 | -9,414 | 2,095 |
Inventories | 3,866 | -2,150 | -929 |
Prepaid expenses and other assets | -7,818 | -2,340 | 2,251 |
Prepaid inventory | 720 | -6,893 | 3,817 |
Accounts payable and accrued expenses | 1,853 | 8,889 | 129 |
Net cash provided by (used in) operating activities | 88,332 | 14,187 | -20,846 |
Investing Activities: | |||
Additions to property and equipment | -13,259 | -3,993 | -2,273 |
Purchases of New PE Holdco ownership interests | -6,000 | -2,340 | -10,000 |
Net cash used in investing activities | -19,259 | -6,333 | -12,273 |
Financing Activities: | |||
Net proceeds from common stock and warrants | 26,073 | 0 | 20,924 |
Proceeds from warrant exercises | 43,676 | 2,064 | 0 |
Proceeds from senior notes and warrants | 0 | 22,192 | 0 |
Proceeds from subordinated convertible notes and warrants | 0 | 14,000 | 0 |
Proceeds from Plant Owners' borrowings | 0 | 7,000 | 24,022 |
Payments on Plant Owners' borrowings | -39,792 | -17,115 | 0 |
Purchase of Plant Owners' debt | -17,038 | -27,088 | 0 |
Net payments on Kinergybs line of credit | -1,512 | -669 | -721 |
Payments on senior unsecured notes | -13,984 | -6,208 | -10,000 |
Debt issuance costs | -438 | -1,560 | -1,166 |
Payment on related party note | -750 | 0 | 0 |
Preferred stock dividend payments | -3,459 | -1,265 | -1,268 |
Payments on capital lease | -4,916 | -1,640 | 0 |
Net cash (used in) provided by financing activities | -12,140 | -10,289 | 31,791 |
Net increase (decrease) in cash and cash equivalents | 56,933 | -2,435 | -1,328 |
Cash and cash equivalents at beginning of period | 5,151 | 7,586 | 8,914 |
Cash and cash equivalents at end of period | 62,084 | 5,151 | 7,586 |
Supplemental Information: | |||
Interest paid | 6,596 | 7,515 | 8,828 |
Income taxes paid | 17,930 | 0 | 0 |
Noncash financing and investing activities: | |||
Preferred stock dividends paid in common stock | 1,463 | 2,192 | 1,464 |
Notes issued for purchase of 33% ownership in New PEHC | 0 | 0 | 10,000 |
Capital leases added to plant and equipment | 0 | 12,829 | 0 |
Original discount on senrior and convertible debt | 0 | 8,558 | 0 |
Purchase of sugar inventory with note | 0 | 5,000 | 0 |
Reclass of warrant liability to equity upon warrant exercises | 41,486 | 260 | 113 |
Reclass of noncontrolling interest to APIC upon acquisitions of ownership interests in New PE Holdco | -79 | 11,940 | 7,646 |
Debt extinguished with issuance of common stock | $0 | $16,000 | $0 |
1_ORGANIZATION_AND_BASIS_OF_PR
1. ORGANIZATION AND BASIS OF PRESENTATION | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
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 PE Op Co., a Delaware corporation (“PE Op Co.,” formerly, New PE Holdco LLC, a Delaware limited liability company), which owns the Plant Owners (as defined below) (collectively, the “Company”). | ||||||||||||
The Company is the leading producer and marketer 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, 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 a 96%, 91% and 67% ownership interest in PE Op Co., the owner of four ethanol production facilities, as of December 31, 2014, 2013 and 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 the following four ethanol production facilities: 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 PE Op Co. These four facilities have an aggregate annual ethanol production capacity of up to 200 million gallons. As of December 31, 2014, all four facilities were operating. On April 30, 2014, the Company’s previously idled facility in Madera, California commenced producing ethanol. 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. | |||||||||||||
Basis of Presentation – The consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and include the accounts of the Company. All significant intercompany accounts and transactions have been eliminated in consolidation. | |||||||||||||
Consolidation of Variable Interest Entities – The Company applies the guidance in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification 810, Consolidation, surrounding a company’s analysis to determine whether any of its variable interests constitute controlling financial interests in a variable interest entity (“VIE”). This analysis identifies the primary beneficiary of a VIE as the enterprise that has both of the following characteristics: (i) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance, and (ii) the obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE. Additionally, an enterprise is required to assess whether it has an implicit financial responsibility to ensure that a VIE operates as designed when determining whether it has the power to direct the activities of the VIE that most significantly impact the entity’s economic performance. The guidance also requires ongoing reassessments of whether an enterprise is the primary beneficiary of a VIE. | |||||||||||||
On October 6, 2010, the Company purchased an initial 20% ownership interest in PE Op Co., a VIE at the time, from a number of PE Op Co.’s owners. At that time, the Company determined it was the primary beneficiary of PE Op Co., and as such, has since consolidated the results of PE Op Co. Through various transactions, the Company increased its ownership interest in PE Op Co. to 67% at December 31, 2012. In 2013, the Company increased its ownership interest in PE Op Co. through various transactions in January, March, June and December 2013, acquiring additional ownership interests of 13%, 3%, 2% and 6%, respectively, bringing its ownership to 91% at December 31, 2013. In 2014, the Company increased its ownership in PE Op Co. bringing its ownership to 96% at December 31, 2014. | |||||||||||||
Since December 2013, as a result of owning 91% of PE Op Co., the Company, with its significant majority position, has the ability to make most all decisions on its own, and has therefore determined that PE Op Co. is no longer considered a VIE. The Company continues to consolidate PE Op Co.’s financial results, however, now under the voting rights model. Consequently, since the Company does not wholly-own PE Op Co., it must adjust its consolidated net income (loss) for the income (loss) attributed to PE Op Co.’s other owners. The remaining amount after this adjustment results in net income (loss) attributed to Pacific Ethanol, Inc. | |||||||||||||
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. | |||||||||||||
Cash and Cash Equivalents – The Company considers all highly-liquid investments with an original maturity of three months or less to be cash equivalents. | |||||||||||||
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, sells WDG to dairy operators and animal feed distributors and sells corn oil to poultry and biodiesel customers generally without requiring collateral. Due to a limited number of ethanol customers, the Company had significant concentrations of credit risk from sales of ethanol as of December 31, 2014 and 2013, as described below. | |||||||||||||
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 $28,427,000 and $27,487,000 at December 31, 2014 and 2013, respectively, were used as collateral under Kinergy’s operating line of credit. The allowance for doubtful accounts was $6,000 and $187,000 as of December 31, 2014 and 2013, respectively. The Company recorded a bad debt recovery of $42,000, an expense of $169,000 and a bad debt recovery of $6,000 for the years ended December 31, 2014, 2013 and 2012, respectively. The Company does not have any off-balance sheet credit exposure related to its customers. | |||||||||||||
Concentrations of Credit Risk – Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed completely to perform as contracted. Concentrations of credit risk, whether on- or off-balance sheet, that arise from financial instruments exist for groups of customers or counterparties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions described below. Financial instruments that subject the Company to credit risk consist of cash balances maintained in excess of federal depository insurance limits and accounts receivable, which have no collateral or security. The Company has not experienced any significant losses in such accounts and believes that it is not exposed to any significant risk of loss of cash. | |||||||||||||
The Company sells fuel-grade ethanol to gasoline refining and distribution companies. The Company sold ethanol to customers representing 10% or more of the Company’s total net sales, as follows. | |||||||||||||
Years Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Customer A | 20% | 23% | 21% | ||||||||||
Customer B | 20% | 17% | 16% | ||||||||||
Customer C | 8% | 12% | 12% | ||||||||||
Customer D | 11% | 6% | 2% | ||||||||||
The Company had accounts receivable due from these customers totaling $20,706,000 and $17,513,000, representing 59% and 50% of total accounts receivable as of December 31, 2014 and 2013, respectively. | |||||||||||||
The Company purchases fuel-grade ethanol and corn, its largest cost component in producing ethanol, from its suppliers. The Company purchased ethanol and corn from suppliers representing 10% or more of the Company’s total purchases for the purchase and production of ethanol, as follows: | |||||||||||||
Years Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Supplier A | 26% | 37% | 40% | ||||||||||
Supplier B | 15% | 14% | 14% | ||||||||||
Supplier C | 12% | 8% | 10% | ||||||||||
Inventories – Inventories consisted primarily of bulk ethanol, beet sugar 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): | |||||||||||||
December 31, | |||||||||||||
2014 | 2013 | ||||||||||||
Finished goods | $ | 11,118 | $ | 10,287 | |||||||||
Raw materials | 2,695 | 9,418 | |||||||||||
Work in progress | 3,274 | 2,766 | |||||||||||
Other | 1,463 | 915 | |||||||||||
Total | $ | 18,550 | $ | 23,386 | |||||||||
Property and Equipment – Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the following estimated useful lives: | |||||||||||||
Buildings | 40 years | ||||||||||||
Facilities and plant equipment | 10 – 25 years | ||||||||||||
Other equipment, vehicles and furniture | 5 – 10 years | ||||||||||||
The cost of normal maintenance and repairs is charged to operations as incurred. Significant capital expenditures that increase the life of an asset are capitalized and depreciated over the estimated remaining useful life of the asset. The cost of fixed assets sold, or otherwise disposed of, and the related accumulated depreciation or amortization are removed from the accounts, and any resulting gains or losses are reflected in current operations. | |||||||||||||
Intangible Assets – The Company amortizes intangible assets with definite lives using the straight-line method over their established lives, generally 2-10 years. Additionally, the Company tests these assets with established lives for impairment if conditions exist that indicate that carrying values may not be recoverable. Possible conditions leading to the unrecoverability of these assets include changes in market conditions, changes in future economic conditions or changes in technological feasibility that impact the Company’s assessments of future operations. If the Company determines that an impairment charge is needed, the charge will be recorded as asset impairment in the consolidated statements of operations. | |||||||||||||
Deferred Financing Costs – Deferred financing costs, which are included in other assets, are costs incurred to obtain debt financing, including all related fees, and are amortized as interest expense over the term of the related financing using the straight-line method which approximates the interest rate method. Amortization of deferred financing costs was $779,000, $2,009,000 and $736,000 for the years ended December 31, 2014, 2013 and 2012, respectively. Unamortized deferred financing costs were approximately $356,000 at December 31, 2014 and are recorded in other assets in the consolidated balance sheets. | |||||||||||||
Derivative Instruments and Hedging Activities – Derivative transactions, which can include forward contracts and futures positions on the New York Mercantile Exchange and the Chicago Board of Trade are recorded on the balance sheet as assets and liabilities based on the derivative’s fair value. Changes in the fair value of derivative contracts are recognized currently in income unless specific hedge accounting criteria are met. If derivatives meet those criteria, effective gains and losses are deferred in accumulated other comprehensive income (loss) and later recorded together with the hedged item in consolidated income (loss). For derivatives designated as a cash flow hedge, the Company formally documents the hedge and assesses the effectiveness with associated transactions. The Company has designated and documented contracts for the physical delivery of commodity products to and from counterparties as normal purchases and normal sales. | |||||||||||||
Revenue Recognition – The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when there is persuasive evidence of an arrangement, delivery has occurred, the sales price is fixed or determinable, and collection is reasonably assured. The Company derives revenue primarily from sales of ethanol and related co-products. The Company recognizes revenue when title transfers to its customers, which is generally upon the delivery of these products to a customer’s designated location. These deliveries are made in accordance with sales commitments and related sales orders entered into either verbally or in writing with customers. The sales commitments and related sales orders provide quantities, pricing and conditions of sales. In this regard, the Company engages in three basic types of revenue generating transactions: | |||||||||||||
· | As a producer. Sales as a producer consist of sales of the Company’s inventory produced at the Pacific Ethanol Plants. | ||||||||||||
· | As a merchant. Sales as a merchant consist of sales to customers through purchases from third-party suppliers in which the Company may or may not obtain physical control of the ethanol or co-products, in which shipments are directed from the Company’s suppliers to its terminals or direct to its customers but for which the Company accepts the risk of loss in the transactions. | ||||||||||||
· | As an agent. Sales as an agent consist of sales to customers through purchases from third-party suppliers in which the risks and rewards of inventory ownership remain with third-party suppliers and the Company receives a predetermined service fee under these transactions. | ||||||||||||
Revenue from sales of third-party ethanol and co-products is recorded net of costs when the Company is acting as an agent between a customer and a supplier and gross when the Company is a principal to the transaction. The Company recorded $1,908,000, $1,928,000 and $2,756,000 in net sales when acting as an agent for the years ended December 31, 2014, 2013 and 2012, respectively. Several factors are considered to determine whether the Company is acting as an agent or principal, most notably whether the Company is the primary obligor to the customer and whether the Company has inventory risk and related risk of loss or whether the Company adds meaningful value to the supplier’s product or service. Consideration is also given to whether the Company has latitude in establishing the sales price or has credit risk, or both. When the Company acts as an agent, it recognizes revenue on a net basis or recognizes its predetermined fees and any associated freight, based upon the amount of net revenues retained in excess of amounts paid to suppliers. | |||||||||||||
The Company records revenues based upon the gross amounts billed to its customers in transactions where the Company acts as a producer or a merchant and obtains title to ethanol and its co-products and therefore owns the product and any related, unmitigated inventory risk for the ethanol, regardless of whether the Company actually obtains physical control of the product. | |||||||||||||
Shipping and Handling Costs – Shipping and handling costs are classified as a component of cost of goods sold in the accompanying consolidated statements of operations. | |||||||||||||
California Ethanol Producer Incentive Program – The Company participated in the California Ethanol Producer Incentive Program (“CEPIP”) through the Pacific Ethanol Plants located in California since the program’s inception in 2010. The CEPIP was a program to provide funds to an eligible California facility—up to $0.25 per gallon of production—when current production corn crush spreads, measured as the difference between specified ethanol and corn index prices, were less than prescribed levels determined by the California Energy Commission. As of December 31, 2014, the program is no longer funded. For any month in which a payment was made by the CEPIP, the Company would be required to reimburse the funds within the subsequent five years from each payment date, if the corn crush spread exceeded $1.00 per gallon. In 2010 and 2011, the Company received an aggregate of $2,000,000 in CEPIP funds. Since these funds were provided to subsidize low production costs and encourage eligible facilities to either continue production or start up production in low margin environments, the Company recorded the proceeds as a credit to cost of goods sold in the periods the funds were received. For the years ended December 31, 2014, 2013 and 2012, the Company recorded aggregate amounts of $1,878,000, $122,000 and $0 as cost of goods sold, respectively, in respect of the Company’s repayments under the CEPIP to the California Energy Commission. | |||||||||||||
Stock-Based Compensation – The Company accounts for the cost of employee services received in exchange for the award of equity instruments based on the fair value of the award, determined on the date of grant. The expense is to be recognized over the period during which an employee is required to provide services in exchange for the award. The Company estimates forfeitures at the time of grant and makes revisions, if necessary, in the second quarter of each year if actual forfeitures differ from those estimates. Based on historical experience, the Company estimated future unvested forfeitures at 8% for the years ended December 31, 2014 and 2013 and 5% for the year ended December 31, 2012. The Company recognizes stock-based compensation expense as a component of selling, general and administrative expenses in the consolidated statements of operations. | |||||||||||||
Impairment of Long-Lived Assets – The Company assesses the impairment of long-lived assets, including property and equipment, internally developed software and purchased intangibles subject to amortization, when events or changes in circumstances indicate that the fair value of assets could be less than their net book value. In such event, the Company assesses long-lived assets for impairment by first determining the forecasted, undiscounted cash flows the asset is expected to generate plus the net proceeds expected from the sale of the asset. If this amount is less than the carrying value of the asset, the Company will then determine the fair value of the asset. An impairment loss would be recognized when the fair value is less than the related asset’s net book value, and an impairment expense would be recorded in the amount of the difference. Forecasts of future cash flows are judgments based on the Company’s experience and knowledge of its operations and the industries in which it operates. These forecasts could be significantly affected by future changes in market conditions, the economic environment, including inflation, and purchasing decisions of the Company’s customers. | |||||||||||||
Income Taxes – Income taxes are accounted for under the asset and liability approach, where deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities, and are measured using enacted tax rates and laws that are expected to be in effect when the differences reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. | |||||||||||||
The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining whether it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. An uncertain tax position is considered effectively settled on completion of an examination by a taxing authority if certain other conditions are satisfied. Should the Company incur interest and penalties relating to tax uncertainties, such amounts would be classified as a component of interest expense, net and other income (expense), net, respectively. | |||||||||||||
Income (Loss) Per Share – Basic income (loss) per share is computed on the basis of the weighted-average number of shares of common stock outstanding during the period. Preferred dividends are deducted from net income (loss) attributed to Pacific Ethanol, Inc. and are considered in the calculation of income (loss) available to common stockholders in computing basic income (loss) per share. | |||||||||||||
The following tables compute basic and diluted earnings per share (in thousands, except per share data): | |||||||||||||
Year Ended December 31, 2014 | |||||||||||||
Income Numerator | Shares Denominator | Per-Share Amount | |||||||||||
Net income attributed to Pacific Ethanol | $ | 21,289 | |||||||||||
Less: Preferred stock dividends | (1,265 | ) | |||||||||||
Basic income per share: | |||||||||||||
Income available to common stockholders | $ | 20,024 | 20,810 | $ | 0.96 | ||||||||
Add: Warrants | – | 1,859 | |||||||||||
Diluted income per share: | |||||||||||||
Income available to common stockholders | $ | 20,024 | 22,669 | $ | 0.88 | ||||||||
Year Ended December 31, 2013 | |||||||||||||
Loss Numerator | Shares Denominator | Per-Share Amount | |||||||||||
Net loss attributed to Pacific Ethanol, Inc. | $ | (781 | ) | ||||||||||
