Alto Ingredients (ALTO) 10-Q 6 Nov 15 2015 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Nov. 06, 2015
Document And Entity Information
Entity Registrant Name	Pacific Ethanol, Inc.
Entity Central Index Key	778,164
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		38,978,689
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2,015

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Current Assets:
Cash and cash equivalents	$ 53,056	$ 62,084
Accounts receivable, net	51,379	34,612
Inventories	48,238	18,550
Income tax receivable	14,097	0
Prepaid inventory	11,100	11,595
Other current assets	5,084	12,710
Total current assets	182,954	139,551
Property and equipment, net	472,632	155,302
Other Assets:
Intangible assets, net	2,566	2,786
Other assets	9,882	1,863
Total other assets	12,448	4,649
Total Assets	668,034	299,502
Current Liabilities:
Accounts payable - trade	41,447	13,122
Accrued liabilities	5,846	6,203
Current portion - capital leases	4,217	4,077
Current portion - long-term debt	17,003	0
Other current liabilities	7,120	2,045
Total current liabilities	75,633	25,447
Long-term debt, net of current portion	190,166	34,533
Capital leases, net of current portion	5,279	2,055
Warrant liabilities at fair value	501	1,986
Deferred tax liabilities	5,293	17,040
Other liabilities	20,451	459
Total Liabilities	$ 297,323	$ 81,520
Commitments and Contingencies (Notes 6 and 8)
Pacific Ethanol, Inc. Stockholders' Equity:
Additional paid-in capital	$ 901,978	$ 725,813
Accumulated deficit	(531,311)	(512,332)
Total Pacific Ethanol, Inc. Stockholders' Equity	370,711	213,507
Noncontrolling interest	0	4,475
Total Stockholders' Equity	370,711	217,982
Total Liabilities and Stockholders' Equity	668,034	299,502
Series A Preferred Stock
Pacific Ethanol, Inc. Stockholders' Equity:
Preferred stock	0	0
Series B Preferred Stock
Pacific Ethanol, Inc. Stockholders' Equity:
Preferred stock	1	1
Common Stock [Member]
Pacific Ethanol, Inc. Stockholders' Equity:
Common stock	39	25
Nonvoting Common Stock [Member]
Pacific Ethanol, Inc. Stockholders' Equity:
Common stock	$ 4	$ 0

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Stockholders' Equity:
Preferred stock par value	$ .001	$ .001
Preferred stock shares authorized	10,000,000	10,000,000
Series A Preferred Stock
Stockholders' Equity:
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 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
Common Stock [Member]
Stockholders' Equity:
Common stock, par value	$ 0.001	$ 0.001
Common stock, authorized	300,000,000	300,000,000
Common stock, issued	38,985,661	24,499,534
Common stock, outstanding	38,985,661	24,499,534
Nonvoting Common Stock [Member]
Stockholders' Equity:
Common stock, par value	$ .001
Common stock, authorized	3,553,000
Common stock, issued	3,540,132	0
Common stock, outstanding	3,540,132	0

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Income Statement [Abstract]
Net sales	$ 380,622	$ 275,573	$ 814,419	$ 851,260
Cost of goods sold	388,002	257,587	816,532	761,153
Gross profit (loss)	(7,380)	17,986	(2,113)	90,107
Selling, general and administrative expenses	7,446	4,392	16,344	12,377
Income (loss) from operations	(14,826)	13,594	(18,457)	77,730
Fair value adjustments and warrant inducements	1,202	(4,378)	1,413	(39,737)
Interest expense, net	(5,167)	(1,133)	(7,187)	(8,370)
Loss on extinguishments of debt	0	0	0	(2,363)
Other income (expense), net	203	(172)	16	(734)
Income (loss) before provision for income taxes	(18,588)	7,911	(24,215)	26,526
Provision (benefit) for income taxes	(3,925)	3,163	(6,095)	13,629
Consolidated net income (loss)	(14,663)	4,748	(18,120)	12,897
Net (income) loss attributed to noncontrolling interests	0	(723)	87	(4,126)
Net income (loss) attributed to Pacific Ethanol, Inc.	(14,663)	4,025	(18,033)	8,771
Preferred stock dividends	(319)	(319)	(946)	(946)
Income (loss) available to common stockholders	$ (14,982)	$ 3,706	$ (18,979)	$ 7,825
Net income (loss) per share, basic	$ (.36)	$ .16	$ (.63)	$ .40
Net income (loss) per share, diluted	$ (.36)	$ .15	$ (.63)	$ .35
Weighted-average shares outstanding, basic	41,861	22,986	30,170	19,713
Weighted-average shares outstanding, diluted	41,861	24,307	30,170	22,073

