Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 11-May-15 | |
Document And Entity Information | ||
Entity Registrant Name | Pacific Ethanol, Inc. | |
Entity Central Index Key | 778164 | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
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 Common Stock, Shares Outstanding | 24,658,394 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2015 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current Assets: | ||
Cash and cash equivalents | $42,274 | $62,084 |
Accounts receivable, net (net of allowance for doubtful accounts of $6) | 27,342 | 34,612 |
Inventories | 17,840 | 18,550 |
Prepaid inventory | 8,431 | 11,595 |
Other current assets | 14,678 | 12,710 |
Total current assets | 110,565 | 139,551 |
Property and equipment, net | 160,179 | 155,302 |
Other Assets: | ||
Intangible assets, net | 2,678 | 2,786 |
Other assets | 1,803 | 1,863 |
Total other assets | 4,481 | 4,649 |
Total Assets | 275,225 | 299,502 |
Current Liabilities: | ||
Accounts payable - trade | 14,823 | 13,122 |
Accrued liabilities | 4,230 | 6,203 |
Current portion - capital leases | 2,986 | 4,077 |
Other current liabilities | 800 | 2,045 |
Total current liabilities | 22,839 | 25,447 |
Long-term debt, net of current portion | 17,003 | 34,533 |
Capital leases, net of current portion | 1,883 | 2,055 |
Warrant liabilities at fair value | 2,120 | 1,986 |
Deferred tax liabilities | 17,040 | 17,040 |
Other liabilities | 443 | 459 |
Total Liabilities | 61,328 | 81,520 |
Commitments and Contingencies | ||
Pacific Ethanol, Inc. Stockholders' Equity: | ||
Common stock, $0.001 par value; 300,000,000 shares authorized; 24,715,029 and 24,499,534 shares issued and outstanding as of March 31, 2015 and December 31, 2014, respectively | 25 | 25 |
Additional paid-in capital | 726,549 | 725,813 |
Accumulated deficit | -517,024 | -512,332 |
Total Pacific Ethanol, Inc. Stockholders' Equity | 209,551 | 213,507 |
Noncontrolling interest | 4,346 | 4,475 |
Total Stockholders' Equity | 213,897 | 217,982 |
Total Liabilities and Stockholders' Equity | 275,225 | 299,502 |
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 March 31, 2015 and December 31, 2014; Series B: 1,580,790 shares authorized; 926,942 shares issued and outstanding as of March 31, 2015 and December 31, 2014; liquidation preference of $18,075 as of March 31, 2015 | 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 March 31, 2015 and December 31, 2014; Series B: 1,580,790 shares authorized; 926,942 shares issued and outstanding as of March 31, 2015 and December 31, 2014; liquidation preference of $18,075 as of March 31, 2015 | $1 | $1 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Current Assets: | ||
Allowance for doubtful accounts | $6,000 | $6,000 |
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 | 24,715,029 | 24,499,534 |
Common stock, outstanding | 24,715,029 | 24,499,534 |
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 | $18,075,000 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Income Statement [Abstract] | ||
Net sales | $206,176 | $254,543 |
Cost of goods sold | 207,163 | 215,998 |
Gross profit | -987 | 38,545 |
Selling, general and administrative expenses | 4,905 | 3,670 |
Income (loss) from operations | -5,892 | 34,875 |
Fair value adjustments | -173 | -35,844 |
Interest expense, net | -1,015 | -4,351 |
Other expense, net | -129 | -227 |
Loss before provision for income taxes | -7,209 | -5,547 |
Provision (benefit) for income taxes | -2,700 | 3,270 |
Consolidated net loss | -4,509 | -8,817 |
Net (income) loss attributed to noncontrolling interest | 129 | -2,009 |
Net loss attributed to Pacific Ethanol, Inc.. | -4,380 | -10,826 |
Preferred stock dividends | -312 | -312 |
Net loss attributed to common stockholders | ($4,692) | ($11,138) |
Net loss per share, basic and diluted | ($0.19) | ($0.69) |
Weighted-average shares outstanding, basic and diluted | 24,104,000 | 16,181,000 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Operating Activities: | ||
Consolidated net loss | ($4,509) | ($8,817) |
Adjustments to reconcile consolidated net loss to net cash provided by operating activities: | ||
Fair value adjustments | 173 | 35,844 |
Depreciation and amortization of intangibles | 3,409 | 3,173 |
Deferred income taxes | 0 | 3,270 |
Amortization of debt discount | 44 | 1,557 |
Non-cash compensation | 506 | 367 |
Amortization of deferred financing fees | 60 | 112 |
Inventory valuation | 0 | 97 |
Loss (gain) on derivatives | 189 | -70 |
Bad debt expense | 0 | -34 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 7,270 | -16,096 |
Inventories | 709 | -5,008 |
Prepaid expenses and other assets | -2,857 | 82 |
Prepaid inventory | 3,164 | 2,974 |
Accounts payable and accrued expenses | -832 | 5,425 |