Less: Preferred stock dividends | (1,265 | ) | |||||||||||
Basic and diluted loss per share: | |||||||||||||
Loss available to common stockholders | $ | (2,046 | ) | 12,264 | $ | (0.17 | ) | ||||||
Year Ended December 31, 2012 | |||||||||||||
Loss Numerator | Shares Denominator | Per-Share Amount | |||||||||||
Net loss attributed to Pacific Ethanol, Inc. | $ | (19,057 | ) | ||||||||||
Less: Preferred stock dividends | (1,268 | ) | |||||||||||
Basic and diluted loss per share: | |||||||||||||
Loss available to common stockholders | $ | (20,325 | ) | 7,224 | $ | (2.81 | ) | ||||||
There were an aggregate of 660,000, 1,357,000 and 246,000 potentially dilutive shares from convertible securities outstanding as of December 31, 2014, 2013 and 2012, respectively. These convertible securities were not considered in calculating diluted income (loss) per common share for the years ended December 31, 2014, 2013 and 2012 as their effect would be anti-dilutive. | |||||||||||||
Financial Instruments – The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities are reasonable estimates of their fair values because of the short maturity of these items. The Company recorded at fair value its warrants and conversion features of its convertible notes. The Company believes the carrying value of its long-term debt approximates fair value because the interest rates on these instruments are variable. | |||||||||||||
Estimates and Assumptions – The preparation of the consolidated financial statements in conformity with GAAP 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 fair value of warrants and conversion features, 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. | |||||||||||||
Subsequent Events – Management evaluates, as of each reporting period, events or transactions that occur after the balance sheet date through the date that the financial statements are issued for either disclosure or adjustment to the consolidated financial results. The Company has evaluated subsequent events up through the date of the filing of this report with the Securities and Exchange Commission. | |||||||||||||
Reclassifications – Certain prior year amounts have been reclassified to conform to the current presentation. Such reclassification had no effect on the consolidated net income (loss) reported in the consolidated statements of operations. | |||||||||||||
Recent Accounting Pronouncements – In May 2014, the FASB issued new guidance on the recognition of revenue. The guidance states that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard will be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company’s adoption begins with the first fiscal quarter of fiscal year 2017. Early adoption is not permitted. The Company is currently evaluating the impact of the adoption of this accounting standard update on its consolidated results of operations and financial position. | |||||||||||||
In April 2014, the FASB issued new guidance on the definition of a discontinued operation that requires entities to provide additional disclosures about disposal transactions that do not meet the discontinued operations criteria. The new guidance narrows the focus of discontinued operations to those components that are disposed of or classified as held-for-sale and that represent a strategic shift that has or will have a major impact on the entity’s operations or financial results. The guidance is effective prospectively for all disposals or components initially classified as held-for-sale in periods beginning on or after December 15, 2014. Early adoption is permitted. Upon adoption, the Company does not believe this guidance will have a material impact on its consolidated results of operations or financial position. | |||||||||||||
In August 2014, the FASB issued new guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new guidance requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about its ability to continue as a going concern. The guidance is effective for annual periods ending after December 15, 2016 and interim periods thereafter. Early adoption is permitted. Upon adoption, the Company does not believe this guidance will have a material impact on its consolidated results of operations or financial position. |
2_PACIFIC_ETHANOL_PLANTS
2. PACIFIC ETHANOL PLANTS | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Pacific Ethanol Plants | |||||
2. PACIFIC ETHANOL PLANTS | Consolidation of PE Op Co. – The Company concluded that from PE Op Co.’s inception to the time the Company became a 91% owner, PE Op Co. was a VIE because the other owners of PE Op Co., due to the Company’s involvement through the contractual arrangements discussed below, at all times lacked the power to direct the activities that most significantly impacted PE Op Co.’s economic performance. However, since the Company’s acquisition in December 2013 that brought its ownership interest in PE Op Co. to 91%, the Company has obtained and maintained sufficient control, both by way of agreements as well as based on structural control of PE Op Co., such that PE Op Co. is no longer considered a VIE, and as such the Company consolidates PE Op Co. under the voting rights model. On April 1, 2014, PE Op Co. was converted from a Delaware limited liability company to a Delaware C-corporation and changed its name from New PE Holdco LLC to PE Op Co. | ||||
In August 2014, the Company purchased an additional 5% of the ownership interests in PE Op Co. for $6,000,000 in cash, bringing its total ownership interest to 96% as of December 31, 2014. | |||||
In January, March, June and December 2013, the Company purchased a 13%, 3%, 2% and 6% of the ownership interests in PE Op Co. for $1,308,000, $331,000, $197,000 and $505,000 in cash, respectively, bringing its total ownership interest to 91% as of December 31, 2013. | |||||
At the beginning of the year ended December 31, 2012, the Company had a 34% ownership interest in PE Op Co. In July 2012, the Company purchased an additional 33% ownership interest in PE Op Co. for $20,000,000 by paying $10,000,000 in cash and issuing $10,000,000 in promissory notes. | |||||
Because the Company has a controlling financial interest in PE Op Co., it did not record any gain or loss on these purchases, but instead reduced the amount of noncontrolling interest on the consolidated balance sheets by an aggregate of $5,921,000, $14,281,000 and $27,647,000 and recorded the difference of $79,000, $11,940,000 and $7,646,000 for the years ended December 31, 2014, 2013 and 2012, respectively, 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. Further, in 2014, the Company recorded a deferred tax liability related to its cumulative adjustments to additional paid-in capital of $10,244,000. | |||||
The Company’s acquisition of its ownership interest in PE Op Co. does not impact the Company’s rights or obligations under any of the agreements described below. Further, creditors of PE Op Co. or its subsidiaries do not have recourse to the Company. Since its acquisition, the Company has not provided any additional support to PE Op Co. beyond the terms of the agreements described below. | |||||
The Company, directly or through one of its subsidiaries, has entered into the management and marketing agreements described below. | |||||
Asset Management Agreement – The Company entered into an Asset Management Agreement (“AMA”) with the Plant Owners under which the Company agreed to operate and maintain the Pacific Ethanol Plants on behalf of the Plant Owners. These services generally include, but are not limited to, administering the Plant Owners’ compliance with their credit agreements and performing billing, collection, record keeping and other administrative and ministerial tasks. The Company agreed to supply all labor and personnel required to perform its services under the AMA, including the labor and personnel required to operate and maintain the production facilities. | |||||
The costs and expenses associated with the Company’s provision of services under the AMA are prefunded by the Plant Owners under a preapproved budget. The Company’s obligation to provide services is limited to the extent there are sufficient funds advanced by the Plant Owners to cover the associated costs and expenses. | |||||
As compensation for providing the services under the AMA, the Company is paid $75,000 per month for each production facility that is operational and $40,000 per month for each production facility that is idled. In addition to the monthly fee, if during any six-month period (measured on September 30 and March 31 of each year commencing March 31, 2011) a production facility has annualized earnings before interest, taxes, depreciation and amortization (“EBITDA”) per gallon of operating capacity of $0.20 or more, the Company will be paid a performance bonus equal to 3% of the increment by which EBITDA exceeds such amount. The aggregate performance bonus for all plants is capped at $2,200,000 for each six-month period. The performance bonus is to be reduced by 25% if all production facilities then operating do not operate at a minimum average yield of 2.70 gallons of denatured ethanol per bushel of corn. In addition, no performance bonus is to be paid if there is a default or event of default under the Plant Owners’ credit agreement resulting from their failure to pay any amounts then due and owing. The AMA also provides the Company with an incentive fee upon any sale of a production facility to the extent the sales price is above $0.60 per gallon of annual capacity. During the year ended December 31, 2014, the Company earned $2,846,000 in respect of such bonuses. These amounts have been eliminated upon consolidation. No bonuses were paid in 2013 and 2012. | |||||
The AMA had an initial term of six months and successive six-month renewal periods at the option of the Plant Owners. In addition to typical conditions for a party to terminate the agreement prior to its expiration, the Company may terminate the AMA, and the Plant Owners may terminate the AMA with respect to any facility, at any time by providing at least 60 days prior notice of such termination. | |||||
The Company recorded revenues and PE Op Co. recorded costs of approximately $3,530,000, $3,477,000 and $3,180,000 related to the AMA for the years ended December 31, 2014, 2013 and 2012, respectively. As such, these amounts have been eliminated upon consolidation. | |||||
Ethanol Marketing Agreements – The Company entered into separate ethanol marketing agreements with each of the Plant Owners, which granted it the exclusive right to purchase, market and sell the ethanol produced at those facilities. Under the terms of the ethanol marketing agreements, within ten days after delivering ethanol to the Company, an amount is paid to the Company equal to (i) the estimated purchase price payable by the third-party purchaser of the ethanol, minus (ii) the estimated amount of transportation costs to be incurred, minus (iii) the estimated incentive fee payable to the Company, which equals 1% of the aggregate third-party purchase price, provided that the marketing fee shall not be less than $0.015 per gallon and not more than $0.0225 per gallon. Each of the ethanol marketing agreements had an initial term of one year and successive one year renewal periods at the option of the individual Plant Owner. | |||||
The Company recorded revenues and PE Op Co. recorded costs of approximately $3,986,000, $3,351,000 and $3,157,000 related to the ethanol marketing agreements for the years ended December 31, 2014, 2013 and 2012, respectively. These amounts have been eliminated upon consolidation. | |||||
Corn Procurement and Handling Agreements – The Company entered into separate corn procurement and handling agreements with each of the Plant Owners. Under the terms of the corn procurement and handling agreements, each facility appointed the Company as its exclusive agent to solicit, negotiate, enter into and administer, on its behalf, corn supply arrangements to procure the corn necessary to operate its facility. The Company also provides grain handling services including, but not limited to, receiving, unloading and conveying corn into the facility’s storage and, in the case of whole corn delivered, processing and hammering the whole corn. | |||||
The Company is to receive a fee of $0.045 per bushel of corn delivered to each facility as consideration for its procurement and handling services, payable monthly. The Company agreed to enter into an agreement guaranteeing the performance of its obligations under the corn procurement and handling agreement upon the request of a Plant Owner. Each corn procurement and handling agreement had an initial term of one year and successive one year renewal periods at the option of the individual Plant Owner. | |||||
The Company recorded revenues and PE Op Co. recorded costs of approximately $2,989,000, $2,423,000 and $2,271,000 related to the corn procurement and handling agreements for the years ended December 31, 2014, 2013 and 2012, respectively. These amounts have been eliminated upon consolidation. | |||||
Distillers Grains Marketing Agreements – The Company entered into separate distillers grains marketing agreements with each of the Plant Owners, which grant the Company the exclusive right to market, purchase and sell the WDG and corn oil produced at each facility. Under the terms of the distillers grains marketing agreements, within ten days after a Plant Owner delivers WDG or corn oil to the Company, the Plant Owner is paid an amount equal to (i) the estimated purchase price payable by the third-party purchaser of the WDG or corn oil, minus (ii) the estimated amount of transportation costs to be incurred, minus (iii) the estimated amount of fees and taxes payable to governmental authorities in connection with the tonnage of WDG or corn oil produced or marketed, minus (iv) the estimated incentive fee payable to the Company, which equals the greater of (a) 5% of the aggregate third-party purchase price, and (b) $2.00 for each ton of WDG or corn oil sold in the transaction, but not less than $2.00 per ton and not more than $3.50 per ton. Each distillers grains marketing agreement had an initial term of one year and successive one year renewal periods at the option of the individual Plant Owner. | |||||
The Company recorded revenues and PE Op Co. recorded costs of approximately $4,788,000, $4,584,000 and $4,353,000 related to the distillers grain marketing agreements for the years ended December 31, 2014, 2013 and 2012, respectively. These amounts have been eliminated upon consolidation. | |||||
Assets and Liabilities of PE Op Co. – The carrying values and classification of assets that are collateral for the obligations of PE Op Co. at December 31, 2014 were as follows (in thousands): | |||||
Cash and cash equivalents | $ | 24,287 | |||
Other current assets | 9,395 | ||||
Property and equipment | 150,281 | ||||
Other assets | 1,312 | ||||
Total assets | $ | 185,275 | |||
Current liabilities | $ | 14,023 | |||
Long-term debt | 58,766 | ||||
Other liabilities | 2,278 | ||||
Total liabilities | $ | 75,067 | |||
3_PROPERTY_AND_EQUIPMENT
3. PROPERTY AND EQUIPMENT | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
3. PROPERTY AND EQUIPMENT | Property and equipment consisted of the following (in thousands): | ||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Facilities and plant equipment | $ | 190,714 | $ | 184,064 | |||||
Land | 2,570 | 2,570 | |||||||
Other equipment, vehicles and furniture | 7,641 | 5,600 | |||||||
Construction in progress | 8,720 | 5,007 | |||||||
209,645 | 197,241 | ||||||||
Accumulated depreciation | (54,343 | ) | (42,047 | ) | |||||
$ | 155,302 | $ | 155,194 | ||||||
Depreciation expense, including idled facilities, was $12,712,000, $11,662,000 and $11,481,000 for the years ended December 31, 2014, 2013 and 2012, respectively. One of the Pacific Ethanol Plants was idled for four months in 2014 and for all of 2013 and 2012. Depreciation on the Company’s idled assets was an aggregate of $699,000, $2,108,000 and $2,136,000 for the years ended December 31, 2014, 2013 and 2012, respectively. | |||||||||
Included in plant and equipment is $12,829,000 at December 31, 2014 and 2013, attributable to capital leases. Depreciation expense related to these capital leases was $855,000 and $340,000 for the years ended December 31, 2014 and 2013, respectively. |
4_INTANGIBLE_ASSETS
4. INTANGIBLE ASSETS | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||
4. INTANGIBLE ASSETS | Intangible assets consisted of the following (in thousands): | ||||||||||||||||||||||||||||
Useful | December 31, 2014 | December 31, 2013 | |||||||||||||||||||||||||||
Life | Accumulated | Net Book | Accumulated | Net Book | |||||||||||||||||||||||||
(Years) | Gross | Amortization | Value | Gross | Amortization | Value | |||||||||||||||||||||||
Non-Amortizing: | |||||||||||||||||||||||||||||
Kinergy tradename | $ | 2,678 | $ | – | $ | 2,678 | $ | 2,678 | $ | – | $ | 2,678 | |||||||||||||||||
Amortizing: | |||||||||||||||||||||||||||||
Customer relationships | 10 | 4,741 | (4,633 | ) | 108 | 4,741 | (4,159 | ) | 582 | ||||||||||||||||||||
Total intangible assets, net | $ | 7,419 | $ | (4,633 | ) | $ | 2,786 | $ | 7,419 | $ | (4,159 | ) | $ | 3,260 | |||||||||||||||
Kinergy Tradename – The Company recorded a tradename valued at $2,678,000 in 2006 as part of its acquisition of Kinergy. The Company determined that the Kinergy tradename has an indefinite life and therefore, rather than being amortized, will be tested annually for impairment. The Company did not record any impairment of the Kinergy tradename for the years ended December 31, 2014, 2013 and 2012. | |||||||||||||||||||||||||||||
Customer Relationships – The Company recorded customer relationships valued at $4,741,000 as part of its acquisition of Kinergy. The Company has established a useful life of ten years for these customer relationships. | |||||||||||||||||||||||||||||
Amortization expense associated with intangible assets totaled $474,000, $474,000 and $724,000 for the years ended December 31, 2014, 2013 and 2012, respectively. The weighted-average unamortized life of the intangible assets is 0.2 years. The remaining expected amortization expense relating to amortizable intangible assets is $108,000 for the year ending December 31, 2015. |
5_DERIVATIVES
5. DERIVATIVES | 12 Months Ended | ||||||||||||||
Dec. 31, 2014 | |||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||
5. DERIVATIVES | The business and activities of the Company expose it to a variety of market risks, including risks related to changes in commodity prices. 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 years ended December 31, 2014, 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 net losses of $808,000 and $1,821,000, and gains of $999,000 as the change in the fair value of these contracts for the years ended December 31, 2014, 2013 and 2012, respectively. | |||||||||||||||
Non Designated Derivative Instruments – The classification and amounts of the Company’s derivatives not designated as hedging instruments are as follows (in thousands): | |||||||||||||||
As of December 31, 2014 | |||||||||||||||
Assets | Liabilities | ||||||||||||||
Type of Instrument | Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | |||||||||||
Commodity contracts | Other current assets | $ | 1,586 | Other current liabilities | $ | 1,149 | |||||||||
$ | 1,586 | $ | 1,149 | ||||||||||||
As of December 31, 2013 | |||||||||||||||
Assets | Liabilities | ||||||||||||||
Type of Instrument | Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | |||||||||||
Commodity contracts | Other current assets | $ | 961 | Other current liabilities | $ | 859 | |||||||||
$ | 961 | $ | 859 | ||||||||||||
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 Gains (Losses) | |||||||||||||||
For the Years Ended December 31, | |||||||||||||||
Type of Instrument | Statements of Operations Location | 2014 | 2013 | 2012 | |||||||||||
Commodity contracts | Cost of goods sold | $ | (1,144 | ) | $ | (1,901 | ) | $ | 720 | ||||||
$ | (1,144 | ) | $ | (1,901 | ) | $ | 720 | ||||||||
Unrealized Gains | |||||||||||||||
For the Years Ended December 31, | |||||||||||||||
Type of Instrument | Statements of Operations Location | 2014 | 2013 | 2012 | |||||||||||
Commodity contracts | Cost of goods sold | $ | 336 | $ | 80 | $ | 279 | ||||||||
$ | 336 | $ | 80 | $ | 279 |
6_DEBT
6. DEBT | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Debt Disclosure [Abstract] | |||||||||
6. DEBT | Long-term borrowings are summarized as follows (in thousands): | ||||||||
31-Dec-14 | 31-Dec-13 | ||||||||
Kinergy operating line of credit | $ | 17,530 | $ | 19,042 | |||||
Plant Owners’ third-party term debt | 17,003 | 31,678 | |||||||
Plant Owners’ lines of credit | – | 35,378 | |||||||
Senior unsecured notes | – | 13,984 | |||||||
Note payable to related party | – | 750 | |||||||
34,533 | 100,832 | ||||||||
Less: Unamortized discount on senior unsecured notes | – | (1,674 | ) | ||||||
34,533 | 99,158 | ||||||||
Less short-term portion | – | (750 | ) | ||||||
Long-term debt | $ | 34,533 | $ | 98,408 | |||||
Kinergy Line of Credit – Kinergy has an operating line of credit for an aggregate amount of up to $30,000,000. The line of credit matures on December 31, 2016. The credit facility is based on Kinergy’s eligible accounts receivable and inventory levels, subject to certain concentration reserves. The credit facility is subject to certain other sublimits, including inventory loan limits. Interest accrues under the line of credit at a rate equal to (i) the three-month London Interbank Offered Rate (“LIBOR”), plus (ii) a specified applicable margin ranging between 2.00% and 3.00%. The applicable margin was 2.00% at December 31, 2014. The credit facility’s monthly unused line fee is 0.50% of the amount by which the maximum credit under the facility exceeds the average daily principal balance. Payments that may be made by Kinergy to the Company as reimbursement for management and other services provided by the Company to Kinergy are limited under the terms of the credit facility to $1,100,000 per fiscal quarter in 2015. | |||||||||