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS	9 Months Ended
	Sep. 30, 2015USD ($)	Sep. 30, 2014USD ($)
Operating Activities:
Consolidated net income (loss)	$ (18,120,000)	$ 12,897,000
Adjustments to reconcile consolidated net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization of intangibles	15,103,000	9,775,000
Deferred income taxes	(120,000)	191,000
Loss on extinguishments of debt	0	2,363,000
Fair value adjustments	(1,413,000)	37,465,000
Amortization of debt discount	383,000	1,815,000
Amortization of deferred financing fees	178,000	1,139,000
Inventory valuation	0	722,000
Non-cash compensation	1,465,000	1,311,000
Derivative instruments	1,552,000	700,000
Bad debt expense (recoveries)	(357,000)	(40,000)
Changes in operating assets and liabilities, net of effects from acquisition of Aventine:
Accounts receivable	(5,980,000)	4,862,000
Inventories	(205,000)	2,401,000
Other current assets	(1,399,000)	962,000
Prepaid inventory	495,000	1,734,000
Accounts payable and accrued expenses	(9,020,000)	(2,047,000)
Net cash provided by (used in)operating activities	(17,438,000)	76,250,000
Investing Activities:
Net cash from Aventine acquisition	18,756,000	0
Additions to property and equipment	(17,680,000)	(9,996,000)
Purchase of cash collateralized letters of credit	(4,574,000)	0
Purchases of PE Op Co. ownership	0	(6,000,000)
Net cash used in investing activities	(3,498,000)	(15,996,000)
Financing Activities:
Proceeds from equity offering	0	26,073,000
Proceeds from exercise of warrants	368,000	42,656,000
Principal Payments on senior notes	0	(13,984,000)
Principal payments on related party note	0	(750,000)
Parent purchases of Plant Owners' debt	0	(17,038,000)
Net proceeds from (payments on) Kinergy's line of credit	29,718,000	(5,570,000)
Principal Payments on Plant Owners' borrowings	(13,833,000)	(35,378,000)
Payments on capital leases	(3,399,000)	(3,772,000)
Debt issuance costs	0	(440,000)
Preferred stock dividends paid	(946,000)	(946,000)
Net cash provided by (used in) financing activities	11,908,000	(9,149,000)
Net increase (decrease) in cash and cash equivalents	(9,028,000)	51,105,000
Cash and cash equivalents at beginning of period	62,084,000	5,151,000
Cash and cash equivalents at end of period	53,056,000	56,256,000
Supplemental Information:
Interest paid	6,043,000	5,606,000
Income taxes paid	0	10,470,000
Noncash financing and investing activities:
Reclass of warrant liability to equity upon warrant exercises	72,000	40,884,000
Reclass of noncontrolling interests to APIC upon acquisitions of ownership positions in PE Op Co.	560,000	80,000
Accrued payment for ownership positions in PE Op Co.	3,828,000	0
Assets acquired in acquisition of Aventine:
Cash and cash equivalents	18,756,000
Accounts receivables	10,430,000
Inventories	29,483,000
Other current assets	10,480,000
Property and equipment	312,781,000
Net deferred tax assets	10,021,000
Other assets	750,000
Liabilities assumed in acquisition of Aventine:
Accounts payable and accrued expenses	27,233,000
Term debt	142,744,000
Line of credit	13,721,000
Pension plan liabilities	8,518,000
Other noncurrent liabilities	25,913,000
Net assets acquired in acquisition of Aventine	174,472,000
Common stock issued in acquisition of Aventine	174,572,000
Preferred stock dividends paid in common stock	$ 0	$ 1,463,000

1. ORGANIZATION AND BASIS OF PR

1. ORGANIZATION AND BASIS OF PRESENTATION	9 Months Ended
	Sep. 30, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
1. ORGANIZATION AND BASIS OF PRESENTATION	Organization and Business The Company is a leading producer and marketer of low-carbon renewable fuels in the United States. The Company’s four ethanol plants in the Western United States (together with their respective holding companies, the “Pacific Ethanol West Plants”) are located in close proximity to both feed and ethanol customers and thus enjoy unique advantages in efficiency, logistics and product pricing. These plants produce among the lowest-carbon ethanol produced in the United States due to low energy use in production. With the addition of four Midwestern ethanol plants in July 2015 as a result of the Company’s acquisition of Aventine, the Company now has a combined ethanol production capacity of 515 million gallons per year, markets, on an annualized basis, over 800 million gallons of ethanol and produces, on an annualized basis, over 1 million tons of co-products such as wet and dry distillers grains, wet and dry corn gluten feed, condensed distillers solubles, corn gluten meal, corn germ, distillers yeast and CO 2 Accounts Receivable and Allowance for Doubtful Accounts 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 $35,541,000 and $28,475,000 at September 30, 2015 and December 31, 2014, respectively, were used as collateral under Kinergy’s operating line of credit. The allowance for doubtful accounts was $21,700 and $6,000 as of September 30, 2015 and December 31, 2014, respectively. The Company recorded bad debt recoveries of $360,000 and $357,000 for the three and nine months ended September 30, 2015, respectively, and bad debt recoveries of $6,000 and $40,000 for the three and nine months ended September 30, 2014, respectively. The Company does not have any off-balance sheet credit exposure related to its customers. Employment-related Benefits Provision for Income Taxes The resulting effective tax rates for the three months ended September 30, 2015 and 2014 were 21.1% and 40.0% of pre-tax income, respectively. The resulting effective tax rates for the nine months ended September 30, 2015 and 2014 were 25.2% and 51.4% of pre-tax income, respectively. Recent Accounting Pronouncements 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. In July 2015, the FASB issued new guidance on simplifying the measurement of inventory. Under the new guidance, entities are required to measure most inventory at the lower of cost and net realizable value, thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. This guidance is effective prospectively for fiscal years beginning after December 15, 2016. Early adoption is permitted. The Company has adopted the guidance with no material impact on its results of operations or financial condition. In September 2015, the FASB issued new guidance on simplifying the accounting for measurement-period adjustments. Under the new guidance, an acquirer must recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The guidance also requires acquirers to present separately on the face of the statement of operations or disclose in the notes, the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The guidance is effective for fiscal years beginning after December 31, 2015, applied prospectively. Early adoption is permitted. The Company will consider early adoption in future periods related to its current measurement period for its acquisition of Aventine. Basis of Presentation – Interim Financial Statements 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 assets acquired and liabilities assumed from the acquisition of Aventine, warrants and conversion features, pension and postretirement benefit plan obligations, 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 WEST PLANTS

2. PACIFIC ETHANOL WEST PLANTS	9 Months Ended
	Sep. 30, 2015
Pacific Ethanol West Plants
2. PACIFIC ETHANOL WEST PLANTS	As of September 30, 2015, the Company owned 100% of its four Pacific Ethanol West Plants located in the Western United States through its holding company, PE Op Co., namely, Pacific Ethanol Madera LLC, Pacific Ethanol Columbia, LLC, Pacific Ethanol Stockton LLC and Pacific Ethanol Magic Valley, LLC, and their holding company, Pacific Ethanol Holding Co. LLC (together with the Pacific Ethanol West Plants, the “Plant Owners”). Prior to December 2013, PE Op Co. was consolidated as a variable interest entity because the Company, through its contractual arrangements with PE Op Co., had the power to direct the activities that most significantly impacted PE Op Co.’s economic performance. Since December 2013, as a result of owning 91% of PE Op Co., the Company continued to consolidate PE Op Co.’s financial results under the voting rights model. In May 2015, the Company purchased the remaining 4% ownership interest in PE Op Co. that it did not own, giving it 100% ownership of PE Op Co. For the prior periods in which the Company did not wholly-own PE Op Co., it adjusted its consolidated net income (loss) for the income (loss) attributed to PE Op Co.’s other owners. The remaining amount after this adjustment resulted in net income (loss) attributed to Pacific Ethanol. Noncontrolling interest decreased from $4,475,000 at December 31, 2014 to $0 at September 30, 2015 due to the Company’s purchase of the remaining 4% ownership interest in PE Op Co. for $3,828,000, resulting in a reduction of noncontrolling interest of $4,388,000, and loss attributed to noncontrolling interest of $87,000 for the nine months ended September 30, 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. ACQUISITION OF AVENTINE