Net cash provided by operating activities | 7,326 | 22,876 |
Investing Activities: | ||
Additions to property and equipment | -8,178 | -1,833 |
Net cash used in investing activities | -8,178 | -1,833 |
Financing Activities: | ||
Proceeds from exercise of warrants | 191 | 12,130 |
Net proceeds from (payments on) Kinergy's line of credit | -17,530 | 4,065 |
Principal Payments on Plant Owners' borrowings | 0 | -19,378 |
Principal Payments on senior notes | 0 | -13,007 |
Principal payments on capital leases | -1,307 | -1,096 |
Principal payments on related party note | 0 | -750 |
Preferred stock dividends paid | -312 | -312 |
Net cash used in financing activities | -18,958 | -18,348 |
Net increase (decrease) in cash and cash equivalents | -19,810 | 2,695 |
Cash and cash equivalents at beginning of period | 62,084 | 5,151 |
Cash and cash equivalents at end of period | 42,274 | 7,846 |
Supplemental Information: | ||
Interest paid | 969 | 2,712 |
Noncash financing and investing activities: | ||
Reclass of warrant liability to equity upon warrant exercises | $39 | $11,377 |
1_ORGANIZATION_AND_BASIS_OF_PR
1. ORGANIZATION AND BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2015 | |
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.,”), 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% and a 91% ownership interest in PE Op Co., the owner of four ethanol production facilities, as of March 31, 2015 and 2014, respectively. The facilities are near their respective fuel and feed customers, offering significant timing, transportation cost and logistical advantages. The Company sells ethanol produced by the Pacific Ethanol Plants (as defined below) and unrelated third parties to gasoline refining and distribution companies, sells its WDG to dairy operators and animal feed distributors and sells its corn oil to poultry and biodiesel customers. | |
The Company manages the production and operation of four ethanol production facilities, namely, Pacific Ethanol Madera LLC, Pacific Ethanol Columbia, LLC, Pacific Ethanol Stockton LLC and Pacific Ethanol Magic Valley, LLC (collectively, the “Pacific Ethanol Plants”) and their holding company, Pacific Ethanol Holding Co. LLC (“PEHC,” and together with the Pacific Ethanol Plants, the “Plant Owners”). PEHC is a wholly-owned subsidiary of PE Op Co. These four facilities have an aggregate annual ethanol production capacity of up to 200 million gallons. | |
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. | |
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 $21,450,000 and $28,427,000 at March 31, 2015 and December 31, 2014, respectively, were used as collateral under Kinergy’s operating line of credit. The allowance for doubtful accounts was $6,000 as of March 31, 2015 and December 31, 2014. The Company recorded a recovery for bad debts of $34,000 for the three months ended March 31, 2014. The Company does not have any off-balance sheet credit exposure related to its customers. | |
Recent Accounting Pronouncements – In May 2014, the Financial Accounting Standards Board (“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 was originally effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, but has been further deferred one year. The Company’s adoption begins with the first fiscal quarter of fiscal year 2018. Early adoption is 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 2015, the FASB issued new guidance on presentation of debt issuance costs. Historically, entities have presented debt issuance costs as an asset. Under the new guidance, effective for fiscal years beginning after December 31, 2015, debt issuance costs will be reclassified as a deduction to the carrying amount of the related debt balance. The guidance does not change any of the Company’s other debt recognition or disclosure. The Company will adopt the guidance beginning March 31, 2016. | |
Basis of Presentation–Interim Financial Statements – The accompanying unaudited consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Results for interim periods should not be considered indicative of results for a full year. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. The accounting policies used in preparing these consolidated financial statements are the same as those described in Note 1 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the results for interim periods have been included. All significant intercompany accounts and transactions have been eliminated in consolidation. | |
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates are required as part of determining the 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. |
2_PACIFIC_ETHANOL_PLANTS
2. PACIFIC ETHANOL PLANTS | 3 Months Ended |
Mar. 31, 2015 | |
Pacific Ethanol Plants | |