The credit facility also includes the accounts receivable of PAP as additional collateral. Payments that may be made by PAP to Pacific Ethanol as reimbursement for management and other services provided by Pacific Ethanol to PAP are limited under the terms of the credit facility to the extent that quarterly payments would result in PAP recording less than $100,000 of net income in the quarter. | |||||||||
For the calendar month ended September 30, 2013 and each calendar month thereafter, Kinergy and PAP were collectively required to generate aggregate EBITDA of $450,000 for the three months then ended and aggregate EBITDA of $1,100,000 for the six months then ended. These amounts were required through December 31, 2013. In 2014, the required EBITDA amounts increased to $500,000 for each rolling three month period and $1,300,000 for each rolling six month period. Further, for all monthly periods, Kinergy and PAP must collectively maintain a fixed-charge coverage ratio (calculated as a twelve-month rolling EBITDA divided by the sum of interest expense, capital expenditures, principal payments of indebtedness, indebtedness from capital leases and taxes paid during such twelve-month rolling period) of at least 2.0 and are prohibited from incurring any additional indebtedness (other than specific intercompany indebtedness) or making any capital expenditures in excess of $100,000 absent the lender’s prior consent. In December 2014, the terms of the above covenants were changed such that if the Company’s monthly average unused availability is in excess of $10,000,000 and Kinergy maintains at least $6,000,000 in excess availability during the quarter, that month’s EBITDA and fixed-charge coverage ratio covenants are not required to be met. The Company believes it is in compliance with these covenants. | |||||||||
Kinergy and PAP’s obligations under the credit facility are secured by a first-priority security interest in all of their assets in favor of the lender. Pacific Ethanol has guaranteed all of Kinergy’s obligations under the line of credit. As of December 31, 2014, Kinergy had an available borrowing base under the credit facility of $30,000,000 and an outstanding balance of $17,530,000. | |||||||||
Plant Owners’ Term Debt and Operating Lines of Credit – The Plant Owners’ debt as of December 31, 2014 consisted of a $32,487,000 tranche A-1 term loan, a $26,279,000 tranche A-2 term loan and a $35,378,000 revolving credit facility, which was subsequently reduced to $19,473,000, all of which have a maturity date of June 30, 2016. Pacific Ethanol holds a combined $41,763,000 of these term loans, which are eliminated in consolidation. As of December 31, 2014, the combined outstanding balance of these loans was $17,003,000 on a consolidated basis (net of Pacific Ethanol purchases). | |||||||||
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 December 31, 2014, 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. | |||||||||
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 December 31, 2014 and 2013, the extended principal balances above included $0 and $7,487,000 of accrued interest that was deferred by the Plant Owners, respectively. | |||||||||
As of December 31, 2014, the unused availability under this line of credit was $19,473,000. | |||||||||
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 PE Op Co. for a combined purchase price of $2,150,000. The Company first allocated $331,000 of this payment to the PE Op Co. 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 PE Op Co. 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. | |||||||||
On June 6, 2014, the Company purchased $14,675,000 of term debt for $17,038,000 in cash, reducing its consolidated plant term debt by $14,675,000, and recorded a $2,363,000 loss on extinguishment of debt for the amount paid in excess of the principal balance. | |||||||||
As of December 31, 2014, the Company held an aggregate of $41,763,000 of the tranche A-1 and tranche A-2 term loans, which has been eliminated upon consolidation. | |||||||||
Additional Plant Operating Line of Credit – The Plant Owners have an additional revolving credit facility for up to an additional $15,000,000, with a maturity date of June 25, 2015. 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. At December 31, 2014, the interest rate was approximately 8.75% and the Plant Owners had unused availability under the new revolving credit facility of $15,000,000. | |||||||||
All of the term loans and revolving credit facilities represent permanent financing and are secured by a perfected, first-priority security interest in substantially 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. | |||||||||
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 $6.32 per share and expire in January 2018. The January 2013 Notes had an original maturity date of March 30, 2016 and bore interest at a rate of 5% per annum, subject to adjustment. Payments due under the January 2013 Notes ranked senior to all other indebtedness of the Company and its subsidiaries, other than certain permitted senior indebtedness. | |||||||||
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 were to receive 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 would 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 2014, the Company made principal cash payments on the January 2013 Notes in the aggregate amount of $13,984,000, fully retiring the debt prior to maturity. During 2013, the Company made principal cash payments on the January 2013 Notes in the aggregate amount of $6,208,000 and the Company issued 500,000 shares of its common stock as a $2,000,000 principal payment, resulting in a loss of $229,000 on extinguishment of debt. | |||||||||
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 had an exercise price of $7.59 per share. Of the warrants issued in the transaction, warrants to purchase 788,400 shares of common stock expired in March 2015 and warrants to purchase 1,051,200 shares of common stock expired 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 PE Op Co.; 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 were to mature on March 28, 2014. The Series A and B Notes bore interest at 5% per annum, compounded monthly. All amounts due under the Series A and B Notes were 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 was 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 sold or issued any securities with “floating” conversion prices based on the market price of its common stock, the holder of a Series A or B Note would 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. | |||||||||
The Company determined that the conversion feature of 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 were accounted for as a debt discount and were 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 were accounted for as a debt discount and were amortized into interest expense as a yield adjustment over the term of the Series B Notes. | |||||||||
In 2013, the Company made installment payments and processed a number of conversions. In the aggregate, the Company issued 4,446,000 shares of its common stock in payment of principal and interest in an aggregate amount of the $14,000,000 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 $4,621,000 for the year ended December 31, 2013. | |||||||||
As of December 31, 2013, the Series A and B Notes had been fully retired. | |||||||||
Note Payable to Related Party – The Company had a note payable to its Chief Executive Officer totaling $750,000 as of December 31, 2013. Interest on the unpaid principal amount accrues at a rate of 8.00% per annum. The Company recorded interest expense for this note of approximately $14,795 for the year ended December 31, 2014 and $60,000 for each of the years ended December 31, 2013 and 2012. On March 31, 2014, the Company paid in cash the outstanding balance of the note payable. | |||||||||
Interest Expense on Borrowings and Maturities – Interest expense on all borrowings discussed above was $6,546,000, $12,680,000 and $12,314,000 for the years ended December 31, 2014, 2013 and 2012, respectively. The consolidated long-term debt of $34,533,000, is due in 2016. |
7_INCOME_TAXES
7. INCOME TAXES | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||
7. INCOME TAXES | The asset and liability method is used to account for income taxes. Under this method, deferred tax assets and liabilities are recognized for tax credits and for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that those assets will be realized. | ||||||||||||
The Company files a consolidated federal income tax return. This return includes all entities 80% or more owned by the Company as well as the Company’s pro-rata share of taxable income from pass-through entities in which the Company holds an ownership interest. State tax returns are filed on a consolidated, combined or separate basis depending on the applicable laws relating to the Company and its subsidiaries. | |||||||||||||
The Company recorded a provision for income taxes for the year ended December 31, 2014 of $15,137,000. The Company recorded no provision for income taxes for the years ended December 31, 2013 and 2012. | |||||||||||||
A reconciliation of the differences between the United States statutory federal income tax rate and the effective tax rate as provided in the consolidated statements of operations is as follows: | |||||||||||||
Years Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Statutory rate | 35 | % | 35 | % | 35 | % | |||||||
Change in valuation allowance | (11.5 | ) | 458 | 125.5 | |||||||||
Convertible debt instruments | – | (297.7 | ) | – | |||||||||
Section 382 reduction to loss carryover | (24.2 | ) | (141.1 | ) | (169.4 | ) | |||||||
State income taxes, net of federal benefit | 10 | (8.2 | ) | 5.5 | |||||||||
Stock compensation | – | (20.9 | ) | (1.9 | ) | ||||||||
Change in tax status of PE Op Co. | (1.6 | ) | – | – | |||||||||
Fair value adjustments and warrant inducements | 31.8 | – | – | ||||||||||
Domestic production gross receipts deduction | (2.0 | ) | – | – | |||||||||
Non-deductible items | 0.6 | (27.7 | ) | 3.6 | |||||||||
Other | (1.3 | ) | 2.6 | 1.7 | |||||||||
Effective rate | 36.8 | % | 0 | % | 0 | % | |||||||
Deferred income taxes are provided using the asset and liability method to reflect temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities using presently enacted tax rates and laws. The components of deferred income taxes included in the consolidated balance sheets were as follows (in thousands): | |||||||||||||
December 31, | |||||||||||||
2014 | 2013 | ||||||||||||
Deferred tax assets: | |||||||||||||
Net operating loss carryforwards | $ | 12,385 | $ | 17,566 | |||||||||
Capital loss carryover | – | 844 | |||||||||||
Stock-based compensation | 781 | 556 | |||||||||||
Enterprise zone credits | – | 259 | |||||||||||
Other accrued liabilities | 483 | 395 | |||||||||||
Convertible debt | 669 | – | |||||||||||
Fixed assets | – | 119 | |||||||||||
Inventory | 575 | – | |||||||||||
Other | 217 | 217 | |||||||||||
Total deferred tax assets | 15,110 | 19,956 | |||||||||||
Deferred tax liabilities: | |||||||||||||
Fixed assets | (24,813 | ) | – | ||||||||||
Investment in PE Op Co. | – | (11,074 | ) | ||||||||||
Intangibles | (1,134 | ) | (1,325 | ) | |||||||||
Derivative instruments | (172 | ) | (226 | ) | |||||||||
Other | (278 | ) | – | ||||||||||
Total deferred tax liabilities | (26,397 | ) | (12,625 | ) | |||||||||
Valuation allowance | (4,147 | ) | (8,422 | ) | |||||||||
Net deferred tax liabilities | $ | (15,434 | ) | $ | (1,091 | ) | |||||||
Classified in balance sheet as: | |||||||||||||
Other current assets | $ | 1,606 | $ | – | |||||||||
Deferred tax liabilities | (17,040 | ) | (1,091 | ) | |||||||||
$ | (15,434 | ) | $ | (1,091 | ) | ||||||||
A portion of the Company’s net operating loss carryforwards will be subject to provisions of the tax law that limit the use of losses incurred by a company prior to the date certain ownership changes occur. All of the Company’s net operating loss carryforwards are subject to these limitations at December 31, 2014. | |||||||||||||
Due to the limitation, a significant portion of these net operating loss carryforwards will expire regardless of whether the Company generates future taxable income. After reducing these net operating loss carryforwards for the amount which will expire, the Company had federal net operating loss carryforwards of approximately $28,321,000 and $45,250,000, and state net operating loss carryforwards of approximately $58,990,000 and $41,695,000, at December 31, 2014 and 2013, respectively. These net operating loss carryforwards expire at various dates beginning in 2015. | |||||||||||||
In assessing whether the deferred tax assets are realizable, a more likely than not standard is applied. If it is determined that it is more likely than not that deferred tax assets will not be realized, a valuation allowance must be established against the deferred tax assets. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the associated temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. | |||||||||||||
A valuation allowance has been established in the amount of $4,147,000 and $8,422,000 at December 31, 2014 and 2013, respectively, based on the Company’s assessment of the future realizability of certain deferred tax assets. For the years ended December 31, 2014 and 2013, the Company recorded a decrease in the valuation allowance of $4,275,000 and $3,133,000, respectively, attributable almost exclusively to the expected expiration of net operating loss carryforwards due to limitations caused by ownership changes as previously discussed. The valuation allowance on deferred tax assets is related to future deductible temporary differences and net operating loss carryforwards (exclusive of net operating losses associated with items recorded directly to equity) for which the Company has concluded it is more likely than not that these items will not be realized in the ordinary course of operations. | |||||||||||||
At December 31, 2014, the Company had no increase or decrease in unrecognized income tax benefits for the year as a result of uncertain tax positions taken in a prior or current period. There was no accrued interest or penalties relating to tax uncertainties at December 31, 2014. Unrecognized tax benefits are not expected to increase or decrease within the next twelve months. | |||||||||||||
The Company is subject to income tax in the United States federal jurisdiction and various state jurisdictions and has identified its federal tax return and tax returns in state jurisdictions below as “major” tax filings. These jurisdictions, along with the years still open to audit under the applicable statutes of limitation, are as follows: | |||||||||||||
Jurisdiction | Tax Years | ||||||||||||
Federal | 2011 – 2013 | ||||||||||||
Arizona | 2011 – 2013 | ||||||||||||
California | 2010 – 2013 | ||||||||||||
Colorado | 2010 – 2013 | ||||||||||||
Idaho | 2011 – 2013 | ||||||||||||
Oregon | 2011 – 2013 | ||||||||||||
However, because the Company had net operating losses and credits carried forward in several of the jurisdictions, including the United States federal and California jurisdictions, certain items attributable to closed tax years are still subject to adjustment by applicable taxing authorities through an adjustment to tax attributes carried forward to open years. |
8_PREFERRED_STOCK
8. PREFERRED STOCK | 12 Months Ended | ||||||||||||||
Dec. 31, 2014 | |||||||||||||||
Equity [Abstract] | |||||||||||||||
8. PREFERRED STOCK | The Company has 6,734,835 undesignated shares of authorized and unissued preferred stock, which may be designated and issued in the future on the authority of the Company’s Board of Directors. As of December 31, 2013, the Company had the following designated preferred stock: | ||||||||||||||
Series A Preferred Stock – The Company has authorized 1,684,375 shares of Series A Cumulative Redeemable Convertible Preferred Stock (“Series A Preferred Stock”), with none outstanding at December 31, 2014 and 2013. Shares of Series A Preferred Stock that are converted into shares of the Company’s common stock revert to undesignated shares of authorized and unissued preferred stock. | |||||||||||||||
Upon any issuance, the Series A Preferred Stock would rank senior in liquidation and dividend preferences to the Company’s common stock. Holders of Series A Preferred Stock would be entitled to quarterly cumulative dividends payable in arrears in cash in an amount equal to 5% per annum of the purchase price per share of the Series A Preferred Stock. The holders of the Series A Preferred Stock would have conversion rights initially equivalent to two shares of common stock for each share of Series A Preferred Stock, subject to customary antidilution adjustments. Certain specified issuances will not result in antidilution adjustments. The shares of Series A Preferred Stock would also be subject to forced conversion upon the occurrence of a transaction that would result in an internal rate of return to the holders of the Series A Preferred Stock of 25% or more. Accrued but unpaid dividends on the Series A Preferred Stock are to be paid in cash upon any conversion of the Series A Preferred Stock. | |||||||||||||||
The holders of Series A Preferred Stock would have a liquidation preference over the holders of the Company’s common stock equivalent to the purchase price per share of the Series A Preferred Stock plus any accrued and unpaid dividends on the Series A Preferred Stock. A liquidation would be deemed to occur upon the happening of customary events, including transfer of all or substantially all of the Company’s capital stock or assets or a merger, consolidation, share exchange, reorganization or other transaction or series of related transactions, unless holders of 66 2/3% of the Series A Preferred Stock vote affirmatively in favor of or otherwise consent to such transaction. | |||||||||||||||
Series B Preferred Stock – The Company has authorized 1,580,790 shares of Series B Cumulative Convertible Preferred Stock (“Series B Preferred Stock”), with 926,942 shares outstanding at December 31, 2014 and 2013. Shares of Series B Preferred Stock that are converted into shares of the Company’s common stock revert to undesignated shares of authorized and unissued preferred stock. | |||||||||||||||
The Series B Preferred Stock ranks senior in liquidation and dividend preferences to the Company’s common stock. Holders of Series B Preferred Stock are entitled to quarterly cumulative dividends payable in arrears in cash in an amount equal to 7.00% per annum of the purchase price per share of the Series B Preferred Stock; however, subject to the provisions of the Letter Agreement described below, such dividends may, at the option of the Company, be paid in additional shares of Series B Preferred Stock based initially on the liquidation value of the Series B Preferred Stock. The holders of Series B Preferred Stock have a liquidation preference over the holders of the Company’s common stock initially equivalent to $19.50 per share of the Series B Preferred Stock plus any accrued and unpaid dividends on the Series B Preferred Stock. A liquidation will be deemed to occur upon the happening of customary events, including the transfer of all or substantially all of the capital stock or assets of the Company or a merger, consolidation, share exchange, reorganization or other transaction or series of related transaction, unless holders of 66 2/3% of the Series B Preferred Stock vote affirmatively in favor of or otherwise consent that such transaction shall not be treated as a liquidation. The Company believes that such liquidation events are within its control and therefore has classified the Series B Preferred Stock in stockholders’ equity. | |||||||||||||||
The holders of the Series B Preferred Stock have conversion rights initially equivalent to approximately 0.03 shares of common stock for each share of Series B Preferred Stock. The conversion ratio is subject to customary antidilution adjustments. In addition, antidilution adjustments are to occur in the event that the Company issues equity securities, including derivative securities convertible into equity securities (on an as-converted or as-exercised basis), at a price less than the conversion price then in effect. The shares of Series B Preferred Stock are also subject to forced conversion upon the occurrence of a transaction that would result in an internal rate of return to the holders of the Series B Preferred Stock of 25% or more. The forced conversion is to be based upon the conversion ratio as last adjusted. Accrued but unpaid dividends on the Series B Preferred Stock are to be paid in cash upon any conversion of the Series B Preferred Stock. | |||||||||||||||
The holders of Series B Preferred Stock vote together as a single class with the holders of the Company’s common stock on all actions to be taken by the Company’s stockholders. Each share of Series B Preferred Stock entitles the holder to approximately 0.03 votes per share on all matters to be voted on by the stockholders of the Company. Notwithstanding the foregoing, the holders of Series B Preferred Stock are afforded numerous customary protective provisions with respect to certain actions that may only be approved by holders of a majority of the shares of Series B Preferred Stock. | |||||||||||||||