3. ACQUISITION OF AVENTINE	9 Months Ended
	Sep. 30, 2015
Business Combinations [Abstract]
3. ACQUISITION OF AVENTINE	On December 30, 2014, the Company entered into a definitive merger agreement with Aventine, a Midwest ethanol producer, under which the Company agreed to acquire Aventine through a stock-for-stock merger. The merger agreement was amended effective March 31, 2015 to address certain conditions to closing and other matters. The acquisition closed on July 1, 2015 and the Company issued an aggregate of 17.8 million shares of common stock and non-voting common stock for 100% of the outstanding shares of common stock of Aventine. The common stock and non-voting common stock issued as consideration had an aggregate fair value of $174.6 million, based on the closing market price of the Company’s common stock on the acquisition date. The Company believes the Aventine acquisition will result in a number of synergies and strategic advantages. The Company believes the acquisition will spread commodity and basis price risks across diverse markets and products, assisting in its efforts to optimize margin management; improve its hedging opportunities with a greater correlation to the liquid physical and paper markets in Chicago; and increase its flexibility and alternatives in feedstock procurement for its Midwestern and Western production facilities. The acquisition also expands the Company’s marketing reach into new markets and extends its mix of co-products. The Company believes the acquisition will enable it to have deeper market insight and engagement in major ethanol and feed markets outside the Western United States, thereby improving pricing opportunities; allows the Company to establish access to markets in 48 states for ethanol sales and access many markets with ethanol and co-product sales reaching domestic and international customers; and enable it to use its more diverse mix of co-products to generate strong co-product returns. In addition, the acquisition also increases the Company’s combined annual ethanol production capacity to 515 million gallons per year and annualized ethanol marketing volume to over 800 million gallons, including Aventine’s historical volumes. The Company has recognized the following allocation of the purchase price at fair values. The following fair value allocation for all assets and liabilities is provisional and incomplete as the Company is in the process of completing its valuation of the assets acquired and liabilities assumed, most significantly its valuation of property and equipment, deferred taxes and environmental remediation. The fair values of property and equipment and deferred taxes are based on the Company’s draft valuations, and represent its best estimates at the time of the filing of this report. The Company expects to conclude its valuations during the fourth quarter of 2015. The Company has included in the following allocation its estimated fair values for certain operating lease agreements and open commitments. The fair-value determination of long-term debt is based on the interest rate environment at the acquisition date. Based upon these fair value estimates, the purchase price consideration allocation is as follows (in thousands): Cash and cash equivalents $ 18,756 Accounts receivable 10,430 Inventory 29,483 Other current assets 10,480 Total current assets 69,149 Property and equipment 312,781 Net deferred tax assets 10,021 Other assets 750 Total assets acquired $ 392,701 Accounts payable and accrued liabilities $ 27,233 Long-term debt - revolvers 13,721 Long-term debt - term debt 142,744 Pension plan liabilities 8,518 Other non-current liabilities 25,913 Total liabilities assumed $ 218,129 Net assets acquired $ 174,572 Estimated goodwill $ – Total purchase price $ 174,572 The contractual amount due on the accounts receivable acquired was $10.8 million, of which $0.4 million is expected to be uncollectible. Any changes to the initial estimates of the fair value of the acquired assets and assumed liabilities will be recorded as adjustments to those assets and liabilities and residual amounts will be allocated to goodwill if the net assets acquired are less than the purchase price. If the net assets acquired exceed the purchase price, the residual amount will result in a bargain purchase gain. As discussed in Note 9, the Company recognized $3.7 million, included in other noncurrent liabilities above, as a litigation contingency related to certain legal cases for amounts that were probable and estimable as of the acquisition date. Subsequent to the acquisition date, the Company paid approximately $0.4 million of this amount. The following table presents unaudited pro forma financial information assuming the acquisition occurred on January 1, 2014 (in thousands, except per share). Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Net sales – pro forma $ 380,622 $ 429,373 $ 1,107,919 $ 1,267,853 Cost of goods sold – pro forma $ 379,302 $ 400,260 $ 1,102,278 $ 1,137,410 Selling, general and administrative expenses – pro forma $ 7,346 $ 8,892 $ 29,144 $ 24,568 Net income (loss) – pro forma $ (6,182 ) $ (117 ) $ (34,226 ) $ 4,400 Diluted net income (loss) per share – pro forma $ (0.15 ) $ (0.00 ) $ (0.71 ) $ 0.11 Diluted weighted-average shares – pro forma 41,861 42,062 47,945 39,828 The effects of the initial step-up of inventories and open contracts in the aggregate of $8.7 million recorded during the three months ended September 30, 2015 were excluded in the above amounts, and instead recorded for the nine months ended September 30, 2014, as if the acquisition had occurred on January 1, 2014. For the three months ended September 30, 2015, Aventine contributed $143.6 million in net revenues and $16.6 million in pre-tax loss. For the three and nine months ended September 30, 2015, the Company recorded approximately $0.1 million and $1.4 million, respectively, in costs associated with the Aventine acquisition. These costs are reflected in selling, general and administrative expenses on the Company’s consolidated statements of operations, but were excluded from the amounts above.