2. PACIFIC ETHANOL PLANTS | Consolidation of PE Op Co. – The Company concluded that since PE Op Co.’s inception, through the point the Company became a 91% owner in December 2013, PE Op Co. was a variable interest entity because the other owners of PE Op Co., due to the Company’s involvement through its contractual arrangements, at all times lacked the power to direct the activities that most significantly impacted its economic performance. 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 variable interest entity. The Company currently is a 96% owner and 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. |
Noncontrolling interest decreased from $4,475,000 at December 31, 2014 to $4,346,000 at March 31, 2015 due to net loss attributed to noncontrolling interest of $129,000 for the three months ended March 31, 2015. | |
The Company’s acquisition of its ownership interest in PE Op Co. does not impact the Company’s rights or obligations under any of its contractual arrangements. Further, creditors of PE Op Co. do not have recourse to Pacific Ethanol, Inc. Since its acquisition, the Company has not provided any additional support to PE Op Co. beyond the terms of its contractual arrangements. |
3_INVENTORIES
3. INVENTORIES | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Inventory Disclosure [Abstract] | |||||||||
3. INVENTORIES | Inventories consisted primarily of bulk ethanol and unleaded fuel, and are valued at the lower-of-cost-or-market, with cost determined on a first-in, first-out basis. Inventory balances consisted of the following (in thousands): | ||||||||
31-Mar-15 | 31-Dec-14 | ||||||||
Finished goods | $ | 11,668 | $ | 11,118 | |||||
Raw materials | 1,914 | 2,695 | |||||||
Work in progress | 2,848 | 3,274 | |||||||
Other | 1,410 | 1,463 | |||||||
Total | $ | 17,840 | $ | 18,550 |
4_DERIVATIVES
4. DERIVATIVES | 3 Months Ended | ||||||||||
Mar. 31, 2015 | |||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||
4. DERIVATIVES | The business and activities of the Company expose it to a variety of market risks, including risks related to changes in commodity prices and interest rates. The Company monitors and manages these financial exposures as an integral part of its risk management program. This program recognizes the unpredictability of financial markets and seeks to reduce the potentially adverse effects that market volatility could have on operating results. | ||||||||||
Commodity Risk – Cash Flow Hedges – The Company uses derivative instruments to protect cash flows from fluctuations caused by volatility in commodity prices for periods of up to twelve months in order to protect gross profit margins from potentially adverse effects of market and price volatility on ethanol sale and purchase commitments where the prices are set at a future date and/or if the contracts specify a floating or index-based price for ethanol. In addition, the Company hedges anticipated sales of ethanol to minimize its exposure to the potentially adverse effects of price volatility. These derivatives may be designated and documented as cash flow hedges and effectiveness is evaluated by assessing the probability of the anticipated transactions and regressing commodity futures prices against the Company’s purchase and sales prices. Ineffectiveness, which is defined as the degree to which the derivative does not offset the underlying exposure, is recognized immediately in cost of goods sold. For the three months ended March 31, 2015 and 2014, the Company did not designate any of its derivatives as cash flow hedges. | |||||||||||
Commodity Risk – Non-Designated Hedges – The Company uses derivative instruments to lock in prices for certain amounts of corn and ethanol by entering into forward contracts for those commodities. These derivatives are not designated for special hedge accounting treatment. The changes in fair value of these contracts are recorded on the balance sheet and recognized immediately in cost of goods sold. The Company recognized losses of $189,000 and gains of $70,000 as the change in the fair value of these contracts for the three months ended March 31, 2015 and 2014, respectively. | |||||||||||
Non Designated Derivative Instruments – The classification and amounts of the Company’s recognized gains (losses) for its derivatives not designated as hedging instruments are as follows (in thousands): | |||||||||||
Realized Gains (Losses) | |||||||||||
Three Months Ended March 31, | |||||||||||
Type of Instrument | Statements of Operations Location | 2015 | 2014 | ||||||||
Commodity contracts | Cost of goods sold | $ | (115 | ) | $ | 84 | |||||
Unrealized Losses | |||||||||||
Three Months Ended March 31, | |||||||||||
Type of Instrument | Statements of Operations Location | 2015 | 2014 | ||||||||