In 2008, the Company entered into Letter Agreements with Lyles United LLC (“Lyles United”) and other purchasers under which the Company expressly waived its rights under the Certificate of Designations relating to the Series B Preferred Stock to make dividend payments in additional shares of Series B Preferred Stock in lieu of cash dividend payments without the prior written consent of Lyles United and the other purchasers. | |||||||||||||||
Registration Rights Agreement – In connection with the sale of its Series B Preferred Stock, the Company entered into a registration rights agreement with Lyles United. The registration rights agreement is to be effective until the holders of the Series B Preferred Stock, and their affiliates, as a group, own less than 10% for each of the series issued, including common stock into which such Series B Preferred Stock has been converted. The registration rights agreement provides that holders of a majority of the Series B Preferred Stock, including common stock into which such Series B Preferred Stock has been converted, may demand and cause the Company to register on their behalf the shares of common stock issued, issuable or that may be issuable upon conversion of the Preferred Stock and as payment of dividends thereon, and upon exercise of the related warrants (collectively, the “Registrable Securities”). The Company is required to keep such registration statement effective until such time as all of the Registrable Securities are sold or until such holders may avail themselves of Rule 144 for sales of Registrable Securities without registration under the Securities Act of 1933, as amended. The holders are entitled to two demand registrations on Form S-1 and unlimited demand registrations on Form S-3; provided, however, that the Company is not obligated to effect more than one demand registration on Form S-3 in any calendar year. In addition to the demand registration rights afforded the holders under the registration rights agreement, the holders are entitled to unlimited “piggyback” registration rights. These rights entitle the holders who so elect to be included in registration statements to be filed by the Company with respect to other registrations of equity securities. The Company is responsible for all costs of registration, plus reasonable fees of one legal counsel for the holders, which fees are not to exceed $25,000 per registration. The registration rights agreement includes customary representations and warranties on the part of both the Company and the holders and other customary terms and conditions. | |||||||||||||||
The Company recorded preferred stock dividends of $1,265,000, $1,265,000 and $1,268,000 for the years ended December 31, 2014, 2013 and 2012, respectively. For the years ended December 31, 2011, 2010 and 2009, the Company accrued but did not pay any preferred stock dividends. For the years ended December 31, 2014, 2013 and 2012, however, the Company accrued and paid all dividends in cash. | |||||||||||||||
Beginning in 2012, the Company has entered into a series of agreements with the parties to whom unpaid dividends were owed under which the Company issued shares of its common stock in satisfaction of a portion of the accrued and unpaid dividends. In connection with each payment of accrued and unpaid dividends, the payees agreed to forebear for a term from exercising any rights they may have with the respect to accrued and unpaid dividends. In 2014, the Company paid the last two installments in cash. The following table summarizes the details of the Company’s payments to the holders of its Series B Preferred Stock: | |||||||||||||||
Agreement/Payment Date | Amount of Dividends Paid | Shares of Common Stock Issued | Extended 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 | ||||||||||||
23-May-14 | 1,463,000 | 120,000 | 30-Nov-15 | ||||||||||||
24-Nov-14 | 1,000,000 | – | |||||||||||||
23-Dec-14 | 1,194,000 | – | |||||||||||||
Total | $ | 7,315,000 | 932,500 |
9_COMMON_STOCK_AND_WARRANTS
9. COMMON STOCK AND WARRANTS | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Stockholders' Equity Note [Abstract] | |||||||||||||
9. COMMON STOCK AND WARRANTS | The following table summarizes warrant activity for the years ended December 31, 2014, 2013 and 2012 (number of shares in thousands): | ||||||||||||
Number of | Price per | Weighted | |||||||||||
Shares | Share | Average | |||||||||||
Exercise Price | |||||||||||||
Balance at December 31, 2011 | 426 | $1.80 – $745.50 | $ | 117.6 | |||||||||
Warrants issued | 4,633 | $6.45 – $8.85 | $ | 7.8 | |||||||||
Warrants exercised | (20 | ) | $1.80 – $7.95 | $ | 2.85 | ||||||||
Balance at December 31, 2012 | 5,039 | $1.80 – $745.50 | $ | 17.1 | |||||||||
Warrants issued | 3,548 | $6.32 – $7.59 | $ | 6.98 | |||||||||
Warrants exercised | (285 | ) | $1.80 – $8.85 | $ | 7.27 | ||||||||
Warrants expired | (27 | ) | $745.50 | $ | 745.5 | ||||||||
Balance at December 31, 2013 | 8,275 | $5.47 – $735.00 | $ | 10.04 | |||||||||
Warrants exercised | (6,615 | ) | $6.09 – $8.85 | $ | 7.17 | ||||||||
Warrants expired | (804 | ) | $5.47 | $ | 5.47 | ||||||||
Balance at December 31, 2014 | 856 | $6.09 – $735.00 | $ | 36.55 | |||||||||
January 2013 Financing – In connection with the January 2013 Financing Transaction, the Company issued warrants to purchase an aggregate of 1,708,700 shares of common stock. All of the warrants were exercised in 2014. | |||||||||||||
Series A and B Notes – 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, respectively. All of the warrants were exercised in 2014. | |||||||||||||
September 2012 Public Offering – On September 26, 2012, the Company raised $10,091,000, net of $909,000 of underwriting fees and issuance costs, through a public offering of units consisting of an aggregate of 1,833,000 shares of common stock and warrants immediately exercisable to purchase an aggregate of 1,833,000 shares of common stock at an exercise price of $8.85 per share and which expire in September 2015. The Company accounted for the net proceeds of the offering by first allocating the $1,658,000 fair value of the warrants to liabilities and then allocating the remaining amount to equity. As of December 31, 2014, warrants to purchase 473,000 shares of common stock remained outstanding. | |||||||||||||
July 2012 Public Offering – On July 3, 2012, the Company raised $10,903,000, net of $1,137,000 of underwriting fees and issuance costs, through a public offering of units consisting of an aggregate of 1,867,000 shares of common stock, warrants immediately exercisable to purchase an aggregate of 1,867,000 shares of common stock at an exercise price of $9.45 per share and which expire in 2017 (“Series I Warrants”) and warrants immediately exercisable to purchase an aggregate of 933,000 shares of common stock at an exercise price of $7.95 per share and which expire in 2014 (“Series II Warrants”). The Series I Warrants and the Series II Warrants are subject to “weighted-average” anti-dilution adjustments if the Company issues or is deemed to have issued securities at a price lower than their then applicable exercise prices. Due to subsequent transactions, the exercise price of the Series I Warrants was reduced to $6.09 per share and the exercise price of the Series II Warrants was reduced to $5.47 per share. The Company accounted for the net proceeds of the offering by first allocating the $3,380,000 fair value of the warrants to liabilities and then allocating the remaining amount to equity. The Series II Warrants expired unexercised. As of December 31, 2014, Series I Warrants to purchase 211,000 shares of common stock remained outstanding. | |||||||||||||
Warrant Inducements – During 2014 and 2013, certain holders exercised warrants and received payments from the Company in the aggregate amounts of $2,271,000 and $785,800, respectively, in cash as an inducement for these exercises, which were recorded as an expense. | |||||||||||||
Warrant Terms – The exercise prices of the warrants described above are subject to adjustment for stock splits, combinations or similar events, and, in such event, the number of shares issuable upon the exercise of the warrants will also be adjusted so that the aggregate exercise price shall be the same immediately before and immediately after the adjustment. The warrants generally require payments to be made by the Company for failure to deliver the shares of common stock issuable upon exercise. The warrants may not be exercised if, after giving effect to the exercise, the investor together with its affiliates would beneficially own in excess of 4.99% of the Company’s outstanding shares of common stock. The blocker applicable to the exercise of the warrants may be raised or lowered to any other percentage not in excess of 9.99%, except that any increase will only be effective upon 61-days’ prior notice to the Company. If the Company issues options, convertible securities, warrants, stock, or similar securities to holders of its common stock generally, each holder of certain warrants has the right to acquire the same securities as if the holder had exercised its warrants. The warrants prohibit the Company from entering into specified transactions involving a change of control, unless the successor entity assumes all of the Company’s obligations under the warrants under a written agreement before the transaction is completed. When there is a transaction involving a permitted change of control, a holder of a warrant will have the right to force the Company to repurchase the holder’s warrant for a purchase price in cash equal to the Black-Scholes value (as calculated under the individual warrant agreements) of the then unexercised portion of the warrant. | |||||||||||||
Accounting for Warrants – The Company has determined that the warrants issued in the above transactions did not meet the conditions for classification in stockholders’ equity and as such, the Company has recorded them as a liability at fair value. The Company will revalue them at each reporting period. Further, as noted above, certain of the exercise prices declined as a result of the anti-dilution adjustments due to subsequent transactions. Accordingly, the Company recorded fair value adjustments quarterly, with total fair value adjustments of $35,260,000, $648,000 and $1,954,000 for the years ended December 31, 2014, 2013 and 2012, respectively, which is largely attributed to adjustment, if any, to their exercise prices, term shortening and changes in the market value of the Company’s common stock. See Note 12 for the Company’s fair value assumptions. | |||||||||||||
Registration Rights Agreements – In connection with the above issuances, the Company entered into a registration rights agreements with all of the investors to file registration statements on Form S-1 or S-3 with the Securities and Exchange Commission by certain dates for the resale by the purchasers of the shares of common stock issued and the shares of common stock issuable upon exercise of the warrants. Subject to customary grace periods, the Company is required to keep the registration statements (and the accompanying prospectuses) available for use for resale by the investors on a delayed or continuous basis at then-prevailing market prices at all times until the earlier of (i) the date as of which all of the investors may sell all of the shares of common stock required to be covered by the registration statement without restriction under Rule 144 under the Securities Act of 1933, as amended (including volume restrictions) and without the need for current public information required by Rule 144(c)(1), if applicable) or (ii) the date on which the investors have sold all of the shares of common stock covered by the registration statement. The Company must pay registration delay payments of up to 2% of each investor’s initial investment per month if the registration statement ceases to be effective prior to the expiration of deadlines provided for in the registration rights agreement. The initial registration statements became effective by the stated deadlines and the Company did not record any liability associated with any registration delay payments under the registration rights agreements. |
10_STOCK_BASED_COMPENSATION
10. STOCK BASED COMPENSATION | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||
10. STOCK-BASED COMPENSATION | The Company has two equity incentive compensation plans: a 2004 Stock Option Plan and a 2006 Stock Incentive Plan. | ||||||||||||||||||||
2004 Stock Option Plan – The 2004 Stock Option Plan authorized the issuance of incentive stock options (“ISOs”) and non-qualified stock options (“NQOs”) to the Company’s officers, directors or key employees or to consultants that do business with the Company for up to an aggregate of 23,810 shares of common stock. On September 7, 2006, the Company terminated the 2004 Stock Option Plan, except to the extent of issued and outstanding options then existing under the plan. The Company had options outstanding to purchase 762 shares of common stock under its 2004 Stock Option Plan at December 31, 2014 and 2013. | |||||||||||||||||||||
2006 Stock Incentive Plan – The 2006 Stock Incentive Plan authorizes the issuance of ISOs, NQOs, restricted stock, restricted stock units, stock appreciation rights, direct stock issuances and other stock-based awards to the Company’s officers, directors or key employees or to consultants that do business with the Company for up to an aggregate of 1,715,000 shares of common stock. | |||||||||||||||||||||
Stock Options – On August 1, 2011, August 25, 2011 and June 18, 2013, the Company granted options to purchase an aggregate of 12,900, 1,000 and 229,000 shares of the Company’s common stock at exercise prices of $12.90, $5.25 and $3.74 per share, which were the respective closing prices per share of the Company’s common stock on the dates of grant, with estimated fair values of $6.60, $2.70 and $1.68, respectively. The options granted in 2011 vested as to 33% on each of April 1, 2012 and 2013 and vest as to 34% on April 1, 2014. The options granted in 2013 vested as to 33% on April 1, 2014, vest as to 33% on April 1, 2015 and vest as to 34% on April 1, 2016. The options expire 10 years from the date of grant. Fair value was determined using the Black-Scholes Option Pricing Model. For the August 1, 2011 grants, the inputs to estimating fair value were: exercise price of $12.90; estimated life of 5.0 years; expected volatility of 56.7%; and risk free interest rate of 2.50%. For the August 25, 2011 grants, the inputs to estimating fair value were: exercise price of $5.25; estimated life of 5.0 years; expected volatility of 56.7% and risk free interest rate of 2.50%. For the June 18, 2013 grants, the inputs to estimating fair value were: exercise price of $3.74; estimated life of 3.0 years; expected volatility of 68.0% and risk free interest rate of 0.57%. The Company estimates expected volatility using peer companies within its industry. | |||||||||||||||||||||
Summaries of the status of Company’s stock option plans as of December 31, 2014 and 2013 and of changes in options outstanding under the Company’s plans during those years are as follows (shares in thousands): | |||||||||||||||||||||
Years Ended December 31, | |||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
Number | Weighted Average Exercise Price | Number | Weighted Average | ||||||||||||||||||
of Shares | of Shares | Exercise Price | |||||||||||||||||||
Outstanding at beginning of year | 241 | $ | 6.91 | 13 | $ | 63 | |||||||||||||||
Issued | – | $ | – | 229 | $ | 3.74 | |||||||||||||||
Cancelled | – | $ | – | (1 | ) | $ | 12.9 | ||||||||||||||
Outstanding at end of year | 241 | $ | 6.91 | 241 | $ | 6.91 | |||||||||||||||
Options exercisable at end of year | 89 | $ | 11.59 | 9 | $ | 88.08 | |||||||||||||||
Stock options outstanding as of December 31, 2014 were as follows (number of shares in thousands): | |||||||||||||||||||||
Options Outstanding | Options Exercisable | ||||||||||||||||||||
Range of | Number | Weighted Average Remaining Contractual Life (yrs) | Weighted Average Exercise Price | Number Exercisable | Weighted Average | ||||||||||||||||
Exercise Prices | Outstanding | Exercise Price | |||||||||||||||||||
$3.74 | 229 | 8.47 | $ | 3.74 | 76 | $ | 3.74 | ||||||||||||||
$12.90 | 11 | 6.59 | $ | 12.9 | 11 | $ | 12.9 | ||||||||||||||
$866.25-$871.50 | 1 | 0.57 | $ | 867.23 | 1 | $ | 867.23 | ||||||||||||||
The options outstanding at December 31, 2014 and 2013 had intrinsic values of $1,509,000 and $309,000, respectively. | |||||||||||||||||||||
Restricted Stock – The Company granted to certain employees and directors shares of restricted stock under its 2006 Stock Incentive Plan pursuant to restricted stock agreements. A summary of unvested restricted stock activity is as follows (shares in thousands): | |||||||||||||||||||||
Number of | Weighted Average Grant Date Fair Value Per Share | ||||||||||||||||||||
Shares | |||||||||||||||||||||
Unvested at December 31, 2011 | 31 | $ | 64.05 | ||||||||||||||||||
Vested | (13 | ) | $ | 81.9 | |||||||||||||||||
Canceled | (2 | ) | $ | 61.2 | |||||||||||||||||
Unvested at December 31, 2012 | 16 | $ | 50.4 | ||||||||||||||||||
Issued | 615 | $ | 4.56 | ||||||||||||||||||
Vested | (142 | ) | $ | 7.85 | |||||||||||||||||
Canceled | (17 | ) | $ | 6.2 | |||||||||||||||||
Unvested at December 31, 2013 | 472 | $ | 5.07 | ||||||||||||||||||
Issued | 155 | $ | 15.23 | ||||||||||||||||||
Vested | (227 | ) | $ | 5.79 | |||||||||||||||||
Canceled | (10 | ) | $ | 4.3 | |||||||||||||||||
Unvested at December 31, 2014 | 390 | $ | 8.71 | ||||||||||||||||||
The fair value of the common stock at vesting aggregated $3,858,000 and $601,000 for the years ended December 31, 2014 and 2013, respectively. Stock-based compensation expense related to employee and non-employee restricted stock and option grants recognized in income were as follows (in thousands): | |||||||||||||||||||||
Years Ended December 31, | |||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
Employees | $ | 1,493 | $ | 1,333 | |||||||||||||||||
Non-employees | 345 | 391 | |||||||||||||||||||
Total stock-based compensation expense | $ | 1,838 | $ | 1,724 | |||||||||||||||||
At December 31, 2014, the total compensation cost related to unvested awards which had not been recognized was $3,393,000 and the associated weighted-average period over which the compensation cost attributable to those unvested awards would be recognized is approximately 2 years. |
11_COMMITMENTS_AND_CONTINGENCI
11. COMMITMENTS AND CONTINGENCIES | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||
11. COMMITMENTS AND CONTINGENCIES | Commitments – The following is a description of significant commitments at December 31, 2014: | ||||||||
Leases – Future minimum lease payments required by non-cancelable leases in effect at December 31, 2014 are as follows (in thousands): | |||||||||
Years Ended December 31, | Capital Leases | Operating Leases | |||||||
2015 | $ | 4,569 | $ | 1,145 | |||||
2016 | 900 | 1,107 | |||||||
2017 | 900 | 956 | |||||||
2018 | 568 | 878 | |||||||
2019 | – | 580 | |||||||
Thereafter | – | 2,243 | |||||||
Total minimum payments | 6,937 | $ | 6,909 | ||||||
Amount representing interest | (805 | ) | |||||||
Obligations under capital leases | 6,132 | ||||||||
Obligations due within one year | (4,077 | ) | |||||||
Long-term obligations under capital leases | $ | 2,055 | |||||||
Total rent expense during the years ended December 31, 2014, 2013 and 2012 was $2,417,000, $1,454,000 and $2,252,000, respectively. | |||||||||
Sales Commitments – At December 31, 2014, the Company had entered into sales contracts with its major customers to sell certain quantities of ethanol, WDG, corn oil and syrup. The Company had open ethanol indexed-price contracts for 163,502,000 gallons of ethanol as of December 31, 2014. The Company had open corn oil fixed-price sales contracts valued at $1,034,000 and open indexed-price sales contracts for 1,072,000 pounds of corn oil as of December 31, 2014. The Company had open WDG and syrup fixed-price sales contracts valued at $871,000 and open indexed-price sales contracts for 162,000 tons of WDG and syrup as of December 31, 2014. These sales contracts are scheduled to be completed throughout 2015. | |||||||||
Purchase Commitments – At December 31, 2014, the Company had indexed-price purchase contracts to purchase 33,330,000 gallons of ethanol and fixed-price purchase contracts to purchase $12,784,000 of ethanol from its suppliers. These purchase commitments are scheduled to be satisfied throughout 2015. | |||||||||
Other Commitments – At December 31, 2014, the Company had firm commitments to add corn oil separation and other process improvement projects at the Pacific Ethanol Plants of approximately $22.5 million, most of which is expected to be completed in 2015. | |||||||||
Contingencies – The following is a description of significant contingencies at December 31, 2014: | |||||||||
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. | |||||||||
GS CleanTech – 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. On August 29, 2013, the case was transferred to the United States District Court for the Southern District of Indiana and made part of the pre-existing multi-district litigation involving GS CleanTech and multiple defendants. The suit alleged 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 (“PE Stockton”), located in Stockton, California. The complaint sought 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 attorneys’ fees. The Company answered the complaint, counterclaimed that the patent claims at issue, as well as the claims in several related patents, are invalid and unenforceable and that the Company is not infringing. Pacific Ethanol, Inc. does not itself use any corn oil separation technology and may seek a dismissal on those grounds. | |||||||||