4. INVENTORIES

4. INVENTORIES	9 Months Ended
	Sep. 30, 2015
Inventory Disclosure [Abstract]
4. INVENTORIES	Inventories consisted primarily of bulk ethanol, corn, co-products 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): September 30, 2015 December 31, 2014 Finished goods $ 31,554 $ 11,118 Raw materials 8,213 2,695 Work in progress 7,055 3,274 Other 1,416 1,463 Total $ 48,238 $ 18,550

5. DERIVATIVES

5. DERIVATIVES	9 Months Ended
	Sep. 30, 2015
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 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 Commodity Risk – Non-Designated Hedges The classification and amounts of the Company’s derivatives not designated as hedging instruments are as follows (in thousands): As of September 30, 2015 Assets Liabilities Type of Instrument Balance Sheet Location Fair Value Balance Sheet Location Fair Value Commodity contracts Other current assets $ 1,012 Other current liabilities $ 2,026 $ 1,012 $ 2,026 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 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 Three Months Ended September 30, Type of Instrument Statements of Operations Location 2015 2014 Commodity contracts Cost of goods sold $ (251 ) $ (1,619 ) $ (251 ) $ (1,619 ) Unrealized Gains (Losses) Three Months Ended September 30, Type of Instrument Statements of Operations Location 2015 2014 Commodity contracts Cost of goods sold $ (824 ) $ 402 $ (824 ) $ 402 Realized Gains Nine Months Ended September 30, Type of Instrument Statements of Operations Location 2015 2014 Commodity contracts Cost of goods sold $ (101 ) $ (1,070 ) $ (101 ) $ (1,070 ) Unrealized Gains (Losses) Three Months Ended September 30, Type of Instrument Statements of Operations Location 2015 2014 Commodity contracts Cost of goods sold $ (1,451 ) $ 370 $ (1,451 ) $ 370

6. DEBT

6. DEBT	9 Months Ended
	Sep. 30, 2015
Debt Disclosure [Abstract]
6. DEBT	Long-term borrowings are summarized as follows (in thousands): September 30, 2015 December 31, 2014 Kinergy operating line of credit $ 47,137 $ 17,530 Term debt 162,622 17,003 209,759 34,533 Less unamortized discount (2,590 ) – Less short-term portion (17,003 ) – Long-term debt $ 190,166 $ 34,533 Kinergy Operating Line of Credit Effective, July 1, 2015, Kinergy amended its line of credit to: · Extend the term and maturity date of the credit facility from December 31, 2016 to December 31, 2020; · Increase the maximum credit under the credit facility from $30,000,000 to $75,000,000, with an “accordion” feature to further increase the maximum credit under the credit facility to up to $100,000,000 in minimum increments of $5,000,000 each, upon Kinergy’s request, but subject to the consent of the agent and the lenders in their sole discretion. · Increase the inventory loan limit under the credit facility from $12,500,000 to $40,000,000 and increase the letter of credit limit under the credit facility from $5,000,000 to $20,000,000; · Reduce the applicable margin to 1.75% to 2.75% depending on the quarterly average amounts available for borrowing and reduce the unused line fee under the credit facility to an annual rate equal to 0.25% to 0.375% depending on the average daily principal balance during the immediately preceding month; and · Delete the financial covenant concerning Kinergy’s earnings before interest, taxes, depreciation and amortization (“EBITDA”) but retained financial covenants concerning its fixed-charge coverage ratios. Pacific Ethanol West Plants’ Term Debt and Operating Lines of Credit All of the term loans and revolving credit facilities represent permanent financing and are secured by a perfected, first-priority security interest in all of the assets, including inventories and all rights, title and interest in all tangible and intangible assets, of the Pacific Ethanol West Plants. The creditors under the term loans and revolving credit facilities for the Pacific Ethanol West Plants do not have recourse to Pacific Ethanol, Inc. or any of its other direct or indirect subsidiaries. Pacific Ethanol Central Plants’ Term Debt The term loan facility matures on September 24, 2017. The term loan facility is secured through a first-priority lien on substantially all of the Pacific Ethanol Central Plants’ assets and contains customary financial covenants, including the requirement that Aventine maintain a cash balance of at least $2.0 million. Interest on the term loan facility accrues and may be paid in cash at a rate of 10.5% per annum or may be paid in-kind at a rate of 15.0% per annum by adding such interest to the outstanding principal balance. If the Company were to elect to pay interest in-kind, the interest would be capitalized at the end of each quarter. The Company paid interest in cash for the three months ended September 30, 2015. On July 1, 2015, the Company repaid in full $14.5 million, including approximately $0.7 million in termination fees, representing all amounts owed under Aventine’s revolving credit facility. At September 30, 2015, there were approximately $320.9 million of net assets of the Company’s subsidiaries that were not available to be transferred to the parent company in the form of dividends, loans or advances due to restrictions contained in the credit facilities of these subsidiaries.

7. PENSION AND RETIREMENT BENEF

7. PENSION AND RETIREMENT BENEFIT PLANS	9 Months Ended
	Sep. 30, 2015
Compensation and Retirement Disclosure [Abstract]
7. PENSION AND RETIREMENT BENEFIT PLANS	The Company, through its acquisition of Aventine, has assumed a defined benefit pension plan (the “Pension Plan”) and a health care and life insurance plan (the “Postretirement Plan”). The Pension Plan is noncontributory, and covers unionized employees at the Company’s Pekin, Illinois facility, who fulfill minimum age and service requirements. Benefits are based on a prescribed formula based upon the employee’s years of service. The Pension Plan, part of a collective bargaining agreement, covers only Union employees hired after November 1, 2010. The Company uses a December 31 measurement date for its Pension Plan. The Company’s funding policy is to make the minimum annual contributions that are required by applicable regulations. As of September 30, 2015, the Pension Plan’s accumulated projected benefit obligation was $18.0 million, with a fair value of plan assets of $13.2 million. The underfunded amount of $4.8 million is recorded on the Company’s consolidated balance sheet in other noncurrent liabilities. For the three months ended September 30, 2015, the Pension Plan’s net periodic expense was $24,000, comprised of $169,000 in interest cost and $106,000 in service cost, partially offset by a $251,000 expected return on plan assets. The Company expects approximately $0.5 million to be paid out of the Pension Plan for the remainder of 2015. The Postretirement Plan provides postretirement medical benefits and life insurance to certain “grandfathered” unionized employees. Employees hired after December 31, 2000 are not eligible to participate in the Postretirement Plan. The Postretirement Plan is contributory, with contributions required at the same rate as active employees. Benefit eligibility under the plan reduces at age 65 from a defined benefit to a defined collar cap based upon years of service. As of September 30, 2015, the Postretirement Plan’s accumulated projected benefit obligation was $3.7 million and is recorded on the Company’s consolidated balance sheet in other noncurrent liabilities. The Company’s funding policy is to make the minimum annual contributions that are required by applicable regulations. For the three months ended September 30, 2015, the Postretirement Plan’s net periodic expense was $49,000, comprised of $33,000 of interest cost and $16,000 of service cost. The Company expects approximately $0.1 million to be paid out of the Postretirement Plan for the remainder of 2015.