Commodity contracts | Cost of goods sold | $ | (74 | ) | $ | (14 | ) | ||||
5_DEBT
5. DEBT | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Debt Disclosure [Abstract] | |||||||||
5. DEBT | Long-term borrowings are summarized as follows (in thousands): | ||||||||
31-Mar-15 | 31-Dec-14 | ||||||||
Kinergy operating line of credit | $ | – | $ | 17,530 | |||||
Plant Owners’ third-party term debt | 17,003 | 17,003 | |||||||
17,003 | 34,533 | ||||||||
Less short-term portion | – | – | |||||||
Long-term debt | $ | 17,003 | $ | 34,533 | |||||
Kinergy Operating Line of Credit – As of March 31, 2014, Kinergy had no outstanding balance and an available borrowing base under the credit facility of $30,000,000. | |||||||||
Plant Owners’ Term Debt and Operating Lines of Credit – As of March 31, 2015, the Plant Owners’ term debt had an outstanding balance of $17,003,000. As of March 31, 2015, the Plant Owners had no outstanding balances on their revolving credit facilities, with an aggregate of $34,473,000 of availability. |
6_COMMON_STOCK_AND_WARRANTS
6. COMMON STOCK AND WARRANTS | 3 Months Ended |
Mar. 31, 2015 | |
Stockholders' Equity Note [Abstract] | |
6. COMMON STOCK AND WARRANTS | Warrant Exercises – During the three months ended March 31, 2015 and 2014, certain holders exercised warrants and received an aggregate of 22,000 and 1,888,000 shares of the Company’s common stock upon payment of an aggregate of $191,000 and $12,130,000 in cash, respectively. |
7_COMMITMENTS_AND_CONTINGENCIE
7. COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
7. COMMITMENTS AND CONTINGENCIES | Sales Commitments – At March 31, 2015, 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 154,350,000 gallons of ethanol as of March 31, 2015. The Company had open fixed-price WDG and syrup sales contracts valued at $1,159,000, open corn oil sales contracts valued at $992,000 and open indexed-price sales contracts for 62,000 tons of WDG and syrup as of March 31, 2015. These sales contracts are scheduled to be completed throughout 2015. |
Purchase Commitments – At March 31, 2015, the Company had fixed-price purchase contracts with its suppliers to purchase $6,413,000 of ethanol and indexed-price contracts to purchase 30,802,000 gallons of ethanol. These contracts are scheduled to be satisfied throughout the remainder of 2015. | |
Litigation – General – The Company is subject to various claims and contingencies in the ordinary course of its business, including those related to litigation, business transactions, employee-related matters, and others. When the Company is aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, the Company will record a liability for the loss. If the loss is not probable or the amount of the loss cannot be reasonably estimated, the Company discloses the claim if the likelihood of a potential loss is reasonably possible and the amount involved could be material. While there can be no assurances, the Company does not expect that any of its pending legal proceedings will have a material financial impact on the Company’s operating results. | |
On May 24, 2013, GS CleanTech Corporation (“GS CleanTech”), filed a suit in the United States District Court for the Eastern District of California, Sacramento Division (Case No.: 2:13-CV-01042-JAM-AC), naming Pacific Ethanol, Inc. as a defendant. 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, Pacific Ethanol, Inc., 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 Pacific Ethanol, Inc., 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 Pacific Ethanol, Inc., 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 Pacific Ethanol, Inc., 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 March 31, 2015 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. |
8_FAIR_VALUE_MEASUREMENTS
8. FAIR VALUE MEASUREMENTS | 3 Months Ended | ||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||
8. FAIR VALUE MEASUREMENTS. | The fair value hierarchy prioritizes the inputs used in valuation techniques into three levels, as follows: | ||||||||||||||||||
· | Level 1 – Observable inputs – unadjusted quoted prices in active markets for identical assets and liabilities; | ||||||||||||||||||
· | Level 2 – Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with market data; and | ||||||||||||||||||
· | Level 3 – Unobservable inputs – includes amounts derived from valuation models where one or more significant inputs are unobservable. For fair value measurements using significant unobservable inputs, a description of the inputs and the information used to develop the inputs is required along with a reconciliation of Level 3 values from the prior reporting period. | ||||||||||||||||||
The Company recorded its warrants issued from 2010 through 2013 at fair value and designated them as Level 3 on their issuance dates. | |||||||||||||||||||