On March 17 and March 18, 2014, GS CleanTech filed suit naming as defendants two Company subsidiaries: PE Stockton and Pacific Ethanol Magic Valley, LLC (“PE Magic Valley”). The claims were similar to those filed against Pacific Ethanol, Inc. in May 2013. These two cases were transferred to the multi-district litigation division in United States District Court for the Southern District of Indiana, where the case against Pacific Ethanol, Inc. was pending. Although PE Stockton and PE Magic Valley do separate and market corn oil, the Company, PE Stockton and PE Magic Valley strongly disagree that either of the subsidiaries use corn oil separation technology that infringes the patent owned by GS CleanTech. In a January 16, 2015 decision, the District Court for the Southern District of Indiana ruled in favor of a stipulated motion for partial summary judgment for the Company, PE Stockton and PE Magic Valley finding that all of the GS Cleantech patents in the suit were invalid and, therefore, not infringed. GS Cleantech has said it will appeal this decision when the remaining claim in the suit has been decided. The only remaining claim alleges that GS Cleantech inequitably conducted itself before the United States Patent Office when obtaining the patents at issue. A trial in the District Court for the Southern District of Indiana on that single issue is expected later in 2015. If the Defendants, including the Company, PE Stockton and PE Magic Valley, succeed in proving inequitable conduct, then the Court will be asked to determine whether GS Cleantech’s behavior makes this an “exceptional case”. A finding that this is an exceptional case would allow the Court to award to the Company, PE Stockton and PE Magic Valley the attorneys’ fees expended to date for defense in this case. It is unknown whether GS Cleantech would appeal such a ruling. The Company did not record a provision for these matters as of December 31, 2014 as Company management intends to vigorously defend these allegations and believes a material adverse ruling against Pacific Ethanol, Inc., PE Stockton and/or PE Magic Valley is not probable. The Company believes that any liability Pacific Ethanol, Inc., PE Stockton and/or PE Magic Valley may incur would not have a material adverse effect on the Company’s financial condition or its results of operations. |
12_FAIR_VALUE_MEASUREMENTS
12. FAIR VALUE MEASUREMENTS | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||
12. 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 2011 through 2013 and the conversion features associated with its convertible notes at fair value and designated them as Level 3 on their issuance date. | |||||||||||||||||||||||||||||
Warrants – Except for the warrants issued September 26, 2012, the Company’s warrants were valued using a Monte Carlo Binomial Lattice-Based valuation methodology, adjusted for marketability restrictions. The warrants issued September 26, 2012, due to no anti-dilution protection features, were valued using the Black-Scholes Valuation Model. | |||||||||||||||||||||||||||||
Significant assumptions used and related fair values for the warrants as of December 31, 2014 were as follows: | |||||||||||||||||||||||||||||
Original Issuance | Exercise Price | Volatility | Risk Free Interest Rate | Term (years) | Market Discount | Warrants Outstanding | Fair Value | ||||||||||||||||||||||
9/26/12 | $ | 8.85 | 51.00% | 0.19% | 0.74 | 37.00% | 473,000 | 748,000 | |||||||||||||||||||||
7/3/12 | $ | 6.09 | 56.10% | 0.89% | 2.51 | 32.80% | 211,000 | 811,000 | |||||||||||||||||||||
12/13/11 | $ | 8.43 | 54.30% | 0.67% | 1.95 | 28.70% | 138,000 | 427,000 | |||||||||||||||||||||
$ | 1,986,000 | ||||||||||||||||||||||||||||
Significant assumptions used and related fair values for the warrants as of December 31, 2013 were as follows: | |||||||||||||||||||||||||||||
Original Issuance | Exercise Price | Volatility | Risk Free Interest Rate | Term (years) | Market Discount | Warrants Outstanding | Fair Value | ||||||||||||||||||||||
6/21/13 | $ | 7.59 | 52.40% | 0.13% | 1.24 | 22.70% | 1,051,000 | $ | 660,000 | ||||||||||||||||||||
3/28/13 | $ | 7.59 | 52.40% | 0.13% | 1.2 | 22.70% | 788,000 | 495,000 | |||||||||||||||||||||
1/11/13 | $ | 6.32 | 63.30% | 1.27% | 4.03 | 43.80% | 1,709,000 | 2,892,000 | |||||||||||||||||||||
9/26/12 | $ | 8.85 | 58.50% | 0.38% | 1.74 | 42.30% | 1,771,000 | 702,000 | |||||||||||||||||||||
7/3/12 | $ | 6.09 | 61.20% | 1.27% | 3.51 | 40.20% | 1,812,000 | 3,008,000 | |||||||||||||||||||||
7/3/12 | $ | 5.47 | 52.80% | 0.01% | 0.01 | 42.30% | 804,000 | 3,000 | |||||||||||||||||||||
12/13/11 | $ | 8.43 | 60.40% | 0.78% | 2.95 | 37.90% | 306,000 | 455,000 | |||||||||||||||||||||
$ | 8,215,000 | ||||||||||||||||||||||||||||
The estimated fair value of the warrants is affected by the above underlying inputs. Observable inputs include the values of exercise price, stock price, term and risk-free interest rate. As separate inputs, an increase (decrease) in either the term or risk free interest rate will result in an increase (decrease) in the estimated fair value of the warrant. | |||||||||||||||||||||||||||||
Unobservable inputs include volatility and market discount. An increase (decrease) in volatility will result in an increase (decrease) in the estimated warrant value and an increase (decrease) in the market discount will result in a decrease (increase) in the estimated warrant fair value. | |||||||||||||||||||||||||||||
The volatility utilized was a blended average of the Company’s historical volatility and implied volatilities derived from a selected peer group. The implied volatility component has remained relatively constant over time given that implied volatility is a forward-looking assumption based on observable trades in public option markets. Should the Company’s historical volatility increase (decrease) on a go-forward basis, the resulting value of the warrants would increase (decrease). | |||||||||||||||||||||||||||||
The market discount, or a discount for lack of marketability, is quantified using a Black-Scholes option pricing model, with a primary model input of assumed holding period restriction. As the assumed holding period increases (decreases), the market discount increases (decreases), conversely impacting the value of the warrant fair value. | |||||||||||||||||||||||||||||
Convertible Notes – The conversion feature imbedded in the convertible notes was valued using a Monte Carlo Binomial Lattice-Based valuation methodology, adjusted for marketability restrictions. The Company estimated the fair value of the conversion feature until the retirement of the convertible notes in December 2013. | |||||||||||||||||||||||||||||
Other Derivative Instruments – The Company’s other derivative instruments consist of commodity positions. The fair values of the commodity positions are based on quoted prices on the commodity exchanges and are designated as Level 1 inputs. | |||||||||||||||||||||||||||||
The following table summarizes fair value measurements by level at December 31, 2014 (in thousands): | |||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||
Commodity contracts(1) | $ | 1,586 | $ | – | $ | – | $ | 1,586 | |||||||||||||||||||||
Total Assets | $ | 1,586 | $ | – | $ | – | $ | 1,586 | |||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||
Warrants(2) | $ | – | $ | – | $ | 1,986 | $ | 1,986 | |||||||||||||||||||||
Commodity contracts(3) | 1,149 | – | – | 1,149 | |||||||||||||||||||||||||
Total Liabilities | $ | 1,149 | $ | – | $ | 1,986 | $ | 3,135 | |||||||||||||||||||||
_______________ | |||||||||||||||||||||||||||||
-1 | Included in other current assets in the consolidated balance sheets. | ||||||||||||||||||||||||||||
-2 | Included in warrant liabilities 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, 2013 (in thousands): | |||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||
Commodity contracts(1) | $ | 961 | $ | – | $ | – | $ | 961 | |||||||||||||||||||||
Total Assets | $ | 961 | $ | – | $ | – | $ | 961 | |||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||
Warrants(2) | $ | – | $ | – | $ | 8,215 | $ | 8,215 | |||||||||||||||||||||
Commodity contracts(3) | 859 | – | – | 859 | |||||||||||||||||||||||||
Total Liabilities | $ | 859 | $ | – | $ | 8,215 | $ | 9,074 | |||||||||||||||||||||
_______________ | |||||||||||||||||||||||||||||
-1 | Included in other current assets in the consolidated balance sheets. | ||||||||||||||||||||||||||||
-2 | Included in warrant liabilities 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 with respect to its warrants were as follows (in thousands): | |||||||||||||||||||||||||||||
Warrants | Conversion Features | ||||||||||||||||||||||||||||
Balance, December 31, 2011 | $ | 1,921 | $ | – | |||||||||||||||||||||||||
Issuance of warrants in July offering | 3,380 | – | |||||||||||||||||||||||||||
Issuance of warrants in September offering | 1,658 | – | |||||||||||||||||||||||||||
Exercises of warrants | (113 | ) | – | ||||||||||||||||||||||||||
Adjustments to fair value for the period | (1,954 | ) | – | ||||||||||||||||||||||||||
Balance, December 31, 2012 | $ | 4,892 | $ | – | |||||||||||||||||||||||||
Issuance of warrants in January offering | $ | 2,657 | $ | – | |||||||||||||||||||||||||
Issuance of notes and warrants in March offering | 1,572 | 1,401 | |||||||||||||||||||||||||||
Issuance of notes in June offering | – | 2,929 | |||||||||||||||||||||||||||
Conversions of notes | – | (5,205 | ) | ||||||||||||||||||||||||||
Exercises of warrants | (260 | ) | – | ||||||||||||||||||||||||||
Adjustments to fair value for the period | (646 | ) | 875 | ||||||||||||||||||||||||||
Balance, December 31, 2013 | $ | 8,215 | $ | – | |||||||||||||||||||||||||
Exercises of warrants | (41,486 | ) | – | ||||||||||||||||||||||||||
Expiration of warrants | (3 | ) | – | ||||||||||||||||||||||||||
Adjustments to fair value for the period | 35,260 | – | |||||||||||||||||||||||||||
Balance, December 31, 2014 | $ | 1,986 | $ | – | |||||||||||||||||||||||||
13_RELATED_PARTY_TRANSACTIONS
13. RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2014 | |
Related Party Transactions [Abstract] | |
13. RELATED PARTY TRANSACTIONS | Preferred Dividends – The Company had accrued and unpaid dividends in respect of its Series B Preferred Stock of $0 and $3,657,000 as of December 31, 2014 and 2013, respectively. As further discussed in Note 8, the Company issued common stock in payment of certain accrued and unpaid dividends. |
Note Payable to Related Party – The Company had a note payable to its Chief Executive Officer totaling $750,000 as of December 31, 2013, which was paid in full in cash on its maturity date on March 31, 2014. |
14_MERGER_AGREEMENT_WITH_AVENT
14. MERGER AGREEMENT WITH AVENTINE | 12 Months Ended |
Dec. 31, 2014 | |
Business Combinations [Abstract] | |
14. MERGER AGREEMENT WITH AVENTINE | On December 30, 2014, The Company entered into a definitive merger agreement with Aventine Renewable Energy Holdings, Inc. (“Aventine”), a Midwest ethanol producer, under which the Company plans to acquire Aventine through a merger. The merger agreement provides that, upon the terms and subject to the conditions set forth in the merger agreement, a wholly-owned subsidiary of the Company will merge with and into Aventine, with Aventine surviving as a wholly-owned subsidiary of the Company. Subject to the terms and conditions of the merger agreement which was approved by the Company’s and Aventine’s boards of directors, if the merger is completed, each outstanding share of Aventine common stock will be converted into the right to receive 1.25 shares of the Company’s common stock, and the Company will issue approximately 17.75 million shares of its common stock. The merger is expected to result in the Company’s stockholders holding approximately 58% of the combined company. |
The merger transaction, which is intended to be structured as a tax-free exchange of shares, is expected to close during the second quarter of 2015, and is subject to closing conditions, including obtaining certain regulatory approvals and approvals from the stockholders of both companies. |
15_QUARTERLY_FINANCIAL_DATA
15. QUARTERLY FINANCIAL DATA | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||
15. QUARTERLY FINANCIAL DATA | The Company’s unaudited quarterly results of operations for the years ended December 31, 2014 and 2013 are as follows (in thousands): | ||||||||||||||||
First | Second | Third | Fourth | ||||||||||||||
Quarter | Quarter | Quarter | Quarter | ||||||||||||||
December 31, 2014: | |||||||||||||||||
Net sales | $ | 254,543 | $ | 321,144 | $ | 275,573 | $ | 256,152 | |||||||||
Gross profit | $ | 38,545 | $ | 33,576 | $ | 17,986 | $ | 18,378 | |||||||||
Income from operations | $ | 34,875 | $ | 29,261 | $ | 13,594 | $ | 13,647 | |||||||||
Net income (loss) attributed to Pacific Ethanol, Inc. | $ | (10,826 | ) | $ | 15,572 | $ | 4,025 | $ | 12,518 | ||||||||
Preferred stock dividends | $ | (312 | ) | $ | (315 | ) | $ | (319 | ) | $ | (319 | ) | |||||
Net income (loss) available to common stockholders | $ | (11,138 | ) | $ | 15,257 | $ | 3,706 | $ | 12,199 | ||||||||
Income (loss) per common share: | |||||||||||||||||
Basic | $ | (0.69 | ) | $ | 0.77 | $ | 0.16 | $ | 0.51 | ||||||||
Diluted | $ | (0.69 | ) | $ | 0.68 | $ | 0.15 | $ | 0.5 | ||||||||
First | Second | Third | Fourth | ||||||||||||||
Quarter | Quarter | Quarter | Quarter | ||||||||||||||
December 31, 2013: | |||||||||||||||||
Net sales | $ | 225,459 | $ | 233,808 | $ | 233,880 | $ | 215,290 | |||||||||
Gross profit | $ | 846 | $ | 6,965 | $ | 3,523 | $ | 21,596 | |||||||||
Income (loss) from operations | $ | (3,159 | ) | $ | 3,832 | $ | 1,012 | $ | 17,224 | ||||||||
Net income (loss) attributed to Pacific Ethanol, Inc. | $ | (5,454 | ) | $ | 1,051 | $ | (4,971 | ) | $ | 8,593 | |||||||
Preferred stock dividends | $ | (312 | ) | $ | (315 | ) | $ | (319 | ) | $ | (319 | ) | |||||
Net income (loss) available to common stockholders | $ | (5,766 | ) | $ | 736 | $ | (5,290 | ) | $ | 8,274 | |||||||
Loss per common share: | |||||||||||||||||
Basic | $ | (0.57 | ) | $ | 0.07 | $ | (0.40 | ) | $ | 0.55 | |||||||
Diluted | $ | (0.57 | ) | $ | 0.07 | $ | (0.40 | ) | $ | 0.54 | |||||||
1_ORGANIZATION_AND_BASIS_OF_PR1
1. ORGANIZATION AND BASIS OF PRESENTATION (Policies) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
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 PE Op Co., a Delaware corporation (“PE Op Co.,” formerly, New PE Holdco LLC, a Delaware limited liability company), which owns the Plant Owners (as defined below) (collectively, the “Company”). | ||||||||||||
The Company is the leading producer and marketer 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, 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 a 96%, 91% and 67% ownership interest in PE Op Co., the owner of four ethanol production facilities, as of December 31, 2014, 2013 and 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 the following four ethanol production facilities: 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 PE Op Co. These four facilities have an aggregate annual ethanol production capacity of up to 200 million gallons. As of December 31, 2014, all four facilities were operating. On April 30, 2014, the Company’s previously idled facility in Madera, California commenced producing ethanol. 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. | |||||||||||||
Basis of Presentation | Basis of Presentation – The consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and include the accounts of the Company. All significant intercompany accounts and transactions have been eliminated in consolidation. | ||||||||||||
Consolidation of Variable Interest Entities | Consolidation of Variable Interest Entities – The Company applies the guidance in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification 810, Consolidation, surrounding a company’s analysis to determine whether any of its variable interests constitute controlling financial interests in a variable interest entity (“VIE”). This analysis identifies the primary beneficiary of a VIE as the enterprise that has both of the following characteristics: (i) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance, and (ii) the obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE. Additionally, an enterprise is required to assess whether it has an implicit financial responsibility to ensure that a VIE operates as designed when determining whether it has the power to direct the activities of the VIE that most significantly impact the entity’s economic performance. The guidance also requires ongoing reassessments of whether an enterprise is the primary beneficiary of a VIE. | ||||||||||||
On October 6, 2010, the Company purchased an initial 20% ownership interest in PE Op Co., a VIE at the time, from a number of PE Op Co.’s owners. At that time, the Company determined it was the primary beneficiary of PE Op Co., and as such, has since consolidated the results of PE Op Co. Through various transactions, the Company increased its ownership interest in PE Op Co. to 67% at December 31, 2012. In 2013, the Company increased its ownership interest in PE Op Co. through various transactions in January, March, June and December 2013, acquiring additional ownership interests of 13%, 3%, 2% and 6%, respectively, bringing its ownership to 91% at December 31, 2013. In 2014, the Company increased its ownership in PE Op Co. bringing its ownership to 96% at December 31, 2014. | |||||||||||||
Since December 2013, as a result of owning 91% of PE Op Co., the Company, with its significant majority position, has the ability to make most all decisions on its own, and has therefore determined that PE Op Co. is no longer considered a VIE. The Company continues to consolidate PE Op Co.’s financial results, however, now under the voting rights model. Consequently, since the Company does not wholly-own PE Op Co., it must adjust its consolidated net income (loss) for the income (loss) attributed to PE Op Co.’s other owners. The remaining amount after this adjustment results in net income (loss) attributed to Pacific Ethanol, Inc. | |||||||||||||
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. | ||||||||||||
Cash and Cash Equivalents | Cash and Cash Equivalents – The Company considers all highly-liquid investments with an original maturity of three months or less to be cash equivalents. | ||||||||||||
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, sells WDG to dairy operators and animal feed distributors and sells corn oil to poultry and biodiesel customers generally without requiring collateral. Due to a limited number of ethanol customers, the Company had significant concentrations of credit risk from sales of ethanol as of December 31, 2014 and 2013, as described below. | ||||||||||||
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 $28,427,000 and $27,487,000 at December 31, 2014 and 2013, respectively, were used as collateral under Kinergy’s operating line of credit. The allowance for doubtful accounts was $6,000 and $187,000 as of December 31, 2014 and 2013, respectively. The Company recorded a bad debt recovery of $42,000, an expense of $169,000 and a bad debt recovery of $6,000 for the years ended December 31, 2014, 2013 and 2012, respectively. The Company does not have any off-balance sheet credit exposure related to its customers. | |||||||||||||
Concentrations of Credit Risk | Concentrations of Credit Risk – Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed completely to perform as contracted. Concentrations of credit risk, whether on- or off-balance sheet, that arise from financial instruments exist for groups of customers or counterparties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions described below. Financial instruments that subject the Company to credit risk consist of cash balances maintained in excess of federal depository insurance limits and accounts receivable, which have no collateral or security. The Company has not experienced any significant losses in such accounts and believes that it is not exposed to any significant risk of loss of cash. | ||||||||||||
The Company sells fuel-grade ethanol to gasoline refining and distribution companies. The Company sold ethanol to customers representing 10% or more of the Company’s total net sales, as follows. | |||||||||||||
Years Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Customer A | 20% | 23% | 21% | ||||||||||
Customer B | 20% | 17% | 16% | ||||||||||
Customer C | 8% | 12% | 12% | ||||||||||
Customer D | 11% | 6% | 2% | ||||||||||
The Company had accounts receivable due from these customers totaling $20,706,000 and $17,513,000, representing 59% and 50% of total accounts receivable as of December 31, 2014 and 2013, respectively. | |||||||||||||
The Company purchases fuel-grade ethanol and corn, its largest cost component in producing ethanol, from its suppliers. The Company purchased ethanol and corn from suppliers representing 10% or more of the Company’s total purchases for the purchase and production of ethanol, as follows: | |||||||||||||
Years Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Supplier A | 26% | 37% | 40% | ||||||||||
Supplier B | 15% | 14% | 14% | ||||||||||
Supplier C | 12% | 8% | 10% | ||||||||||
Inventories | Inventories – Inventories consisted primarily of bulk ethanol, beet sugar 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): | ||||||||||||
December 31, | |||||||||||||
2014 | 2013 | ||||||||||||
Finished goods | $ | 11,118 | $ | 10,287 | |||||||||
Raw materials | 2,695 | 9,418 | |||||||||||
Work in progress | 3,274 | 2,766 | |||||||||||