8. COMMON STOCK AND WARRANTS

8. COMMON STOCK AND WARRANTS	9 Months Ended
	Sep. 30, 2015
Stockholders' Equity Note [Abstract]
8. COMMON STOCK AND WARRANTS	Warrant Exercises During the three and nine months ended September 30, 2014, certain holders exercised warrants and received an aggregate of 3,095,000 and 5,942,000 shares of the Company’s common stock upon payment of an aggregate of $24,417,000 and $42,575,000 in cash, respectively. During the three and nine months ended September 30, 2014, the Company paid an aggregate of $1,471,000 and $2,271,000, respectively, in cash to certain warrant holders as an inducement to exercise their warrants and recorded an expense of $1,471,000 and $2,271,000, respectively. During the nine months ended September 30, 2014, certain warrant holders exercised warrants on a cashless basis and received 291,000 shares of the Company’s common stock. Grants of Stock

9. COMMITMENTS AND CONTINGENCIE

9. COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Sep. 30, 2015
Commitments and Contingencies Disclosure [Abstract]
9. COMMITMENTS AND CONTINGENCIES	Sales Commitments Purchase Commitments Litigation Pacific Ethanol, Inc., through a subsidiary acquired in its acquisition of Aventine, became involved in a pending lawsuit with Western Sugar Cooperative (“Western Sugar”) that pre-dated the Aventine acquisition. On February 27, 2015, Western Sugar filed a complaint in the United States District Court for the District of Colorado (Case No. 1:15-cv-00415) naming Aventine Renewable Energy, Inc. (“ARE, Inc.”), one of Aventine’s subsidiaries, as defendant. Western Sugar amended its complaint on April 21, 2015. ARE, Inc. purchased surplus sugar through a United States Department of Agriculture program. Western Sugar was one of the entities that warehoused this sugar for ARE, Inc. The suit alleges that ARE, Inc. breached its contract with Western Sugar by failing to pay certain penalty rates for the storage of its sugar or alternatively failing to pay a premium rate for storage. Western Sugar alleges that the penalty rates apply because ARE, Inc. failed to take timely delivery or otherwise cause timely shipment of the sugar. Western Sugar claims “expectation damages” in the amount of approximately $8.6 million. ARE, Inc. filed answers to Western Sugar’s complaint and amended complaint generally denying Western Sugar’s allegations and asserting various defenses. The case is currently in its discovery phase. The Company, through subsidiaries acquired in its acquisition of Aventine, became involved in various pending lawsuits with Aurora Cooperative Elevator Company (“Aurora Coop”) that pre-dated the Aventine acquisition. On July 26, 2015, the Company settled all outstanding litigation with Aurora Coop. The Company and Aurora Coop agreed to dismiss all lawsuits with prejudice with no admission of fault or liability by the parties, and to release the alleged option held by Aurora Coop to repurchase the land upon which the Company’s 110 million gallon ethanol production facility in Aurora, Nebraska is located (the “Aurora West Facility”). In addition, the parties agreed to terminate the grain supply, marketing and various other agreements between them or their subsidiaries. Under the terms of the settlement, the Company and Aurora Coop will each bear its own costs and fees associated with the lawsuits and the settlement. The Company and Aurora Coop agreed to continue to work together to amend or replace certain real property easements currently in place to ensure continued mutual access by both parties to a system of rails, rail switches, roads, electrical improvements, and utilities already constructed near the Aurora West Facility. 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 was conducted last month on that single issue as well as whether GS Cleantech’s behavior during prosecution of the patents renders this an exceptional case. The Company is awaiting the court’s decision. If the Defendants, including Pacific Ethanol, Inc., PE Stockton and PE Magic Valley, succeed in proving inequitable conduct, and that GS Cleantech’s behavior makes this an “exceptional case” such a finding 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 June 30, 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. The Company has evaluated the above cases as well as other pending cases. The Company currently has recognized $3.3 million as a litigation contingency liability with respect to these cases for amounts that were probable and estimable.

10. FAIR VALUE MEASUREMENTS

10. FAIR VALUE MEASUREMENTS	9 Months Ended
	Sep. 30, 2015
Fair Value Disclosures [Abstract]
10. 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 Significant assumptions used and related fair values for the warrants as of September 30, 2015 were as follows: Original Issuance Exercise Price Volatility Risk Free Interest Rate Term (years) Market Discount Warrants Outstanding Fair Value 07/3/2012 $ 6.09 50.0% 0.64% 1.76 25.3% 211,000 $ 355,000 12/13/2011 $ 8.43 46.7% 0.33% 1.21 20.0% 138,000 146,000 $ 501,000 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 Interest Rate Term (years) Market Discount Warrants Outstanding Fair Value 09/26/2012 $ 8.85 51.0% 0.19% 0.74 37.0% 473,000 $ 748,000 07/3/2012 $ 6.09 56.1% 0.89% 2.51 32.8% 211,000 811,000 12/13/2011 $ 8.43 54.3% 0.67% 1.95 28.7% 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 following table summarizes fair value measurements by level at September 30, 2015 (in thousands): Level 1 Level 2 Level 3 Total Assets: Commodity contracts (1) $ 1,012 $ – $ – $ 1,012 Total Assets $ 1,012 $ – $ – $ 1,012 Liabilities: Warrants (2) $ – $ – $ 501 $ 501 Commodity contracts (3) 2,026 – – 2,026 Total Liabilities $ 2,026 $ – $ 501 $ 2,527 __________ (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 (72 ) Expiration of warrants (527 ) Adjustments to fair value for the period (886 ) Balance, September 30, 2015 $ 501