Warrants – Except for the warrants issued September 26, 2012, the 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 March 31, 2015 were as follows: | |||||||||||||||||||
Original Issuance | Exercise Price | Volatility | Risk Free | Term (years) | Market Discount | Warrants Outstanding | Fair Value | ||||||||||||
Interest | |||||||||||||||||||
Rate | |||||||||||||||||||
9/26/12 | $8.85 | 54.60% | 0.20% | 0.49 | 32.00% | 452,000 | $ | 815,000 | |||||||||||
7/3/12 | $6.09 | 53.90% | 0.56% | 2.26 | 30.60% | 211,000 | 855,000 | ||||||||||||
12/13/11 | $8.43 | 54.80% | 0.56% | 1.71 | 27.30% | 138,000 | 450,000 | ||||||||||||
$ | 2,120,000 | ||||||||||||||||||
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 | Term (years) | Market Discount | Warrants Outstanding | Fair Value | ||||||||||||
Interest | |||||||||||||||||||
Rate | |||||||||||||||||||
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 | ||||||||||||||||||
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. | |||||||||||||||||||
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 March 31, 2015 (in thousands): | |||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Assets: | |||||||||||||||||||
Commodity contracts(1) | $ | 812 | $ | – | $ | – | $ | 812 | |||||||||||
Total Assets | $ | 812 | $ | – | $ | – | $ | 812 | |||||||||||
Liabilities: | |||||||||||||||||||
Warrants(2) | $ | – | $ | – | $ | 2,120 | $ | 2,120 | |||||||||||
Commodity contracts(3) | 449 | – | – | 449 | |||||||||||||||
Total Liabilities | $ | 449 | $ | – | $ | 2,120 | $ | 2,569 | |||||||||||
__________ | |||||||||||||||||||
(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, 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. | |||||||||||||||||||
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): | |||||||||||||||||||
Balance, December 31, 2014 | $ | 1,986 | |||||||||||||||||
Exercises of warrants | (39 | ) | |||||||||||||||||
Adjustments to fair value for the period | 173 | ||||||||||||||||||
Balance, March 31, 2015 | $ | 2,120 |
9_EARNINGS_PER_SHARE
9. EARNINGS PER SHARE | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Earnings Per Share [Abstract] | |||||||||||||
9 .EARNINGS PER SHARE | The following tables compute basic and diluted earnings per share (in thousands, except per share data): | ||||||||||||
Three Months Ended March 31, 2015 | |||||||||||||
Loss Numerator | Shares Denominator | Per-Share Amount | |||||||||||
Net loss attributed to Pacific Ethanol, Inc. | $ | (4,380 | ) | ||||||||||
Less: Preferred stock dividends | (312 | ) | |||||||||||
Basic and diluted loss per share: | |||||||||||||
Net loss attributed to common stockholders | $ | (4,692 | ) | 24,104 | $ | (0.19 | ) | ||||||
Three Months Ended March 31, 2014 | |||||||||||||
Loss Numerator | Shares Denominator | Per-Share Amount | |||||||||||
Net loss attributed to Pacific Ethanol, Inc. | $ | (10,826 | ) | ||||||||||
Less: Preferred stock dividends | (312 | ) | |||||||||||
Basic and diluted loss per share: | |||||||||||||
Net loss attributed to common stockholders | $ | (11,138 | ) | 16,181 | $ | (0.69 | ) | ||||||
There were an aggregate of 1,080,000 and 2,301,000 potentially dilutive weighted-average shares from convertible securities outstanding as of March 31, 2015 and 2014, respectively. These convertible securities were not considered in calculating diluted net loss per share for the three months ended March 31, 2015 and 2014, as their effect would have been anti-dilutive. |
10_MERGER_AGREEMENT_WITH_AVENT
10. MERGER AGREEMENT WITH AVENTINE | 3 Months Ended |
Mar. 31, 2015 | |
Business Combinations [Abstract] | |
10. 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. Effective March 31, 2015, the Company entered into an amendment to the definitive merger agreement with Aventine to address certain conditions to closing and other matters. 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. |
1_ORGANIZATION_AND_BASIS_OF_PR1
1. ORGANIZATION AND BASIS OF PRESENTATION (Policies) | 3 Months Ended |
Mar. 31, 2015 | |
Accounting Policies [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.,”), 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% and a 91% ownership interest in PE Op Co., the owner of four ethanol production facilities, as of March 31, 2015 and 2014, respectively. The facilities are near their respective fuel and feed customers, offering significant timing, transportation cost and logistical advantages. The Company sells ethanol produced by the Pacific Ethanol Plants (as defined below) and unrelated third parties to gasoline refining and distribution companies, sells its WDG to dairy operators and animal feed distributors and sells its corn oil to poultry and biodiesel customers. | |