Other | 1,463 | 915 | |||||||||||
Total | $ | 18,550 | $ | 23,386 | |||||||||
Property and Equipment | Property and Equipment – Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the following estimated useful lives: | ||||||||||||
Buildings | 40 years | ||||||||||||
Facilities and plant equipment | 10 – 25 years | ||||||||||||
Other equipment, vehicles and furniture | 5 – 10 years | ||||||||||||
The cost of normal maintenance and repairs is charged to operations as incurred. Significant capital expenditures that increase the life of an asset are capitalized and depreciated over the estimated remaining useful life of the asset. The cost of fixed assets sold, or otherwise disposed of, and the related accumulated depreciation or amortization are removed from the accounts, and any resulting gains or losses are reflected in current operations. | |||||||||||||
Intangible Assets | Intangible Assets – The Company amortizes intangible assets with definite lives using the straight-line method over their established lives, generally 2-10 years. Additionally, the Company tests these assets with established lives for impairment if conditions exist that indicate that carrying values may not be recoverable. Possible conditions leading to the unrecoverability of these assets include changes in market conditions, changes in future economic conditions or changes in technological feasibility that impact the Company’s assessments of future operations. If the Company determines that an impairment charge is needed, the charge will be recorded as asset impairment in the consolidated statements of operations. | ||||||||||||
Deferred Financing Costs | Deferred Financing Costs – Deferred financing costs, which are included in other assets, are costs incurred to obtain debt financing, including all related fees, and are amortized as interest expense over the term of the related financing using the straight-line method which approximates the interest rate method. Amortization of deferred financing costs was $779,000, $2,009,000 and $736,000 for the years ended December 31, 2014, 2013 and 2012, respectively. Unamortized deferred financing costs were approximately $356,000 at December 31, 2014 and are recorded in other assets in the consolidated balance sheets. | ||||||||||||
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities – Derivative transactions, which can include forward contracts and futures positions on the New York Mercantile Exchange and the Chicago Board of Trade are recorded on the balance sheet as assets and liabilities based on the derivative’s fair value. Changes in the fair value of derivative contracts are recognized currently in income unless specific hedge accounting criteria are met. If derivatives meet those criteria, effective gains and losses are deferred in accumulated other comprehensive income (loss) and later recorded together with the hedged item in consolidated income (loss). For derivatives designated as a cash flow hedge, the Company formally documents the hedge and assesses the effectiveness with associated transactions. The Company has designated and documented contracts for the physical delivery of commodity products to and from counterparties as normal purchases and normal sales. | ||||||||||||
Revenue Recognition | Revenue Recognition – The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when there is persuasive evidence of an arrangement, delivery has occurred, the sales price is fixed or determinable, and collection is reasonably assured. The Company derives revenue primarily from sales of ethanol and related co-products. The Company recognizes revenue when title transfers to its customers, which is generally upon the delivery of these products to a customer’s designated location. These deliveries are made in accordance with sales commitments and related sales orders entered into either verbally or in writing with customers. The sales commitments and related sales orders provide quantities, pricing and conditions of sales. In this regard, the Company engages in three basic types of revenue generating transactions: | ||||||||||||
· | As a producer. Sales as a producer consist of sales of the Company’s inventory produced at the Pacific Ethanol Plants. | ||||||||||||
· | As a merchant. Sales as a merchant consist of sales to customers through purchases from third-party suppliers in which the Company may or may not obtain physical control of the ethanol or co-products, in which shipments are directed from the Company’s suppliers to its terminals or direct to its customers but for which the Company accepts the risk of loss in the transactions. | ||||||||||||
· | As an agent. Sales as an agent consist of sales to customers through purchases from third-party suppliers in which the risks and rewards of inventory ownership remain with third-party suppliers and the Company receives a predetermined service fee under these transactions. | ||||||||||||
Revenue from sales of third-party ethanol and co-products is recorded net of costs when the Company is acting as an agent between a customer and a supplier and gross when the Company is a principal to the transaction. The Company recorded $1,908,000, $1,928,000 and $2,756,000 in net sales when acting as an agent for the years ended December 31, 2014, 2013 and 2012, respectively. Several factors are considered to determine whether the Company is acting as an agent or principal, most notably whether the Company is the primary obligor to the customer and whether the Company has inventory risk and related risk of loss or whether the Company adds meaningful value to the supplier’s product or service. Consideration is also given to whether the Company has latitude in establishing the sales price or has credit risk, or both. When the Company acts as an agent, it recognizes revenue on a net basis or recognizes its predetermined fees and any associated freight, based upon the amount of net revenues retained in excess of amounts paid to suppliers. | |||||||||||||
The Company records revenues based upon the gross amounts billed to its customers in transactions where the Company acts as a producer or a merchant and obtains title to ethanol and its co-products and therefore owns the product and any related, unmitigated inventory risk for the ethanol, regardless of whether the Company actually obtains physical control of the product. | |||||||||||||
Shipping and Handling Costs | Shipping and Handling Costs – Shipping and handling costs are classified as a component of cost of goods sold in the accompanying consolidated statements of operations. | ||||||||||||
California Ethanol Producer Incentive Program | California Ethanol Producer Incentive Program – The Company participated in the California Ethanol Producer Incentive Program (“CEPIP”) through the Pacific Ethanol Plants located in California since the program’s inception in 2010. The CEPIP was a program to provide funds to an eligible California facility—up to $0.25 per gallon of production—when current production corn crush spreads, measured as the difference between specified ethanol and corn index prices, were less than prescribed levels determined by the California Energy Commission. As of December 31, 2014, the program is no longer funded. For any month in which a payment was made by the CEPIP, the Company would be required to reimburse the funds within the subsequent five years from each payment date, if the corn crush spread exceeded $1.00 per gallon. In 2010 and 2011, the Company received an aggregate of $2,000,000 in CEPIP funds. Since these funds were provided to subsidize low production costs and encourage eligible facilities to either continue production or start up production in low margin environments, the Company recorded the proceeds as a credit to cost of goods sold in the periods the funds were received. For the years ended December 31, 2014, 2013 and 2012, the Company recorded aggregate amounts of $1,878,000, $122,000 and $0 as cost of goods sold, respectively, in respect of the Company’s repayments under the CEPIP to the California Energy Commission. | ||||||||||||
Stock-Based Compensation | Stock-Based Compensation – The Company accounts for the cost of employee services received in exchange for the award of equity instruments based on the fair value of the award, determined on the date of grant. The expense is to be recognized over the period during which an employee is required to provide services in exchange for the award. The Company estimates forfeitures at the time of grant and makes revisions, if necessary, in the second quarter of each year if actual forfeitures differ from those estimates. Based on historical experience, the Company estimated future unvested forfeitures at 8% for the years ended December 31, 2014 and 2013 and 5% for the year ended December 31, 2012. The Company recognizes stock-based compensation expense as a component of selling, general and administrative expenses in the consolidated statements of operations. | ||||||||||||
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets – The Company assesses the impairment of long-lived assets, including property and equipment, internally developed software and purchased intangibles subject to amortization, when events or changes in circumstances indicate that the fair value of assets could be less than their net book value. In such event, the Company assesses long-lived assets for impairment by first determining the forecasted, undiscounted cash flows the asset is expected to generate plus the net proceeds expected from the sale of the asset. If this amount is less than the carrying value of the asset, the Company will then determine the fair value of the asset. An impairment loss would be recognized when the fair value is less than the related asset’s net book value, and an impairment expense would be recorded in the amount of the difference. Forecasts of future cash flows are judgments based on the Company’s experience and knowledge of its operations and the industries in which it operates. These forecasts could be significantly affected by future changes in market conditions, the economic environment, including inflation, and purchasing decisions of the Company’s customers. | ||||||||||||
Income Taxes | Income Taxes – Income taxes are accounted for under the asset and liability approach, where deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities, and are measured using enacted tax rates and laws that are expected to be in effect when the differences reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. | ||||||||||||
The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining whether it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. An uncertain tax position is considered effectively settled on completion of an examination by a taxing authority if certain other conditions are satisfied. Should the Company incur interest and penalties relating to tax uncertainties, such amounts would be classified as a component of interest expense, net and other income (expense), net, respectively. | |||||||||||||
Income (Loss) Per Share | Income (Loss) Per Share – Basic income (loss) per share is computed on the basis of the weighted-average number of shares of common stock outstanding during the period. Preferred dividends are deducted from net income (loss) attributed to Pacific Ethanol, Inc. and are considered in the calculation of income (loss) available to common stockholders in computing basic income (loss) per share. | ||||||||||||
The following tables compute basic and diluted earnings per share (in thousands, except per share data): | |||||||||||||
Year Ended December 31, 2014 | |||||||||||||
Income Numerator | Shares Denominator | Per-Share Amount | |||||||||||
Net income attributed to Pacific Ethanol | $ | 21,289 | |||||||||||
Less: Preferred stock dividends | (1,265 | ) | |||||||||||
Basic income per share: | |||||||||||||
Income available to common stockholders | $ | 20,024 | 20,810 | $ | 0.96 | ||||||||
Add: Warrants | – | 1,859 | |||||||||||
Diluted income per share: | |||||||||||||
Income available to common stockholders | $ | 20,024 | 22,669 | $ | 0.88 | ||||||||
Year Ended December 31, 2013 | |||||||||||||
Loss Numerator | Shares Denominator | Per-Share Amount | |||||||||||
Net loss attributed to Pacific Ethanol, Inc. | $ | (781 | ) | ||||||||||
Less: Preferred stock dividends | (1,265 | ) | |||||||||||
Basic and diluted loss per share: | |||||||||||||
Loss available to common stockholders | $ | (2,046 | ) | 12,264 | $ | (0.17 | ) | ||||||
Year Ended December 31, 2012 | |||||||||||||
Loss Numerator | Shares Denominator | Per-Share Amount | |||||||||||
Net loss attributed to Pacific Ethanol, Inc. | $ | (19,057 | ) | ||||||||||
Less: Preferred stock dividends | (1,268 | ) | |||||||||||
Basic and diluted loss per share: | |||||||||||||
Loss available to common stockholders | $ | (20,325 | ) | 7,224 | $ | (2.81 | ) | ||||||
There were an aggregate of 660,000, 1,357,000 and 246,000 potentially dilutive shares from convertible securities outstanding as of December 31, 2014, 2013 and 2012, respectively. These convertible securities were not considered in calculating diluted income (loss) per common share for the years ended December 31, 2014, 2013 and 2012 as their effect would be anti-dilutive. | |||||||||||||
Financial Instruments | Financial Instruments – The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities are reasonable estimates of their fair values because of the short maturity of these items. The Company recorded at fair value its warrants and conversion features of its convertible notes. The Company believes the carrying value of its long-term debt approximates fair value because the interest rates on these instruments are variable. | ||||||||||||
Estimates and Assumptions | Estimates and Assumptions – The preparation of the consolidated financial statements in conformity with GAAP 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 fair value of warrants and conversion features, 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. | ||||||||||||
Subsequent Events | Subsequent Events – Management evaluates, as of each reporting period, events or transactions that occur after the balance sheet date through the date that the financial statements are issued for either disclosure or adjustment to the consolidated financial results. The Company has evaluated subsequent events up through the date of the filing of this report with the Securities and Exchange Commission. | ||||||||||||
Reclassifications | Reclassifications – Certain prior year amounts have been reclassified to conform to the current presentation. Such reclassification had no effect on the consolidated net income (loss) reported in the consolidated statements of operations. | ||||||||||||
Recent Accounting Pronouncements | Recent Accounting Pronouncements – In May 2014, the FASB issued new guidance on the recognition of revenue. The guidance states that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard will be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company’s adoption begins with the first fiscal quarter of fiscal year 2017. Early adoption is not permitted. The Company is currently evaluating the impact of the adoption of this accounting standard update on its consolidated results of operations and financial position. | ||||||||||||
In April 2014, the FASB issued new guidance on the definition of a discontinued operation that requires entities to provide additional disclosures about disposal transactions that do not meet the discontinued operations criteria. The new guidance narrows the focus of discontinued operations to those components that are disposed of or classified as held-for-sale and that represent a strategic shift that has or will have a major impact on the entity’s operations or financial results. The guidance is effective prospectively for all disposals or components initially classified as held-for-sale in periods beginning on or after December 15, 2014. Early adoption is permitted. Upon adoption, the Company does not believe this guidance will have a material impact on its consolidated results of operations or financial position. | |||||||||||||
In August 2014, the FASB issued new guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new guidance requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about its ability to continue as a going concern. The guidance is effective for annual periods ending after December 15, 2016 and interim periods thereafter. Early adoption is permitted. Upon adoption, the Company does not believe this guidance will have a material impact on its consolidated results of operations or financial position. |
1_ORGANIZATION_AND_BASIS_OF_PR2
1. ORGANIZATION AND BASIS OF PRESENTATION (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Organization And Basis Of Presentation Tables | |||||||||||||
Concentrations of Credit Risk Major Customers | Years Ended December 31, | ||||||||||||
2014 | 2013 | 2012 | |||||||||||
Customer A | 20% | 23% | 21% | ||||||||||
Customer B | 20% | 17% | 16% | ||||||||||
Customer C | 8% | 12% | 12% | ||||||||||
Customer D | 11% | 6% | 2% | ||||||||||
Purchases from external customers | Years Ended December 31, | ||||||||||||
2014 | 2013 | 2012 | |||||||||||
Supplier A | 26% | 37% | 40% | ||||||||||
Supplier B | 15% | 14% | 14% | ||||||||||
Supplier C | 12% | 8% | 10% | ||||||||||
Inventory | December 31, | ||||||||||||
2014 | 2013 | ||||||||||||
Finished goods | $ | 11,118 | $ | 10,287 | |||||||||
Raw materials | 2,695 | 9,418 | |||||||||||
Work in progress | 3,274 | 2,766 | |||||||||||
Other | 1,463 | 915 | |||||||||||
Total | $ | 18,550 | $ | 23,386 | |||||||||
Property and equipment useful lives | Buildings | 40 years | |||||||||||
Facilities and plant equipment | 10 – 25 years | ||||||||||||
Other equipment, vehicles and furniture | 5 – 10 years | ||||||||||||
Schedule of Earnings Per Share, Diluted, by Common Class, Including Two Class Method | The following tables compute basic and diluted earnings per share (in thousands, except per share data): | ||||||||||||
Year Ended December 31, 2014 | |||||||||||||
Income Numerator | Shares Denominator | Per-Share Amount | |||||||||||
Net income attributed to Pacific Ethanol | $ | 21,289 | |||||||||||
Less: Preferred stock dividends | (1,265 | ) | |||||||||||
Basic income per share: | |||||||||||||
Income available to common stockholders | $ | 20,024 | 20,810 | $ | 0.96 | ||||||||
Add: Warrants | – | 1,859 | |||||||||||
Diluted income per share: | |||||||||||||
Income available to common stockholders | $ | 20,024 | 22,669 | $ | 0.88 | ||||||||
Year Ended December 31, 2013 | |||||||||||||
Loss Numerator | Shares Denominator | Per-Share Amount | |||||||||||
Net loss attributed to Pacific Ethanol, Inc. | $ | (781 | ) | ||||||||||
Less: Preferred stock dividends | (1,265 | ) | |||||||||||
Basic and diluted loss per share: | |||||||||||||
Loss available to common stockholders | $ | (2,046 | ) | 12,264 | $ | (0.17 | ) | ||||||
Year Ended December 31, 2012 | |||||||||||||
Loss Numerator | Shares Denominator | Per-Share Amount | |||||||||||
Net loss attributed to Pacific Ethanol, Inc. | $ | (19,057 | ) | ||||||||||
Less: Preferred stock dividends | (1,268 | ) | |||||||||||
Basic and diluted loss per share: | |||||||||||||
Loss available to common stockholders | $ | (20,325 | ) | 7,224 | $ | (2.81 | ) | ||||||
2_PACIFIC_ETHANOL_PLANTS_Table
2. PACIFIC ETHANOL PLANTS (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Pacific Ethanol Plants | |||||
Value and classification of assets that are collateral for obligations of New PE Holdco | Assets and Liabilities of PE Op Co. – The carrying values and classification of assets that are collateral for the obligations of PE Op Co. at December 31, 2014 were as follows (in thousands): | ||||
Cash and cash equivalents | $ | 24,287 | |||
Other current assets | 9,395 | ||||
Property and equipment | 150,281 | ||||
Other assets | 1,312 | ||||
Total assets | $ | 185,275 | |||
Current liabilities | $ | 14,023 | |||
Long-term debt | 58,766 | ||||
Other liabilities | 2,278 | ||||
Total liabilities | $ | 75,067 |
3_PROPERTY_AND_EQUIPMENT_Table
3. PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
Property and equipment | December 31, | ||||||||
2014 | 2013 | ||||||||
Facilities and plant equipment | $ | 190,714 | $ | 184,064 | |||||
Land | 2,570 | 2,570 | |||||||
Other equipment, vehicles and furniture | 7,641 | 5,600 | |||||||
Construction in progress | 8,720 | 5,007 | |||||||
209,645 | 197,241 | ||||||||
Accumulated depreciation | (54,343 | ) | (42,047 | ) | |||||
$ | 155,302 | $ | 155,194 |
4_INTANGIBLE_ASSETS_Tables
4. INTANGIBLE ASSETS (Tables) | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||
Intangible assets | Useful | December 31, 2014 | December 31, 2013 | ||||||||||||||||||||||||||
Life | Accumulated | Net Book | Accumulated | Net Book | |||||||||||||||||||||||||
(Years) | Gross | Amortization | Value | Gross | Amortization | Value | |||||||||||||||||||||||
Non-Amortizing: | |||||||||||||||||||||||||||||
Kinergy tradename | $ | 2,678 | $ | – | $ | 2,678 | $ | 2,678 | $ | – | $ | 2,678 | |||||||||||||||||
Amortizing: | |||||||||||||||||||||||||||||
Customer relationships | 10 | 4,741 | (4,633 | ) | 108 | 4,741 | (4,159 | ) | 582 | ||||||||||||||||||||
Total intangible assets, net | $ | 7,419 | $ | (4,633 | ) | $ | 2,786 | $ | 7,419 | $ | (4,159 | ) | $ | 3,260 |
5_DERIVATIVES_Tables
5. DERIVATIVES (Tables) | 12 Months Ended | ||||||||||||||
Dec. 31, 2014 | |||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||
Derivatives not designated as hedging instruments | Non Designated Derivative Instruments – The classification and amounts of the Company’s derivatives not designated as hedging instruments are as follows (in thousands): | ||||||||||||||