11. EARNINGS PER SHARE

11. EARNINGS PER SHARE	9 Months Ended
	Sep. 30, 2015
Earnings Per Share [Abstract]
11. EARNINGS PER SHARE	The following tables compute basic and diluted earnings per share (in thousands, except per share data): Three Months Ended September 30, 2015 Income Numerator Shares Denominator Per-Share Amount Net loss attributed to Pacific Ethanol $ (14,663 ) Less: Preferred stock dividends (319 ) Basic and diluted loss per share: Loss available to common stockholders $ (14,982 ) 41,861 $ (0.36 ) Three Months Ended September 30, 2014 Income Numerator Shares Denominator Per-Share Amount Net income attributed to Pacific Ethanol $ 4,025 Less: Preferred stock dividends (319 ) Basic income per share: Income available to common stockholders $ 3,706 22,986 $ 0.16 Add: Warrants – 1,321 Diluted income per share: Income available to common stockholders $ 3,706 24,307 $ 0.15 Nine Months Ended September 30, 2015 Loss Numerator Shares Denominator Per-Share Amount Net loss attributed to Pacific Ethanol $ (18,033 ) Less: Preferred stock dividends (946 ) Basic and diluted loss per share: Loss available to common stockholders $ (18,979 ) 30,170 $ (0.63 ) Nine Months Ended September 30, 2014 Income Numerator Shares Denominator Per-Share Amount Net income attributed to Pacific Ethanol $ 8,771 Less: Preferred stock dividends (946 ) Basic income per share: Income available to common stockholders $ 7,825 19,713 $ 0.40 Add: Warrants – 2,360 Diluted income per share: Income available to common stockholders $ 7,825 22,073 $ 0.35 There were an aggregate of 897,000 and 786,000 potentially dilutive weighted-average shares from the Company’s warrants and shares of Series B Cumulative Convertible Preferred Stock outstanding for the three and nine months ended September 30, 2015, respectively. These convertible securities were not considered in calculating diluted net income (loss) per share for the three and nine months ended September 30, 2015, as their effect would have been anti-dilutive.

1. ORGANIZATION AND BASIS OF 17

1. ORGANIZATION AND BASIS OF PRESENTATION (Policies)	9 Months Ended
	Sep. 30, 2015
Accounting Policies [Abstract]
Organization and Business	Organization and Business The Company is a leading producer and marketer of low-carbon renewable fuels in the United States. The Company’s four ethanol plants in the Western United States (together with their respective holding companies, the “Pacific Ethanol West Plants”) are located in close proximity to both feed and ethanol customers and thus enjoy unique advantages in efficiency, logistics and product pricing. These plants produce among the lowest-carbon ethanol produced in the United States due to low energy use in production. With the addition of four Midwestern ethanol plants in July 2015 as a result of the Company’s acquisition of Aventine, the Company now has a combined ethanol production capacity of 515 million gallons per year, markets, on an annualized basis, over 800 million gallons of ethanol and produces, on an annualized basis, over 1 million tons of co-products such as wet and dry distillers grains, wet and dry corn gluten feed, condensed distillers solubles, corn gluten meal, corn germ, distillers yeast and CO 2
Accounts Receivable and Allowance for Doubtful Accounts	Accounts Receivable and Allowance for Doubtful Accounts 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 $35,541,000 and $28,475,000 at September 30, 2015 and December 31, 2014, respectively, were used as collateral under Kinergy’s operating line of credit. The allowance for doubtful accounts was $21,700 and $6,000 as of September 30, 2015 and December 31, 2014, respectively. The Company recorded bad debt recoveries of $360,000 and $357,000 for the three and nine months ended September 30, 2015, respectively, and bad debt recoveries of $6,000 and $40,000 for the three and nine months ended September 30, 2014, respectively. The Company does not have any off-balance sheet credit exposure related to its customers.
Employment-related Benefits	Employment-related Benefits
Provision for Income Taxes	Provision for Income Taxes The resulting effective tax rates for the three months ended September 30, 2015 and 2014 were 21.1% and 40.0% of pre-tax income, respectively. The resulting effective tax rates for the nine months ended September 30, 2015 and 2014 were 25.2% and 51.4% of pre-tax income, respectively.
Recent Accounting Pronouncements	Recent Accounting Pronouncements 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. In July 2015, the FASB issued new guidance on simplifying the measurement of inventory. Under the new guidance, entities are required to measure most inventory at the lower of cost and net realizable value, thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. This guidance is effective prospectively for fiscal years beginning after December 15, 2016. Early adoption is permitted. The Company has adopted the guidance with no material impact on its results of operations or financial condition. In September 2015, the FASB issued new guidance on simplifying the accounting for measurement-period adjustments. Under the new guidance, an acquirer must recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The guidance also requires acquirers to present separately on the face of the statement of operations or disclose in the notes, the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The guidance is effective for fiscal years beginning after December 31, 2015, applied prospectively. Early adoption is permitted. The Company will consider early adoption in future periods related to its current measurement period for its acquisition of Aventine.
Basis of Presentation-Interim Financial Statements	Basis of Presentation – Interim Financial Statements 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 assets acquired and liabilities assumed from the acquisition of Aventine, warrants and conversion features, pension and postretirement benefit plan obligations, 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. ACQUISITION OF AVENTINE (Tab

3. ACQUISITION OF AVENTINE (Tables)	9 Months Ended
	Sep. 30, 2015
Business Combinations [Abstract]
Acquisition purchase price consideration	Cash and cash equivalents $ 18,756 Accounts receivable 10,430 Inventory 29,483 Other current assets 10,480 Total current assets 69,149 Property and equipment 312,781 Net deferred tax assets 10,021 Other assets 750 Total assets acquired $ 392,701 Accounts payable and accrued liabilities $ 27,233 Long-term debt - revolvers 13,721 Long-term debt - term debt 142,744 Pension plan liabilities 8,518 Other non-current liabilities 25,913 Total liabilities assumed $ 218,129 Net assets acquired $ 174,572 Estimated goodwill $ – Total purchase price $ 174,572
Unaudited pro forma information on acquisition	Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Net sales – pro forma $ 380,622 $ 429,373 $ 1,107,919 $ 1,267,853 Cost of goods sold – pro forma $ 379,302 $ 400,260 $ 1,102,278 $ 1,137,410 Selling, general and administrative expenses – pro forma $ 7,346 $ 8,892 $ 29,144 $ 24,568 Net income (loss) – pro forma $ (6,182 ) $ (117 ) $ (34,226 ) $ 4,400 Diluted net income (loss) per share – pro forma $ (0.15 ) $ (0.00 ) $ (0.71 ) $ 0.11 Diluted weighted-average shares – pro forma 41,861 42,062 47,945 39,828