The Company manages the production and operation of four ethanol production facilities, namely, Pacific Ethanol Madera LLC, Pacific Ethanol Columbia, LLC, Pacific Ethanol Stockton LLC and Pacific Ethanol Magic Valley, LLC (collectively, the “Pacific Ethanol Plants”) and their holding company, Pacific Ethanol Holding Co. LLC (“PEHC,” and together with the Pacific Ethanol Plants, the “Plant Owners”). PEHC is a wholly-owned subsidiary of PE Op Co. These four facilities have an aggregate annual ethanol production capacity of up to 200 million gallons. | |
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. |
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 $21,450,000 and $28,427,000 at March 31, 2015 and December 31, 2014, respectively, were used as collateral under Kinergy’s operating line of credit. The allowance for doubtful accounts was $6,000 as of March 31, 2015 and December 31, 2014. The Company recorded a recovery for bad debts of $34,000 for the three months ended March 31, 2014. The Company does not have any off-balance sheet credit exposure related to its customers. | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements – In May 2014, the Financial Accounting Standards Board (“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 was originally effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, but has been further deferred one year. The Company’s adoption begins with the first fiscal quarter of fiscal year 2018. Early adoption is 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 2015, the FASB issued new guidance on presentation of debt issuance costs. Historically, entities have presented debt issuance costs as an asset. Under the new guidance, effective for fiscal years beginning after December 31, 2015, debt issuance costs will be reclassified as a deduction to the carrying amount of the related debt balance. The guidance does not change any of the Company’s other debt recognition or disclosure. The Company will adopt the guidance beginning March 31, 2016. | |
Basis of Presentation-Interim Financial Statements | Basis of Presentation–Interim Financial Statements – The accompanying unaudited consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Results for interim periods should not be considered indicative of results for a full year. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. The accounting policies used in preparing these consolidated financial statements are the same as those described in Note 1 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the results for interim periods have been included. All significant intercompany accounts and transactions have been eliminated in consolidation. |
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates are required as part of determining the 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. |
3_INVENTORIES_Tables
3. INVENTORIES (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Inventory Disclosure [Abstract] | |||||||||
Inventories | 31-Mar-15 | 31-Dec-14 | |||||||
Finished goods | $ | 11,668 | $ | 11,118 | |||||
Raw materials | 1,914 | 2,695 | |||||||
Work in progress | 2,848 | 3,274 | |||||||
Other | 1,410 | 1,463 | |||||||
Total | $ | 17,840 | $ | 18,550 |
4_DERIVATIVES_Tables
4. DERIVATIVES (Tables) | 3 Months Ended | ||||||||||
Mar. 31, 2015 | |||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||
Derivatives not designated as hedging instruments | Realized Gains (Losses) | ||||||||||
Three Months Ended March 31, | |||||||||||
Type of Instrument | Statements of Operations Location | 2015 | 2014 | ||||||||
Commodity contracts | Cost of goods sold | $ | (115 | ) | $ | 84 | |||||
Unrealized Losses | |||||||||||
Three Months Ended March 31, | |||||||||||
Type of Instrument | Statements of Operations Location | 2015 | 2014 | ||||||||
Commodity contracts | Cost of goods sold | $ | (74 | ) | $ | (14 | ) | ||||
5_DEBT_Tables
5. DEBT (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Debt Disclosure [Abstract] | |||||||||
Long Term Debt | 31-Mar-15 | 31-Dec-14 | |||||||
Kinergy operating line of credit | $ | – | $ | 17,530 | |||||
Plant Owners’ third-party term debt | 17,003 | 17,003 | |||||||
17,003 | 34,533 | ||||||||
Less short-term portion | – | – | |||||||
Long-term debt | $ | 17,003 | $ | 34,533 |
8_FAIR_VALUE_MEASUREMENTS_Tabl
8. FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended | ||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||
Assumptions used and related fair value for conversion feature | Significant assumptions used and related fair values for the warrants as of March 31, 2015 were as follows: | ||||||||||||||||||
Original Issuance | Exercise Price | Volatility | Risk Free | Term (years) | Market Discount | Warrants Outstanding | Fair Value | ||||||||||||