As of December 31, 2014 | |||||||||||||||
Assets | Liabilities | ||||||||||||||
Type of Instrument | Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | |||||||||||
Commodity contracts | Other current assets | $ | 1,586 | Other current liabilities | $ | 1,149 | |||||||||
$ | 1,586 | $ | 1,149 | ||||||||||||
As of December 31, 2013 | |||||||||||||||
Assets | Liabilities | ||||||||||||||
Type of Instrument | Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | |||||||||||
Commodity contracts | Other current assets | $ | 961 | Other current liabilities | $ | 859 | |||||||||
$ | 961 | $ | 859 | ||||||||||||
Recognized gains (losses) on Derivatives | 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 Gains (Losses) | |||||||||||||||
For the Years Ended December 31, | |||||||||||||||
Type of Instrument | Statements of Operations Location | 2014 | 2013 | 2012 | |||||||||||
Commodity contracts | Cost of goods sold | $ | (1,144 | ) | $ | (1,901 | ) | $ | 720 | ||||||
$ | (1,144 | ) | $ | (1,901 | ) | $ | 720 | ||||||||
Unrealized Gains | |||||||||||||||
For the Years Ended December 31, | |||||||||||||||
Type of Instrument | Statements of Operations Location | 2014 | 2013 | 2012 | |||||||||||
Commodity contracts | Cost of goods sold | $ | 336 | $ | 80 | $ | 279 | ||||||||
$ | 336 | $ | 80 | $ | 279 |
6_DEBT_Tables
6. DEBT (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Debt Disclosure [Abstract] | |||||||||
Long Term Debt | 31-Dec-14 | 31-Dec-13 | |||||||
Kinergy operating line of credit | $ | 17,530 | $ | 19,042 | |||||
Plant Owners’ third-party term debt | 17,003 | 31,678 | |||||||
Plant Owners’ lines of credit | – | 35,378 | |||||||
Senior unsecured notes | – | 13,984 | |||||||
Note payable to related party | – | 750 | |||||||
34,533 | 100,832 | ||||||||
Less: Unamortized discount on senior unsecured notes | – | (1,674 | ) | ||||||
34,533 | 99,158 | ||||||||
Less short-term portion | – | (750 | ) | ||||||
Long-term debt | $ | 34,533 | $ | 98,408 |
7_INCOME_TAXES_Tables
7. INCOME TAXES (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||
Schedule of Effective Income Tax Rate Reconciliation | Years Ended December 31, | ||||||||||||
2014 | 2013 | 2012 | |||||||||||
Statutory rate | 35 | % | 35 | % | 35 | % | |||||||
Change in valuation allowance | (11.5 | ) | 458 | 125.5 | |||||||||
Convertible debt instruments | – | (297.7 | ) | – | |||||||||
Section 382 reduction to loss carryover | (24.2 | ) | (141.1 | ) | (169.4 | ) | |||||||
State income taxes, net of federal benefit | 10 | (8.2 | ) | 5.5 | |||||||||
Stock compensation | – | (20.9 | ) | (1.9 | ) | ||||||||
Change in tax status of PE Op Co. | (1.6 | ) | – | – | |||||||||
Fair value adjustments and warrant inducements | 31.8 | – | – | ||||||||||
Domestic production gross receipts deduction | (2.0 | ) | – | – | |||||||||
Non-deductible items | 0.6 | (27.7 | ) | 3.6 | |||||||||
Other | (1.3 | ) | 2.6 | 1.7 | |||||||||
Effective rate | 36.8 | % | 0 | % | 0 | % | |||||||
Components of deferred income taxes | December 31, | ||||||||||||
2014 | 2013 | ||||||||||||
Deferred tax assets: | |||||||||||||
Net operating loss carryforwards | $ | 12,385 | $ | 17,566 | |||||||||
Capital loss carryover | – | 844 | |||||||||||
Stock-based compensation | 781 | 556 | |||||||||||
Enterprise zone credits | – | 259 | |||||||||||
Other accrued liabilities | 483 | 395 | |||||||||||
Convertible debt | 669 | – | |||||||||||
Fixed assets | – | 119 | |||||||||||
Inventory | 575 | – | |||||||||||
Other | 217 | 217 | |||||||||||
Total deferred tax assets | 15,110 | 19,956 | |||||||||||
Deferred tax liabilities: | |||||||||||||
Fixed assets | (24,813 | ) | – | ||||||||||
Investment in PE Op Co. | – | (11,074 | ) | ||||||||||
Intangibles | (1,134 | ) | (1,325 | ) | |||||||||
Derivative instruments | (172 | ) | (226 | ) | |||||||||
Other | (278 | ) | – | ||||||||||
Total deferred tax liabilities | (26,397 | ) | (12,625 | ) | |||||||||
Valuation allowance | (4,147 | ) | (8,422 | ) | |||||||||
Net deferred tax liabilities | $ | (15,434 | ) | $ | (1,091 | ) | |||||||
Classified in balance sheet as: | |||||||||||||
Other current assets | $ | 1,606 | $ | – | |||||||||
Deferred tax liabilities | (17,040 | ) | (1,091 | ) | |||||||||
$ | (15,434 | ) | $ | (1,091 | ) | ||||||||
Federal Income Tax Note | Jurisdiction | Tax Years | |||||||||||
Federal | 2011 – 2013 | ||||||||||||
Arizona | 2011 – 2013 | ||||||||||||
California | 2010 – 2013 | ||||||||||||
Colorado | 2010 – 2013 | ||||||||||||
Idaho | 2011 – 2013 | ||||||||||||
Oregon | 2011 – 2013 |
8_PREFERRED_STOCK_Tables
8. PREFERRED STOCK (Tables) | 12 Months Ended | ||||||||||||||
Dec. 31, 2014 | |||||||||||||||
Equity [Abstract] | |||||||||||||||
Company's agreements with the holders of its Series B Preferred Stock: | Agreement/Payment Date | Amount of Dividends Paid | Shares of Common Stock Issued | Extended 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 | ||||||||||||
23-May-14 | 1,463,000 | 120,000 | 30-Nov-15 | ||||||||||||
24-Nov-14 | 1,000,000 | – | |||||||||||||
23-Dec-14 | 1,194,000 | – | |||||||||||||
Total | $ | 7,315,000 | 932,500 |
9_COMMON_STOCK_AND_WARRANTS_Ta
9. COMMON STOCK AND WARRANTS (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Stockholders' Equity Note [Abstract] | |||||||||||||
Warrant activity | Number of | Price per | Weighted | ||||||||||
Shares | Share | Average | |||||||||||
Exercise Price | |||||||||||||
Balance at December 31, 2011 | 426 | $1.80 – $745.50 | $ | 117.6 | |||||||||
Warrants issued | 4,633 | $6.45 – $8.85 | $ | 7.8 | |||||||||
Warrants exercised | (20 | ) | $1.80 – $7.95 | $ | 2.85 | ||||||||
Balance at December 31, 2012 | 5,039 | $1.80 – $745.50 | $ | 17.1 | |||||||||
Warrants issued | 3,548 | $6.32 – $7.59 | $ | 6.98 | |||||||||
Warrants exercised | (285 | ) | $1.80 – $8.85 | $ | 7.27 | ||||||||
Warrants expired | (27 | ) | $745.50 | $ | 745.5 | ||||||||
Balance at December 31, 2013 | 8,275 | $5.47 – $735.00 | $ | 10.04 | |||||||||
Warrants exercised | (6,615 | ) | $6.09 – $8.85 | $ | 7.17 | ||||||||
Warrants expired | (804 | ) | $5.47 | $ | 5.47 | ||||||||
Balance at December 31, 2014 | 856 | $6.09 – $735.00 | $ | 36.55 |
10_STOCK_BASED_COMPENSATION_Ta
10. STOCK BASED COMPENSATION (Tables) | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||
Stock option plans | Years Ended December 31, | ||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
Number | Weighted Average Exercise Price | Number | Weighted Average | ||||||||||||||||||
of Shares | of Shares | Exercise Price | |||||||||||||||||||
Outstanding at beginning of year | 241 | $ | 6.91 | 13 | $ | 63 | |||||||||||||||
Issued | – | $ | – | 229 | $ | 3.74 | |||||||||||||||
Cancelled | – | $ | – | (1 | ) | $ | 12.9 | ||||||||||||||
Outstanding at end of year | 241 | $ | 6.91 | 241 | $ | 6.91 | |||||||||||||||
Options exercisable at end of year | 89 | $ | 11.59 | 9 | $ | 88.08 | |||||||||||||||
Stock options outstanding | Options Outstanding | Options Exercisable | |||||||||||||||||||
Range of | Number | Weighted Average Remaining Contractual Life (yrs) | Weighted Average Exercise Price | Number Exercisable | Weighted Average | ||||||||||||||||
Exercise Prices | Outstanding | Exercise Price | |||||||||||||||||||
$3.74 | 229 | 8.47 | $ | 3.74 | 76 | $ | 3.74 | ||||||||||||||
$12.90 | 11 | 6.59 | $ | 12.9 | 11 | $ | 12.9 | ||||||||||||||
$866.25-$871.50 | 1 | 0.57 | $ | 867.23 | 1 | $ | 867.23 | ||||||||||||||
Unvested restricted stock activity | Number of | Weighted Average Grant Date Fair Value Per Share | |||||||||||||||||||
Shares | |||||||||||||||||||||
Unvested at December 31, 2011 | 31 | $ | 64.05 | ||||||||||||||||||
Vested | (13 | ) | $ | 81.9 | |||||||||||||||||
Canceled | (2 | ) | $ | 61.2 | |||||||||||||||||
Unvested at December 31, 2012 | 16 | $ | 50.4 | ||||||||||||||||||
Issued | 615 | $ | 4.56 | ||||||||||||||||||
Vested | (142 | ) | $ | 7.85 | |||||||||||||||||
Canceled | (17 | ) | $ | 6.2 | |||||||||||||||||
Unvested at December 31, 2013 | 472 | $ | 5.07 | ||||||||||||||||||
Issued | 155 | $ | 15.23 | ||||||||||||||||||
Vested | (227 | ) | $ | 5.79 | |||||||||||||||||
Canceled | (10 | ) | $ | 4.3 | |||||||||||||||||
Unvested at December 31, 2014 | 390 | $ | 8.71 | ||||||||||||||||||
Stock-based compensation expense | Years Ended December 31, | ||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
Employees | $ | 1,493 | $ | 1,333 | |||||||||||||||||
Non-employees | 345 | 391 | |||||||||||||||||||
Total stock-based compensation expense | $ | 1,838 | $ | 1,724 |
11_COMMITMENTS_AND_CONTINGENCI1
11. COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||
Future Minimum Payment of Operating Lease | Years Ended December 31, | Capital Leases | Operating Leases | ||||||
2015 | $ | 4,569 | $ | 1,145 | |||||
2016 | 900 | 1,107 | |||||||
2017 | 900 | 956 | |||||||
2018 | 568 | 878 | |||||||
2019 | – | 580 | |||||||
Thereafter | – | 2,243 | |||||||
Total minimum payments | 6,937 | $ | 6,909 | ||||||
Amount representing interest | (805 | ) | |||||||
Obligations under capital leases | 6,132 | ||||||||
Obligations due within one year | (4,077 | ) | |||||||
Long-term obligations under capital leases | $ | 2,055 |
12_FAIR_VALUE_MEASUREMENTS_Tab
12. FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||
Significant assumptions | Significant assumptions used and related fair values for the warrants as of December 31, 2014 were as follows: | ||||||||||||||||||||||||||||
Original Issuance | Exercise Price | Volatility | Risk Free Interest Rate | Term (years) | Market Discount | Warrants Outstanding | Fair Value | ||||||||||||||||||||||
9/26/12 | $ | 8.85 | 51.00% | 0.19% | 0.74 | 37.00% | 473,000 | 748,000 | |||||||||||||||||||||
7/3/12 | $ | 6.09 | 56.10% | 0.89% | 2.51 | 32.80% | 211,000 | 811,000 | |||||||||||||||||||||
12/13/11 | $ | 8.43 | 54.30% | 0.67% | 1.95 | 28.70% | 138,000 | 427,000 | |||||||||||||||||||||
$ | 1,986,000 | ||||||||||||||||||||||||||||
Significant assumptions used and related fair values for the warrants as of December 31, 2013 were as follows: | |||||||||||||||||||||||||||||
Original Issuance | Exercise Price | Volatility | Risk Free Interest Rate | Term (years) | Market Discount | Warrants Outstanding | Fair Value | ||||||||||||||||||||||
6/21/13 | $ | 7.59 | 52.40% | 0.13% | 1.24 | 22.70% | 1,051,000 | $ | 660,000 | ||||||||||||||||||||
3/28/13 | $ | 7.59 | 52.40% | 0.13% | 1.2 | 22.70% | 788,000 | 495,000 | |||||||||||||||||||||
1/11/13 | $ | 6.32 | 63.30% | 1.27% | 4.03 | 43.80% | 1,709,000 | 2,892,000 | |||||||||||||||||||||
9/26/12 | $ | 8.85 | 58.50% | 0.38% | 1.74 | 42.30% | 1,771,000 | 702,000 | |||||||||||||||||||||
7/3/12 | $ | 6.09 | 61.20% | 1.27% | 3.51 | 40.20% | 1,812,000 | 3,008,000 | |||||||||||||||||||||
7/3/12 | $ | 5.47 | 52.80% | 0.01% | 0.01 | 42.30% | 804,000 | 3,000 | |||||||||||||||||||||
12/13/11 | $ | 8.43 | 60.40% | 0.78% | 2.95 | 37.90% | 306,000 | 455,000 | |||||||||||||||||||||
$ | 8,215,000 | ||||||||||||||||||||||||||||
Schedule of fair value measurements | The following table summarizes fair value measurements by level at December 31, 2014 (in thousands): | ||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||
Commodity contracts(1) | $ | 1,586 | $ | – | $ | – | $ | 1,586 | |||||||||||||||||||||
Total Assets | $ | 1,586 | $ | – | $ | – | $ | 1,586 | |||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||
Warrants(2) | $ | – | $ | – | $ | 1,986 | $ | 1,986 | |||||||||||||||||||||
Commodity contracts(3) | 1,149 | – | – | 1,149 | |||||||||||||||||||||||||
Total Liabilities | $ | 1,149 | $ | – | $ | 1,986 | $ | 3,135 | |||||||||||||||||||||
_______________ | |||||||||||||||||||||||||||||
-1 | Included in other current assets in the consolidated balance sheets. | ||||||||||||||||||||||||||||
-2 | Included in warrant liabilities 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, 2013 (in thousands): | |||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||
Commodity contracts(1) | $ | 961 | $ | – | $ | – | $ | 961 | |||||||||||||||||||||
Total Assets | $ | 961 | $ | – | $ | – | $ | 961 | |||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||
Warrants(2) | $ | – | $ | – | $ | 8,215 | $ | 8,215 | |||||||||||||||||||||
Commodity contracts(3) | 859 | – | – | 859 | |||||||||||||||||||||||||
Total Liabilities | $ | 859 | $ | – | $ | 8,215 | $ | 9,074 | |||||||||||||||||||||
_______________ | |||||||||||||||||||||||||||||
-1 | Included in other current assets in the consolidated balance sheets. | ||||||||||||||||||||||||||||
-2 | Included in warrant liabilities at fair value in the consolidated balance sheets. | ||||||||||||||||||||||||||||
-3 | Included in accrued liabilities in the consolidated balance sheets. | ||||||||||||||||||||||||||||
Level 3 fair value schedule | Warrants | Conversion Features | |||||||||||||||||||||||||||
Balance, December 31, 2011 | $ | 1,921 | $ | – | |||||||||||||||||||||||||
Issuance of warrants in July offering | 3,380 | – | |||||||||||||||||||||||||||
Issuance of warrants in September offering | 1,658 | – | |||||||||||||||||||||||||||
Exercises of warrants | (113 | ) | – | ||||||||||||||||||||||||||
Adjustments to fair value for the period | (1,954 | ) | – | ||||||||||||||||||||||||||
Balance, December 31, 2012 | $ | 4,892 | $ | – | |||||||||||||||||||||||||
Issuance of warrants in January offering | $ | 2,657 | $ | – | |||||||||||||||||||||||||
Issuance of notes and warrants in March offering | 1,572 | 1,401 | |||||||||||||||||||||||||||
Issuance of notes in June offering | – | 2,929 | |||||||||||||||||||||||||||
Conversions of notes | – | (5,205 | ) | ||||||||||||||||||||||||||
Exercises of warrants | (260 | ) | – | ||||||||||||||||||||||||||
Adjustments to fair value for the period | (646 | ) | 875 | ||||||||||||||||||||||||||
Balance, December 31, 2013 | $ | 8,215 | $ | – | |||||||||||||||||||||||||
Exercises of warrants | (41,486 | ) | – | ||||||||||||||||||||||||||
Expiration of warrants | (3 | ) | – | ||||||||||||||||||||||||||
Adjustments to fair value for the period | 35,260 | – | |||||||||||||||||||||||||||
Balance, December 31, 2014 | $ | 1,986 | $ | – |
15_QUARTERLY_FINANCIAL_DATA_Ta
15. QUARTERLY FINANCIAL DATA (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||
Quarterly financial data | First | Second | Third | Fourth | |||||||||||||
Quarter | Quarter | Quarter | Quarter | ||||||||||||||
December 31, 2014: | |||||||||||||||||
Net sales | $ | 254,543 | $ | 321,144 | $ | 275,573 | $ | 256,152 | |||||||||
Gross profit | $ | 38,545 | $ | 33,576 | $ | 17,986 | $ | 18,378 | |||||||||
Income from operations | $ | 34,875 | $ | 29,261 | $ | 13,594 | $ | 13,647 | |||||||||
Net income (loss) attributed to Pacific Ethanol, Inc. | $ | (10,826 | ) | $ | 15,572 | $ | 4,025 | $ | 12,518 | ||||||||
Preferred stock dividends | $ | (312 | ) | $ | (315 | ) | $ | (319 | ) | $ | (319 | ) | |||||
Net income (loss) available to common stockholders | $ | (11,138 | ) | $ | 15,257 | $ | 3,706 | $ | 12,199 | ||||||||
Income (loss) per common share: | |||||||||||||||||
Basic | $ | (0.69 | ) | $ | 0.77 | $ | 0.16 | $ | 0.51 | ||||||||
Diluted | $ | (0.69 | ) | $ | 0.68 | $ | 0.15 | $ | 0.5 | ||||||||
First | Second | Third | Fourth | ||||||||||||||
Quarter | Quarter | Quarter | Quarter | ||||||||||||||
December 31, 2013: | |||||||||||||||||
Net sales | $ | 225,459 | $ | 233,808 | $ | 233,880 | $ | 215,290 | |||||||||
Gross profit | $ | 846 | $ | 6,965 | $ | 3,523 | $ | 21,596 | |||||||||
Income (loss) from operations | $ | (3,159 | ) | $ | 3,832 | $ | 1,012 | $ | 17,224 | ||||||||
Net income (loss) attributed to Pacific Ethanol, Inc. | $ | (5,454 | ) | $ | 1,051 | $ | (4,971 | ) | $ | 8,593 | |||||||
Preferred stock dividends | $ | (312 | ) | $ | (315 | ) | $ | (319 | ) | $ | (319 | ) | |||||
Net income (loss) available to common stockholders | $ | (5,766 | ) | $ | 736 | $ | (5,290 | ) | $ | 8,274 | |||||||
Loss per common share: | |||||||||||||||||
Basic | $ | (0.57 | ) | $ | 0.07 | $ | (0.40 | ) | $ | 0.55 | |||||||
Diluted | $ | (0.57 | ) | $ | 0.07 | $ | (0.40 | ) | $ | 0.54 |
1_ORGANIZATION_AND_BASIS_OF_PR3
1. ORGANIZATION AND BASIS OF PRESENTATION (Details-Concentration sales) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Sales [Member] | Customer A [Member] | |||
Concentration risk percentage | 20.00% | 23.00% | 21.00% |
Sales [Member] | Customer B [Member] | |||
Concentration risk percentage | 20.00% | 17.00% | 16.00% |
Sales [Member] | Customer C [Member] | |||
Concentration risk percentage | 8.00% | 12.00% | 12.00% |
Sales [Member] | Customer D [Member] | |||
Concentration risk percentage | 11.00% | 6.00% | 2.00% |
Accounts Receivable [Member] | Customers A B C D [Member] | |||
Concentration risk percentage | 59.00% | 50.00% | |
Accounts receivable | 20,706 | 17,513 |
1_ORGANIZATION_AND_BASIS_OF_PR4
1. ORGANIZATION AND BASIS OF PRESENTATION (Details-Purchase concentration) (Purchases [Member]) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Supplier A [Member] | |||
Concentration percentage | 26.00% | 37.00% | 40.00% |
Supplier B [Memebr] | |||
Concentration percentage | 15.00% | 14.00% | 14.00% |
Supplier C [Memebr] | |||
Concentration percentage | 12.00% | 8.00% | 10.00% |
1_ORGANIZATION_AND_BASIS_OF_PR5
1. ORGANIZATION AND BASIS OF PRESENTATION (Details-Inventories) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Inventory Disclosure [Abstract] | ||
Finished goods | $11,118 | $10,287 |
Raw materials | 2,695 | 9,418 |
Work in progress | 3,274 | 2,766 |
Other | 1,463 | 915 |
Total inventories | $18,550 | $23,386 |
1_ORGANIZATION_AND_BASIS_OF_PR6
1. ORGANIZATION AND BASIS OF PRESENTATION (Details-Useful Lives) | 12 Months Ended |
Dec. 31, 2014 | |
Building [Member] | |
Estimated useful lives | 40 years |
Facilities and plant equipment [Member] | |
Estimated useful lives | 10 to 25 years |
Other equipment, vehicles and furniture [Member] | |
Estimated useful lives | 5 to 10 years |
1_ORGANIZATION_AND_BASIS_OF_PR7
1. ORGANIZATION AND BASIS OF PRESENTATION (Details-EPS computation) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Loss Numerator | |||||||||||
Net loss attributed to Pacific Ethanol, Inc. | $12,518 | $4,025 | $15,572 | ($10,826) | $8,593 | ($4,971) | $1,051 | ($5,454) | $21,289 | ($781) | ($19,057) |
Preferred stock dividends | -319 | -319 | -315 | -312 | -319 | -319 | -315 | -312 | -1,265 | -1,265 | -1,268 |
Basic and diluted loss per share: | |||||||||||
Loss available to common stockholders | $12,199 | $3,706 | $15,257 | ($11,138) | $8,274 | ($5,290) | $736 | ($5,766) | $20,024 | ($2,046) | ($20,325) |
Shares Denominator | |||||||||||
Shares available to common stockholders - basic | 20,810,000 | 12,264,000 | 7,224,000 | ||||||||
Incremental shares - warrants | 1,859,000 | ||||||||||
Shares available to common stockholders - diluted | 22,669,000 | 12,264,000 | 7,224,000 | ||||||||
Per-Share Amount | |||||||||||
Per-Share amount - basic | $0.51 | $0.16 | $0.77 | ($0.69) | $0.55 | ($0.40) | $0.07 | ($0.57) | $0.96 | ($0.17) | ($2.81) |
Per-Shares amount - diluted | $0.50 | $0.15 | $0.68 | ($0.69) | $0.54 | ($0.40) | $0.07 | ($0.57) | $0.88 | ($0.17) | ($2.81) |
1_ORGANIZATION_AND_BASIS_OF_PR8
1. ORGANIZATION AND BASIS OF PRESENTATION (Details Narrative) (USD $) | 12 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Accounts receivable used as collateral | $28,427 | $27,487 | |
Allowance for doubtful accounts | 6 | 187 | |
Bad debt recoveries | -42 | 169 | -6 |
Amortization of deferred financing costs | 779 | 2,009 | 736 |
Unamortized deferred financing costs | 356 | ||
Reduction in costs related to government payments | $1,878 | $122 | $0 |
Potentially dilutive shares from convertible securities outstanding | 660,000 | 1,357,000 | 246,000 |
2_PACIFIC_ETHANOL_PLANTS_Detai
2. PACIFIC ETHANOL PLANTS (Details) (New PE Holdco, USD $) | Dec. 31, 2014 |
In Thousands, unless otherwise specified | |
Variable Interest Entity [Line Items] | |
Total assets | $185,275 |
Total liabilities | 75,067 |
Cash and Cash Equivalents [Member] | |
Variable Interest Entity [Line Items] | |
Total assets | 24,287 |
Other Current Assets [Member] | |
Variable Interest Entity [Line Items] | |
Total assets | 9,395 |
Property, Plant and Equipment [Member] | |
Variable Interest Entity [Line Items] | |
Total assets | 150,281 |
Other Assets [Member] | |
Variable Interest Entity [Line Items] | |
Total assets | 1,312 |
Current Liabilities [Member] | |
Variable Interest Entity [Line Items] | |
Total liabilities | 14,023 |
Long-term Debt [Member] | |
Variable Interest Entity [Line Items] | |
Total liabilities | 58,766 |
Other Liabilities [Member] | |
Variable Interest Entity [Line Items] | |
Total liabilities | $2,278 |
2_PACIFIC_ETHANOL_PLANTS_Detai1
2. PACIFIC ETHANOL PLANTS (Details Narrative) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Asset Management Agreement | |||
Recorded cost attributed to New PE Holdco | $3,530 | $3,477 | $3,180 |
Ethanol Marketing Agreements | |||
Recorded cost attributed to New PE Holdco | 3,986 | 3,351 | 3,157 |
Corn Procurement and Handling Agreements | |||
Recorded cost attributed to New PE Holdco | 2,989 | 2,423 | 2,271 |
Distillers Grains Marketing Agreements | |||
Recorded cost attributed to New PE Holdco | $4,788 | $4,584 | $4,353 |
3_PROPERTY_AND_EQUIPMENT_Detai
3. PROPERTY AND EQUIPMENT (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Property, Plant and Equipment [Abstract] | ||
Facilities and plant equipment | $190,714 | $184,064 |
Land | 2,570 | 2,570 |
Other equipment, vehicles and furniture | 7,641 | 5,600 |
Construction in progress | 8,720 | 5,007 |
Property, Plant and Equipment, Gross | 209,645 | 197,241 |
Accumulated Depreciation | -54,343 | -42,047 |
Property, Plant and Equipment, Net | $155,302 | $155,194 |
3_PROPERTY_AND_EQUIPMENT_Detai1
3. PROPERTY AND EQUIPMENT (Details Narrative) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Depreciation expense | $12,712 | $11,662 | $11,481 |