4. INVENTORIES (Tables)

4. INVENTORIES (Tables)	9 Months Ended
	Sep. 30, 2015
Inventory Disclosure [Abstract]
Inventories	September 30, 2015 December 31, 2014 Finished goods $ 31,554 $ 11,118 Raw materials 8,213 2,695 Work in progress 7,055 3,274 Other 1,416 1,463 Total $ 48,238 $ 18,550

5. DERIVATIVES (Tables)

5. DERIVATIVES (Tables)	9 Months Ended
	Sep. 30, 2015
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Derivatives not designated as hedging instruments	The classification and amounts of the Company’s derivatives not designated as hedging instruments are as follows (in thousands): As of September 30, 2015 Assets Liabilities Type of Instrument Balance Sheet Location Fair Value Balance Sheet Location Fair Value Commodity contracts Other current assets $ 1,012 Other current liabilities $ 2,026 $ 1,012 $ 2,026 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
Recognized gains (losses) for 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 Three Months Ended September 30, Type of Instrument Statements of Operations Location 2015 2014 Commodity contracts Cost of goods sold $ (251 ) $ (1,619 ) $ (251 ) $ (1,619 ) Unrealized Gains (Losses) Three Months Ended September 30, Type of Instrument Statements of Operations Location 2015 2014 Commodity contracts Cost of goods sold $ (824 ) $ 402 $ (824 ) $ 402 Realized Gains Nine Months Ended September 30, Type of Instrument Statements of Operations Location 2015 2014 Commodity contracts Cost of goods sold $ (101 ) $ (1,070 ) $ (101 ) $ (1,070 ) Unrealized Gains (Losses) Three Months Ended September 30, Type of Instrument Statements of Operations Location 2015 2014 Commodity contracts Cost of goods sold $ (1,451 ) $ 370 $ (1,451 ) $ 370

6. DEBT (Tables)

6. DEBT (Tables)	9 Months Ended
	Sep. 30, 2015
Debt Disclosure [Abstract]
Long Term Debt	September 30, 2015 December 31, 2014 Kinergy operating line of credit $ 47,137 $ 17,530 Term debt 162,622 17,003 209,759 34,533 Less unamortized discount (2,590 ) – Less short-term portion (17,003 ) – Long-term debt $ 190,166 $ 34,533

10. FAIR VALUE MEASUREMENTS (Ta

10. FAIR VALUE MEASUREMENTS (Tables)	9 Months Ended
	Sep. 30, 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 September 30, 2015 were as follows: Original Issuance Exercise Price Volatility Risk Free Interest Rate Term (years) Market Discount Warrants Outstanding Fair Value 07/3/2012 $ 6.09 50.0% 0.64% 1.76 25.3% 211,000 $ 355,000 12/13/2011 $ 8.43 46.7% 0.33% 1.21 20.0% 138,000 146,000 $ 501,000 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 Interest Rate Term (years) Market Discount Warrants Outstanding Fair Value 09/26/2012 $ 8.85 51.0% 0.19% 0.74 37.0% 473,000 $ 748,000 07/3/2012 $ 6.09 56.1% 0.89% 2.51 32.8% 211,000 811,000 12/13/2011 $ 8.43 54.3% 0.67% 1.95 28.7% 138,000 427,000 $ 1,986,000
Summary of fair value measurements by level	The following table summarizes fair value measurements by level at September 30, 2015 (in thousands): Level 1 Level 2 Level 3 Total Assets: Commodity contracts (1) $ 1,012 $ – $ – $ 1,012 Total Assets $ 1,012 $ – $ – $ 1,012 Liabilities: Warrants (2) $ – $ – $ 501 $ 501 Commodity contracts (3) 2,026 – – 2,026 Total Liabilities $ 2,026 $ – $ 501 $ 2,527 __________ (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	Balance, December 31, 2014 $ 1,986 Exercises of warrants (72 ) Expiration of warrants (527 ) Adjustments to fair value for the period (886 ) Balance, September 30, 2015 $ 501

11. EARNINGS PER SHARE (Tables)

11. EARNINGS PER SHARE (Tables)	9 Months Ended
	Sep. 30, 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 September 30, 2015 Income Numerator Shares Denominator Per-Share Amount Net loss attributed to Pacific Ethanol $ (14,663 ) Less: Preferred stock dividends (319 ) Basic and diluted loss per share: Loss available to common stockholders $ (14,982 ) 41,861 $ (0.36 ) Three Months Ended September 30, 2014 Income Numerator Shares Denominator Per-Share Amount Net income attributed to Pacific Ethanol $ 4,025 Less: Preferred stock dividends (319 ) Basic income per share: Income available to common stockholders $ 3,706 22,986 $ 0.16 Add: Warrants – 1,321 Diluted income per share: Income available to common stockholders $ 3,706 24,307 $ 0.15 Nine Months Ended September 30, 2015 Loss Numerator Shares Denominator Per-Share Amount Net loss attributed to Pacific Ethanol $ (18,033 ) Less: Preferred stock dividends (946 ) Basic and diluted loss per share: Loss available to common stockholders $ (18,979 ) 30,170 $ (0.63 ) Nine Months Ended September 30, 2014 Income Numerator Shares Denominator Per-Share Amount Net income attributed to Pacific Ethanol $ 8,771 Less: Preferred stock dividends (946 ) Basic income per share: Income available to common stockholders $ 7,825 19,713 $ 0.40 Add: Warrants – 2,360 Diluted income per share: Income available to common stockholders $ 7,825 22,073 $ 0.35

1. ORGANIZATION AND BASIS OF 24

1. ORGANIZATION AND BASIS OF PRESENTATION (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Ethanol production capacity per year			515 million gallons per year
Ethanol market capacity per year			800 million gallons annualized
Other products produced per year			over 1 million tons of co-products annualized
Accounts receivable used as collateral	$ 35,541,000		$ 35,541,000		$ 28,475,000
Allowance for doubtful accounts	21,700		21,700		$ 6,000
Bad debt recovery (expense)	360,000	$ 6,000	(357,000)	$ (40,000)
Tax benefit related to adjustments to tax asset valuation from a prior period	$ 1,500,000		$ 1,500,000
Effective tax rates	21.10%	40.00%	25.20%	51.40%

2. PACIFIC ETHANOL WEST PLANTS

2. PACIFIC ETHANOL WEST PLANTS (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Loss attributed to noncontrolling interest	$ 0	$ 723	$ (87)	$ 4,126
PE Op Co
Noncontrolling interest	$ 0		0		$ 4,475
Purchase of ownership interest			3,828
Reduction of noncontrolling interest			4,388
Loss attributed to noncontrolling interest			$ (87)