Interest | |||||||||||||||||||
Rate | |||||||||||||||||||
9/26/12 | $8.85 | 54.60% | 0.20% | 0.49 | 32.00% | 452,000 | $ | 815,000 | |||||||||||
7/3/12 | $6.09 | 53.90% | 0.56% | 2.26 | 30.60% | 211,000 | 855,000 | ||||||||||||
12/13/11 | $8.43 | 54.80% | 0.56% | 1.71 | 27.30% | 138,000 | 450,000 | ||||||||||||
$ | 2,120,000 | ||||||||||||||||||
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 | Term (years) | Market Discount | Warrants Outstanding | Fair Value | ||||||||||||
Interest | |||||||||||||||||||
Rate | |||||||||||||||||||
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 | ||||||||||||||||||
Summary of fair value measurements by level | The following table summarizes fair value measurements by level at March 31, 2015 (in thousands): | ||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Assets: | |||||||||||||||||||
Commodity contracts(1) | $ | 812 | $ | – | $ | – | $ | 812 | |||||||||||
Total Assets | $ | 812 | $ | – | $ | – | $ | 812 | |||||||||||
Liabilities: | |||||||||||||||||||
Warrants(2) | $ | – | $ | – | $ | 2,120 | $ | 2,120 | |||||||||||
Commodity contracts(3) | 449 | – | – | 449 | |||||||||||||||
Total Liabilities | $ | 449 | $ | – | $ | 2,120 | $ | 2,569 | |||||||||||
__________ | |||||||||||||||||||
(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, 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. | |||||||||||||||||||
Changes in fair value of Level 3 inputs | The changes in the Company’s fair value of its Level 3 inputs with respect to its warrants were as follows (in thousands): | ||||||||||||||||||
Balance, December 31, 2014 | $ | 1,986 | |||||||||||||||||
Exercises of warrants | (39 | ) | |||||||||||||||||
Adjustments to fair value for the period | 173 | ||||||||||||||||||
Balance, March 31, 2015 | $ | 2,120 |
9_EARNINGS_PER_SHARE_Tables
9. EARNINGS PER SHARE (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Earnings Per Share [Abstract] | |||||||||||||
Computation of basic and diluted earnings per share | The following tables compute basic and diluted earnings per share (in thousands, except per share data): | ||||||||||||
Three Months Ended March 31, 2015 | |||||||||||||
Loss Numerator | Shares Denominator | Per-Share Amount | |||||||||||
Net loss attributed to Pacific Ethanol, Inc. | $ | (4,380 | ) | ||||||||||
Less: Preferred stock dividends | (312 | ) | |||||||||||
Basic and diluted loss per share: | |||||||||||||
Net loss attributed to common stockholders | $ | (4,692 | ) | 24,104 | $ | (0.19 | ) | ||||||
Three Months Ended March 31, 2014 | |||||||||||||
Loss Numerator | Shares Denominator | Per-Share Amount | |||||||||||
Net loss attributed to Pacific Ethanol, Inc. | $ | (10,826 | ) | ||||||||||
Less: Preferred stock dividends | (312 | ) | |||||||||||
Basic and diluted loss per share: | |||||||||||||
Net loss attributed to common stockholders | $ | (11,138 | ) | 16,181 | $ | (0.69 | ) | ||||||
1_ORGANIZATION_AND_BASIS_OF_PR2
1. ORGANIZATION AND BASIS OF PRESENTATION (Details Narrative) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Accounts receivable used as collateral | $21,450,000 | $28,427,000 | |
Allowance for doubtful accounts | 6,000 | 6,000 | |
Bad debt recovery (expense) | $0 | $34,000 |
2_PACIFIC_ETHANOL_PLANTS_Detai
2. PACIFIC ETHANOL PLANTS (Details Narrative) (USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Pacific Ethanol Plants | |
Decrease in noncontrolling interest | ($129,000) |
3_INVENTORIES_Details
3. INVENTORIES (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Inventory balances | ||
Finished goods | $11,668 | $11,118 |
Raw materials | 1,914 | 2,695 |
Work in progress | 2,848 | 3,274 |
Other | 1,410 | 1,463 |
Total | $17,840 | $18,550 |
4_DERIVATIVES_Details
4. DERIVATIVES (Details) (Commodity contracts [Member], Non Designated Derivative Instruments [Member], Cost of goods sold [Member], USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Commodity contracts [Member] | Non Designated Derivative Instruments [Member] | Cost of goods sold [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Realized Gains (Losses) | ($115) | $84 |
Unrealized Gains (Losses) | ($74) | ($14) |
4_DERIVATIVES_Details_Narrativ
4. DERIVATIVES (Details Narrative) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Recognized gains and losses due to change in fair value | ($189) | $70 |
5_DEBT_DetailsLong_term_borrow
5. DEBT (Details-Long term borrowings) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Long-term borrowings are summarized as follows | ||
Plant Owner's third-party term debt | $17,003 | $17,003 |
Less short-term portion | 0 | 0 |
Long-term debt | 17,003 | 34,533 |
Line of Credit [Member] | Kinergy [Member] | ||
Long-term borrowings are summarized as follows | ||
Line of credit | 0 | 17,530 |