Property and equpment, gross | 209,645 | 197,241 | |
Idled Facilities [Member] | |||
Depreciation expense | 699 | 2,108 | 2,136 |
Assets Held under Capital Leases [Member] | |||
Depreciation expense | 855 | 340 | |
Property and equpment, gross | $12,829 | $12,829 |
4_INTANGIBLE_ASSETS_Details
4. INTANGIBLE ASSETS (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Gross | $7,419 | $7,419 |
Accumulated Amortization | -4,633 | -4,159 |
Net Book Value | 2,786 | 3,260 |
Kinergy Tradename [Member] | ||
Gross | 2,678 | 2,678 |
Accumulated Amortization | 0 | 0 |
Net Book Value | 2,678 | 2,678 |
Customer Relationships [Member] | ||
Useful Life (Years) | 10 years | |
Gross | 4,741 | 4,741 |
Accumulated Amortization | -4,633 | -4,159 |
Net Book Value | $108 | $582 |
4_INTANGIBLE_ASSETS_Details_Na
4. INTANGIBLE ASSETS (Details Narrative) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Amortization expense of intangible assets | $474 | $474 | $724 |
Weighted-average unamortized life of the intangible assets | 2 months 12 days |
5_DERIVATIVES_DetailsFair_valu
5. DERIVATIVES (Details-Fair value) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Other current assets | $1,586 | $961 |
Accrued liabilities | 1,149 | 859 |
Non Designated Derivative Instruments [Member] | Commodity contracts [Member] | Other Current Assets [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | ||
Other current assets | 1,586 | 961 |
Accrued liabilities | $1,149 | $859 |
5_DERIVATIVES_DetailsRecognize
5. DERIVATIVES (Details-Recognized gains/losses) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Derivative Instruments, Gain (Loss) [Line Items] | |||
Realized Gains (Losses) | ($1,144) | ($1,901) | $720 |
Unrealized Gains (Losses) | 336 | 80 | 279 |
Commodity contracts [Member] | Non Designated Derivative Instruments [Member] | Cost of goods sold [Member] | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Realized Gains (Losses) | -1,144 | -1,901 | 720 |
Unrealized Gains (Losses) | $336 | $80 | $279 |
5_DERIVATIVES_Details_Narrativ
5. DERIVATIVES (Details Narrative) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||
Recognized gains and losses due to change in fair value | ($808) | ($1,821) | $999 |
6_DEBT_DetailsLong_term_borrow
6. DEBT (Details-Long term borrowings) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Long-term borrowings are summarized as follows | ||
Plant Owner's third-party term debt | $17,003 | $31,678 |
Senior unsecured notes | 0 | 13,984 |
Note payable to related party | 0 | 750 |
Total debt | 34,533 | 100,832 |
Less: Unamortized discount on senior unsecured notes | 0 | -1,674 |
Long-term Debt, current and non-current | 34,533 | 100,832 |
Less short-term portion | 0 | -750 |
Long-term debt | 34,533 | 98,408 |
Line of Credit [Member] | Kinergy [Member] | ||
Long-term borrowings are summarized as follows | ||
Line of credit | 17,530 | 19,042 |
Line of Credit [Member] | Plant Owners | ||
Long-term borrowings are summarized as follows | ||
Line of credit | $0 | $35,378 |
6_DEBT_Details_Narrative
6. DEBT (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Plant Owner's third-party term debt | $17,003,000 | $31,678,000 | |
Note payable related party | 0 | 750,000 | |
Interest expense on related party debt | 14,795,000 | ||
Interest expense on all debt | 6,546,000 | 12,680,000 | 12,314,000 |
Plant Owners | |||
Plant Owner's third-party term debt | 17,003,000 | ||
Line of Credit [Member] | Kinergy [Member] | |||
Line of credit maximum borrowing capacity | 30,000,000 | ||
Line of credit | 17,530,000 | 19,042,000 | |
Maturity date | 31-Dec-16 | ||
Line of Credit [Member] | Plant Owners | |||
Line of credit remaining borrowing availability | 19,473,000 | ||
Line of credit | $0 | $35,378,000 |
7_INCOME_TAXES_DetailsEffectiv
7. INCOME TAXES (Details-Effective rate) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Effective income tax rate reconciliation | |||
Statutory rate | 35.00% | 35.00% | 35.00% |
Change in valuation allowance | -11.50% | 458.00% | 125.50% |
Convertible debt instruments | -297.70% | ||
Section 382 reduction to loss carryover | -24.20% | -141.10% | -169.40% |
State income taxes, net of federal benefit | 10.00% | -8.20% | 5.50% |
Stock compensation | -20.90% | -1.90% | |
Change in tax status of PE Op Co. | -1.60% | ||
Fair value adjustments and warrant inducements | 31.80% | ||
Domestic production gross receipts deduction | -2.00% | ||
Non-deductible items | 0.60% | -27.70% | 3.60% |
Other | -1.30% | 2.60% | 1.70% |
Effective rate | 36.80% | 0.00% | 0.00% |
7_INCOME_TAXES_DetailsDeferred
7. INCOME TAXES (Details-Deferred tax assets) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Deferred tax assets: | ||
Net operating loss carryforward | $12,385 | $17,566 |
Capital loss carryover | 0 | 844 |
Stock-based compensation | 781 | 556 |
Enterprise zone credits | 0 | 259 |
Other accrued liabilities | 483 | 395 |
Convertible debt | 669 | 0 |
Fixed assets | 0 | 119 |
Inventory | 575 | 0 |
Other | 217 | 217 |
Total deferred tax assets | 15,110 | 19,956 |
Deferred tax liabilities: | ||
Fixed assets | -24,813 | 0 |
Investment in New PE Holdco | 0 | -11,074 |
Intangibles | -1,134 | -1,325 |
Derivative instruments | -172 | -226 |
Other | -278 | 0 |
Total deferred tax liabilities | -26,397 | -12,625 |
Valuation allowance | -4,147 | -8,422 |
Net deferred tax liabilities | -15,434 | -1,091 |
Classified in balance sheet as: | ||
Other current assets | 1,606 | 0 |
Deferred tax liabilties | -17,040 | -1,091 |
Deferred income taxes | ($15,434) | ($1,091) |
7_INCOME_TAXES_DetailsTax_juri
7. INCOME TAXES (Details-Tax jurisdictions) | 12 Months Ended |
Dec. 31, 2014 | |
Federal [Member] | |
Tax Years | 2011-2013 |
Arizona [Member] | |
Tax Years | 2011-2013 |
California [Member] | |
Tax Years | 2010-2013 |
Colorado [Member] | |
Tax Years | 2010-2013 |
Idaho [Member] | |
Tax Years | 2011-2013 |
Oregon [Member] | |
Tax Years | 2011-2013 |
7_INCOME_TAXES_Details_Narrati
7. INCOME TAXES (Details Narrative) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Income Tax Disclosure [Abstract] | |||
Provision for income taxes | $15,137 | $0 | $0 |
Federal net operating loss carryforwards | 28,321 | 45,250 | |
State net operating loss carryforwards | 58,990 | 41,695 | |
Valuation allowance | -4,147 | -8,422 | |
Change in valuation allowance | ($4,275) | ($3,133) |
8_PREFERRED_STOCK_Details
8. PREFERRED STOCK (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Amount of Dividends Paid | $319 | $319 | $315 | $312 | $319 | $319 | $315 | $312 | $1,265 | $1,265 | $1,268 |
Accrued and unpaid dividends | 0 | 3,657 | 0 | 3,657 | |||||||
Series B Preferred Stock | |||||||||||
Amount of Dividends Paid | 7,315 | ||||||||||
Shares of Common Stock Issued | 932,500 | ||||||||||
Series B Preferred Stock | January 1, 2014 | |||||||||||
Agreement Date | 12-Aug-12 | ||||||||||
Amount of Dividends Paid | 732 | ||||||||||
Shares of Common Stock Issued | 157,000 | ||||||||||
Extended Forbearance Date | 1-Jan-14 | ||||||||||
Series B Preferred Stock | June 30, 2014 | |||||||||||
Agreement Date | 26-Dec-12 | ||||||||||
Amount of Dividends Paid | 732 | ||||||||||
Shares of Common Stock Issued | 144,500 | ||||||||||
Extended Forbearance Date | 30-Jun-14 | ||||||||||
Series B Preferred Stock | September 30, 2014 | |||||||||||
Agreement Date | 27-Mar-13 | ||||||||||
Amount of Dividends Paid | 732 | ||||||||||
Shares of Common Stock Issued | 139,000 | ||||||||||
Extended Forbearance Date | 30-Sep-14 | ||||||||||
Series B Preferred Stock | December 31, 2014 | |||||||||||
Agreement Date | 26-Jul-13 | ||||||||||
Amount of Dividends Paid | 731 | ||||||||||
Shares of Common Stock Issued | 175,000 | ||||||||||
Extended Forbearance Date | 31-Dec-14 | ||||||||||
Series B Preferred Stock | March 31, 2015 | |||||||||||
Agreement Date | 17-Sep-13 | ||||||||||
Amount of Dividends Paid | 731 | ||||||||||
Shares of Common Stock Issued | 197,000 | ||||||||||
Extended Forbearance Date | 31-Mar-15 | ||||||||||
Series B Preferred Stock | November 30, 2015 | |||||||||||
Agreement Date | 23-May-14 | ||||||||||
Amount of Dividends Paid | 1,463 | ||||||||||
Shares of Common Stock Issued | 120,000 | ||||||||||
Extended Forbearance Date | 30-Nov-15 | ||||||||||
Series B Preferred Stock | Payment Date November 24, 2014 | |||||||||||
Agreement Date | 24-Nov-14 | ||||||||||
Amount of Dividends Paid | 1,000 | ||||||||||
Series B Preferred Stock | Payment Date December 23, 2014 | |||||||||||
Agreement Date | 23-Dec-14 | ||||||||||
Amount of Dividends Paid | $1,194 |
9_COMMON_STOCK_AND_WARRANTS_De
9. COMMON STOCK AND WARRANTS (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Minimum [Member] | |||
Price per Share | |||
Begining Balance | $5.47 | $1.80 | $1.80 |
Warrants issued | 6.32 | 6.45 | |
Warrants exercised | 6.09 | 1.8 | 1.8 |
Ending Balance | $6.09 | $5.47 | $1.80 |
Maximum [Member] | |||
Price per Share | |||
Begining Balance | $735 | $745.50 | $745.50 |
Warrants issued | 7.59 | 8.85 | |
Warrants exercised | 8.85 | 8.85 | 7.95 |
Warrants expired | 5.47 | 745.5 | |
Ending Balance | $735 | $735 | $745.50 |
Warrant | |||
Number of Shares | |||
Begining Balance | 8,275,000 | 5,039,000 | 426,000 |
Warrants issued | 3,548,000 | 4,633,000 | |
Warrants exercised | -6,615,000 | -285,000 | -20,000 |
Warrants expired | -804,000 | -27,000 | |
Ending Balance | 856,000 | 8,275,000 | 5,039,000 |
Weighted Average Exercise Price | |||
Begining Balance | $10.04 | $17.10 | $117.60 |
Warrants issued | $6.98 | $7.80 | |
Warrants exercised | $7.17 | $7.27 | $2.85 |
Warrants expired | $5.47 | $745.50 | |
Ending Balance | $36.55 | $10.04 | $17.10 |
10_STOCKBASED_COMPENSATION_Det
10. STOCK-BASED COMPENSATION (Details-Option Activity) (Stock Options [Member], USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Stock Options [Member] | ||
Number of Shares | ||
Begining Balance | 241,000 | 13,000 |
Issued | 229,000 | |
Cancelled | -1,000 | |
Ending Balance | 241,000 | 241,000 |
Options exercisable at end of year | 89,000 | 9,000 |
Weighted Average Exercise Price | ||
Begining Balance | $6.91 | $63 |
Issued | $3.74 | |
Cancelled | $12.90 | |
Ending Balance | $6.91 | $6.91 |
Options exercisable at end of year | $11.59 | $88.08 |
10_STOCKBASED_COMPENSATION_Det1
10. STOCK-BASED COMPENSATION (Detail-Options Outstanding and Exercisable) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
$3.74 | |
Number Outstanding | 229,000 |
Weighted Average Remaining Contractual Life (yrs) | 8 years 5 months 19 days |
Weighted Average Exercise Price | $3.74 |
Number Exercisable | 76,000 |
Weighted Average Exercise Price | $3.74 |
$12.90 | |
Number Outstanding | 11,000 |
Weighted Average Remaining Contractual Life (yrs) | 6 years 7 months 2 days |
Weighted Average Exercise Price | $12.90 |
Number Exercisable | 11,000 |
Weighted Average Exercise Price | $12.90 |
$866.25-$871.50 | |
Number Outstanding | 1,000 |
Weighted Average Remaining Contractual Life (yrs) | 6 months 25 days |
Weighted Average Exercise Price | $867.23 |
Number Exercisable | 1,000 |
Weighted Average Exercise Price | $867.23 |
10_STOCKBASED_COMPENSATION_Det2
10. STOCK-BASED COMPENSATION (Details-Restricted Stock Activity) (Restricted Stock, USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Restricted Stock | |||
Number of Shares | |||
Begining Balance | 472,000 | 16,000 | 31,000 |
Issued | 155,000 | 615,000 | |
Vested | -227,000 | -142,000 | -13,000 |
Canceled | -10,000 | -17,000 | -2,000 |
Ending Balance | 390,000 | 472,000 | 16,000 |
Weighted Average Grant Date Fair Value | |||
Begining Balance | $5.07 | $50.40 | $64.05 |
Issued | $15.23 | $4.56 | |
Vested | $5.79 | $7.85 | $81.90 |
Canceled | $4.30 | $6.20 | $61.20 |
Ending Balance | $8.71 | $5.07 | $50.40 |
10_STOCKBASED_COMPENSATION_Det3
10. STOCK-BASED COMPENSATION (Details-Stock based compensation expense) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Total stock-based compensation expense | $1,838 | $1,724 | $806 |
Employees [Member] | |||
Total stock-based compensation expense | 1,493 | 1,333 | |
Non-Employees [Member] | |||
Total stock-based compensation expense | $345 | $391 |
10_STOCKBASED_COMPENSATION_Det4
10. STOCK-BASED COMPENSATION (Details Narrative) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Intrinsic values of outstanding options | $309 | $0 |
Total compensation cost related to unvested awards | 3,393 | |
Compensation cost weighted average period | 2 years | |
Stock Options [Member] | ||
Intrinsic values of outstanding options | 1,509 | 309 |
Fair value of stock vested | $3,858 | $601 |
11_COMMITMENTS_AND_CONTINGENCI2
11. COMMITMENTS AND CONTINGENCIES (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Capital Leases | ||
2015 | $4,569 | |
2016 | 900 | |
2017 | 900 | |
2018 | 568 | |
2019 | 0 | |
Thereafter | 0 | |
Total minimum payments | 6,937 | |
Amount representing interest | -805 | |
Obligations under capital leases | 6,132 | |
Obligations due within one year | 4,077 | 4,830 |
Long-term obligations under capital leases | 2,055 | 6,041 |
Operating Leases | ||
2015 | 1,145 | |
2016 | 1,107 | |
2017 | 956 | |
2018 | 878 | |
2019 | 580 | |
Thereafter | 2,243 | |
Total minimum payments | $6,909 |
11_COMMITMENTS_AND_CONTINGENCI3
11. COMMITMENTS AND CONTINGENCIES (Details Narrative) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Rent expense | $2,417 | $1,454 | $2,252 |
Open Ethanol | |||
Open indexed-price sales contracts | 163,502,000 gallons | ||
Corn contract | |||
Sales commitments | 1,034 | ||
Open indexed-price sales contracts | 1,072,000 pounds | ||
Syrup contracts | |||
Sales commitments | 871 | ||
Open indexed-price sales contracts | 162,000 tons of WDG and syrup | ||
Ethanol contracts | |||
Purchase commitments | $12,784 | ||
Indexed-price purchase contracts | 33,330,000 gallons |
12_FAIR_VALUE_MEASUREMENTS_Det
12. FAIR VALUE MEASUREMENTS (Details-Significant Assumptions and Fair Value) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Significant assumptions used in the valuations | ||
Fair value (in dollars) | $1,986,000 | $8,215,000 |
Original Issuance 09/26/2012 | ||
Significant assumptions used in the valuations | ||
Exercise price | $8.85 | |
Volatility | 51.00% | |
Risk free interest rate | 0.19% | |
Term (years) | 8 months 26 days | |
Discount for Marketability restrictions | 37.00% | |
Warrants Outstanding | 473,000 | |
Fair value (in dollars) | 748,000 | |
Original issuance 7/3/2012 | ||
Significant assumptions used in the valuations | ||
Exercise price | $6.09 | $6.09 |
Volatility | 56.10% | 61.20% |
Risk free interest rate | 0.89% | 1.27% |
Term (years) | 2 years 6 months 4 days | 3 years 6 months 4 days |
Discount for Marketability restrictions | 32.80% | 40.20% |
Warrants Outstanding | 211,000 | 1,812,000 |
Fair value (in dollars) | 811,000 | 3,008,000 |
Original issuance 12/13/2011 | ||
Significant assumptions used in the valuations | ||
Exercise price | $8.43 | $8.43 |
Volatility | 54.30% | 60.40% |
Risk free interest rate | 0.67% | 0.78% |
Term (years) | 1 year 11 months 12 days | 2 years 11 months 12 days |
Discount for Marketability restrictions | 28.70% | 37.90% |
Warrants Outstanding | 138,000 | 306,000 |
Fair value (in dollars) | 427,000 | 455,000 |
Original Issuance 03/28/2013 | ||
Significant assumptions used in the valuations | ||
Exercise price | $7.59 | |
Volatility | 52.40% | |
Risk free interest rate | 0.13% | |
Term (years) | 1 year 2 months 12 days | |
Discount for Marketability restrictions | 22.70% | |
Warrants Outstanding | 788,000 | |
Fair value (in dollars) | 495,000 | |
Original Issuance 06/21/2013 | ||
Significant assumptions used in the valuations | ||
Exercise price | $7.59 | |
Volatility | 52.40% | |
Risk free interest rate | 0.13% | |
Term (years) | 1 year 2 months 26 days | |
Discount for Marketability restrictions | 22.70% | |
Warrants Outstanding | 1,051,000 | |
Fair value (in dollars) | 660,000 | |
Original issuance 1/11/2013 | ||
Significant assumptions used in the valuations | ||
Exercise price | $6.32 | |
Volatility | 63.30% | |
Risk free interest rate | 1.27% | |
Term (years) | 4 years 11 days | |
Discount for Marketability restrictions | 43.80% | |
Warrants Outstanding | 1,709,000 | |
Fair value (in dollars) | 2,892,000 | |
Original issuance 9/26/2012 | ||
Significant assumptions used in the valuations | ||
Exercise price | $8.85 | |
Volatility | 58.50% | |
Risk free interest rate | 0.38% | |
Term (years) | 1 year 8 months 26 days | |
Discount for Marketability restrictions | 42.30% | |
Warrants Outstanding | 1,771,000 | |
Fair value (in dollars) | 702,000 | |
Original issuance 7/3/2012 (2nd one) | ||
Significant assumptions used in the valuations | ||
Exercise price | $5.47 | |
Volatility | 52.80% | |
Risk free interest rate | 0.01% | |
Term (years) | 4 days | |
Discount for Marketability restrictions | 42.30% | |
Warrants Outstanding | 804,000 | |
Fair value (in dollars) | $3,000 |
12_FAIR_VALUE_MEASUREMENTS_Det1
12. FAIR VALUE MEASUREMENTS (Details-Other derivatives) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Assets: | ||
Assets | $1,586 | $961 |
Liabilities: | ||
Liabilities | 3,135 | 9,074 |
Commodity contracts [Member] | ||
Assets: | ||
Assets | 1,586 | 961 |
Liabilities: | ||
Liabilities | 1,149 | 859 |
Warrant | ||
Assets: | ||
Assets | 0 | |
Liabilities: | ||
Liabilities | 1,986 | 8,215 |
Level 1 [Member] | ||
Assets: | ||
Assets | 1,586 | 961 |
Liabilities: | ||
Liabilities | 1,149 | 859 |
Level 1 [Member] | Commodity contracts [Member] | ||
Assets: | ||
Assets | 1,586 | 961 |
Liabilities: | ||
Liabilities | 1,149 | 859 |
Level 1 [Member] | Warrant | ||
Assets: | ||
Assets | 0 | |
Liabilities: | ||
Liabilities | 0 | 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] | Warrant | ||
Assets: | ||
Assets | 0 | |
Liabilities: | ||
Liabilities | 0 | 0 |
Level 3 [Member] | ||
Assets: | ||
Assets | 0 | 0 |
Liabilities: | ||
Liabilities | 1,986 | 8,215 |
Level 3 [Member] | Commodity contracts [Member] | ||
Assets: | ||
Assets | 0 | 0 |
Liabilities: | ||
Liabilities | 0 | 0 |
Level 3 [Member] | Warrant | ||
Assets: | ||
Assets | 0 | |
Liabilities: | ||
Liabilities | $1,986 | $8,215 |
12_FAIR_VALUE_MEASUREMENTS_Det2
12. FAIR VALUE MEASUREMENTS (Details-Level 3) (Level 3 [Member], USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Warrant | |||
Changes in the fair value of the Company's Level 3 inputs | |||
Beginning Balance | $8,215 | $4,892 | $1,921 |
Adjustments to fair value for the period | 35,260 | -646 | -1,954 |
Ending Balance | 1,986 | 8,215 | 4,892 |
Warrant | Exercises of Warrants [Member] | |||
Changes in the fair value of the Company's Level 3 inputs | |||
Transfers out | -41,486 | -260 | -113 |
Warrant | Expiration of Warrants [Member] | |||
Changes in the fair value of the Company's Level 3 inputs | |||
Transfers out | -3 | ||
Warrant | Issuance In January [Member] | |||
Changes in the fair value of the Company's Level 3 inputs | |||
Issuances | 2,657 | ||
Warrant | Issuance In March [Member] | |||
Changes in the fair value of the Company's Level 3 inputs | |||
Issuances | 1,572 | ||
Warrant | Issuance In June [Member] | |||
Changes in the fair value of the Company's Level 3 inputs | |||
Issuances | 0 | ||
Warrant | Conversions of Notes [Member] | |||
Changes in the fair value of the Company's Level 3 inputs | |||
Transfers out | 0 | ||
Warrant | Issuance of warrants in July offering [Member] | |||
Changes in the fair value of the Company's Level 3 inputs | |||
Issuances | 3,380 | ||
Warrant | Issuance of warrants in September offering | |||
Changes in the fair value of the Company's Level 3 inputs | |||
Issuances | 1,658 | ||
Conversion Features [Member] | |||
Changes in the fair value of the Company's Level 3 inputs | |||
Adjustments to fair value for the period | 875 | ||
Ending Balance | |||
Conversion Features [Member] | Exercises of Warrants [Member] | |||
Changes in the fair value of the Company's Level 3 inputs | |||
Transfers out | 0 | ||
Conversion Features [Member] | Issuance In March [Member] | |||
Changes in the fair value of the Company's Level 3 inputs | |||
Issuances | 1,401 | ||
Conversion Features [Member] | Issuance In June [Member] | |||
Changes in the fair value of the Company's Level 3 inputs | |||
Issuances | 2,929 | ||
Conversion Features [Member] | Conversions of Notes [Member] | |||
Changes in the fair value of the Company's Level 3 inputs | |||
Transfers out | ($5,205) |
13_RELATED_PARTY_TRANSACTIONS_
13. RELATED PARTY TRANSACTIONS (Details Narrative) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Accrued and unpaid dividends, amount | $0 | $3,657 |
Note payable to CEO | $0 | $750 |
15_QUARTERLY_FINANCIAL_DATA_De
15. QUARTERLY FINANCIAL DATA (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Net sales | $256,152 | $275,573 | $321,144 | $254,543 | $215,290 | $233,880 | $233,808 | $225,459 | $1,107,412 | $908,437 | $816,044 |
Gross profit | 18,378 | 17,986 | 33,576 | 38,545 | 21,596 | 3,523 | 6,965 | 846 | 108,485 | 32,930 | -19,524 |
Income from operations | 13,647 | 13,594 | 29,261 | 34,875 | 17,224 | 1,012 | 3,832 | -3,159 | 91,377 | 18,909 | -31,665 |
Net income (loss) attributed to Pacific Ethanol, Inc. | 12,518 | 4,025 | 15,572 | -10,826 | 8,593 | -4,971 | 1,051 | -5,454 | 21,289 | -781 | -19,057 |
Preferred stock dividends | -319 | -319 | -315 | -312 | -319 | -319 | -315 | -312 | -1,265 | -1,265 | -1,268 |
Net income (loss) available to common stockholders | $12,199 | $3,706 | $15,257 | ($11,138) | $8,274 | ($5,290) | $736 | ($5,766) | $20,024 | ($2,046) | ($20,325) |
Income (loss) per common share: Basic | $0.51 | $0.16 | $0.77 | ($0.69) | $0.55 | ($0.40) | $0.07 | ($0.57) | $0.96 | ($0.17) | ($2.81) |
Income (loss) per common share: Diluted | $0.50 | $0.15 | $0.68 | ($0.69) | $0.54 | ($0.40) | $0.07 | ($0.57) | $0.88 | ($0.17) | ($2.81) |