Line of credit availability | 30,000 | |
Line of Credit [Member] | Plant Owners | ||
Long-term borrowings are summarized as follows | ||
Line of credit | 0 | 0 |
Line of credit availability | $34,473 |
6_COMMON_STOCK_AND_WARRANTS_De
6. COMMON STOCK AND WARRANTS (Details Narrative) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Stockholders' Equity Note [Abstract] | ||
Warrants exercised, shares received | 22,000 | 1,888,000 |
Warrants exercised, cash received | $191 | $12,130 |
7_COMMITMENTS_AND_CONTINGENCIE1
7. COMMITMENTS AND CONTINGENCIES (Details Narrative) (USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Corn contract | |
Sales commitments | $992,000 |
WDG and Syrup | |
Sales commitments | 1,159,000 |
Open indexed-price sales contracts | 62,000 tons |
EthanolMember | |
Open indexed-price sales contracts | 154,350,000 gallons |
Purchase commitments | $6,413,000 |
Indexed-price purchase contracts | 30,802,000 gallons |
8_FAIR_VALUE_MEASUREMENTS_Deta
8. FAIR VALUE MEASUREMENTS (Details-Significant Assumptions and Fair Value) (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | |
Significant assumptions used in the valuations | ||
Fair value (in dollars) | $2,120,000 | $1,986,000 |
Original Issuance 09/26/2012 | ||
Significant assumptions used in the valuations | ||
Exercise price | $8.85 | $8.85 |
Volatility | 54.60% | 51.00% |
Risk free interest rate | 0.20% | 0.19% |
Term (years) | 5 months 26 days | 8 months 26 days |
Discount for Marketability restrictions | 32.00% | 37.00% |
Warrants Outstanding | 452,000 | 473,000 |
Fair value (in dollars) | 815,000 | 748,000 |
Original issuance 7/3/2012 | ||
Significant assumptions used in the valuations | ||
Exercise price | $6.09 | $6.09 |
Volatility | 53.90% | 56.10% |
Risk free interest rate | 0.56% | 0.89% |
Term (years) | 2 years 3 months 4 days | 2 years 6 months 4 days |
Discount for Marketability restrictions | 30.60% | 32.80% |
Warrants Outstanding | 211,000 | 211,000 |
Fair value (in dollars) | 855,000 | 811,000 |
Original issuance 12/13/2011 | ||
Significant assumptions used in the valuations | ||
Exercise price | $8.43 | $8.43 |
Volatility | 54.80% | 54.30% |
Risk free interest rate | 0.56% | 0.67% |
Term (years) | 1 year 8 months 16 days | 1 year 11 months 12 days |
Discount for Marketability restrictions | 27.30% | 28.70% |
Warrants Outstanding | 138,000 | 138,000 |
Fair value (in dollars) | $450,000 | $427,000 |
8_FAIR_VALUE_MEASUREMENTS_Deta1
8. FAIR VALUE MEASUREMENTS (Details-Fair value measurements) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Assets: | ||
Assets | $812 | $1,586 |
Liabilities: | ||
Liabilities | 2,569 | 3,135 |
Commodity contracts [Member] | ||
Assets: | ||
Assets | 812 | 1,586 |
Liabilities: | ||
Liabilities | 449 | 1,149 |
Warrants [Member] | ||
Liabilities: | ||
Liabilities | 2,120 | 1,986 |
Level 1 [Member] | ||
Assets: | ||
Assets | 812 | 1,586 |
Liabilities: | ||
Liabilities | 449 | 1,149 |
Level 1 [Member] | Commodity contracts [Member] | ||
Assets: | ||
Assets | 812 | 1,586 |
Liabilities: | ||
Liabilities | 449 | 1,149 |
Level 1 [Member] | Warrants [Member] | ||
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] | Warrants [Member] | ||
Liabilities: | ||
Liabilities | 0 | 0 |
Level 3 [Member] | ||
Assets: | ||
Assets | 0 | 0 |
Liabilities: | ||
Liabilities | 2,120 | 1,986 |
Level 3 [Member] | Commodity contracts [Member] | ||
Assets: | ||
Assets | 0 | 0 |
Liabilities: | ||
Liabilities | 0 | 0 |
Level 3 [Member] | Warrants [Member] | ||
Liabilities: | ||
Liabilities | $2,120 | $1,986 |
8_FAIR_VALUE_MEASUREMENTS_Deta2
8. FAIR VALUE MEASUREMENTS (Details-Level 3) (Level 3 [Member], Warrants [Member], USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2015 |
Level 3 [Member] | Warrants [Member] | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Beginning Balance | $1,986 |
Exercises of warrants | -39 |
Adjustments to fair value for the period | 173 |
Ending Balance | $2,120 |
9_EARNINGS_PER_SHARE_Details
9. EARNINGS PER SHARE (Details) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Loss Numerator | ||
Net loss attributed to Pacific Ethanol, Inc. | ($4,380) | ($10,826) |
Preferred stock dividends | -312 | -312 |
Basic and diluted loss per share: | ||
Loss available to common stockholders | ($4,692) | ($11,138) |
Shares Denominator | ||
Loss available to common stockholders | 24,104,000 | 16,181,000 |
Per-Share Amount | ||
Loss available to common stockholders | ($0.19) | ($0.69) |
9_EARNINGS_PER_SHARE_Details_N
9. EARNINGS PER SHARE (Details Narrative) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Dilutive securities | ||
Potentially dilutive weighted-average shares from convertible securities not considered in calculation of diluted shares | 1,080,000 | 2,301,000 |