3. ACQUISITION OF AVENTINE (Det

3. ACQUISITION OF AVENTINE (Details - Purchase allocation) $ in Thousands	9 Months Ended
	Sep. 30, 2015USD ($)
Cash and equivalents	$ 18,756
Accounts receivables	10,430
Inventory	29,483
Other current assets	10,480
Property and equipment	312,781
Net deferred tax assets	10,021
Other assets	750
Accounts payable and accrued liabilities	27,233
Long-term debt - revolvers	13,721
Long-term debt - term debt	142,744
Pension plan liabilties	8,518
Other non-current liabilities	25,913
Net assets acquired	174,472
Aventine
Cash and equivalents	18,756
Accounts receivables	10,430
Inventory	29,483
Other current assets	10,480
Total current assets	69,149
Property and equipment	312,781
Net deferred tax assets	10,021
Other assets	750
Total assets acquired	392,701
Accounts payable and accrued liabilities	27,233
Long-term debt - revolvers	13,721
Long-term debt - term debt	142,744
Pension plan liabilties	8,518
Other non-current liabilities	25,913
Total liabilities assumed	218,129
Net assets acquired	174,572
Estimated goodwill	0
Total purchase price	$ 174,572

3. ACQUISITION OF AVENTINE (D27

3. ACQUISITION OF AVENTINE (Details - Pro forma) - Aventine - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Net sales - pro forma	$ 380,622	$ 429,373	$ 1,107,919	$ 1,267,853
Cost of goods sold - pro forma	379,302	400,260	1,102,278	1,137,410
Selling, general and administrative expenses - pro forma	7,346	8,892	29,144	24,568
Net income (loss) - pro forma	$ (6,182)	$ (117)	$ (34,226)	$ 4,400
Diluted net income (loss) per share - pro forma	$ (.15)	$ 0	$ (.71)	$ .11
Diluted weighted-average shares - pro forma	41,861,000	42,062,000	47,945,000	39,828,000

3. ACQUISITION OF AVENTINE (D28

3. ACQUISITION OF AVENTINE (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Stock issued for acquisition, value			$ 174,572
Ethanol production capacity per year			515 million gallons per year
Ethanol market capacity per year			800 million gallons annualized
Other noncurrent liabilities acquired	$ 25,913		$ 25,913
Net revenues from noncontrolling interest	0	$ 723	(87)	$ 4,126
Pre-tax loss attributed by Aventine	(18,588)	7,911	(24,215)	26,526
Costs associated with acquisition	$ 7,446	$ 4,392	$ 16,344	$ 12,377
Aventine
Stock issued for acquisition, shares issued	17,800,000		17,800,000
Stock issued for acquisition, value	$ 174,600		$ 174,600
Ethanol production capacity per year			515 million gallons per year
Ethanol market capacity per year			800 million gallons annualized
Accounts receivable acquired gross	10,800		$ 10,800
Uncollectible accounts receivable from acquisition	400		400
Other noncurrent liabilities acquired	25,913		25,913
Net revenues from noncontrolling interest	143,600		143,600
Pre-tax loss attributed by Aventine	(16,600)		(16,600)
Costs associated with acquisition	100		1,400
Aventine | Litigation Contingencies
Other noncurrent liabilities acquired	3,700		3,700
Ligitation contingency paid	$ 400		$ 400

4. INVENTORIES (Details)

4. INVENTORIES (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Inventory balances
Finished goods	$ 31,554	$ 11,118
Raw materials	8,213	2,695
Work in progress	7,055	3,274
Other	1,416	1,463
Total	$ 48,238	$ 18,550

5. DERIVATIVES (Details - deriv

5. DERIVATIVES (Details - derivatives) - Commodity Contract [Member] - Not Designated as Hedging Instrument [Member] - USD ($)	Sep. 30, 2015	Dec. 31, 2014
Commodity contracts, Other current assets	$ 1,012	$ 1,586
Commodity contracts, Other current liabilities	$ 2,026	$ 1,149

5. DERIVATIVES (Details - Recog

5. DERIVATIVES (Details - Recognized gains (losses)) - Commodity contracts [Member] - Non Designated Derivative Instruments [Member] - Cost of goods sold [Member] - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Derivative Instruments, Gain (Loss) [Line Items]
Realized Gains (Losses)	$ (251)	$ (1,619)	$ (101)	$ (1,070)
Unrealized Gains (Losses)	$ (824)	$ 402	$ (1,451)	$ 370

6. DEBT (Details - Long term bo

6. DEBT (Details - Long term borrowings) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Long-term borrowings are summarized as follows
Line of credit	$ 47,137	$ 17,530
Term debt	162,622	17,003
Total debt	209,759	34,533
Less unamortized discount	(2,590)	0
Less short-term portion	(17,003)	0
Long-term debt	$ 190,166	$ 34,533

6. DEBT (Details Narrative)

6. DEBT (Details Narrative) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Line of credit balance	$ 47,137	$ 17,530
Term debt	162,622	$ 17,003
Aventine
Payments on line of credit	14,500
Termination fees	700
Kinergy [Member]
Line of credit balance	47,137
Available borrowing base	4,576
Maximum borrowing base	$ 75,000
Maturity date	Dec. 31, 2020
Kinergy [Member] | Inventory loan [Member]
Maximum borrowing base	$ 40,000
Kinergy [Member] | Letter of Credit [Member]
Maximum borrowing base	20,000
Plant Owners
Maximum borrowing base	19,473
Plant Owners | West Plants
Line of credit balance	0
Term debt	17,003
Available borrowing base	19,473
Plant Owners | Central Plants
Term debt	$ 145,619
Maturity date	Sep. 24, 2017

7. PENSION AND RETIREMENT BEN34

7. PENSION AND RETIREMENT BENEFITS (Details Narrative) $ in Thousands	3 Months Ended
	Sep. 30, 2015USD ($)
Pension Plan [Member]
Accumulated projected benefit obligation	$ 18,000
Plan assets fair value	13,200
Underfunded amount	4,800
Net periodic expense	24
Expected payout remainder of fiscal year	500
Postretirement Plan [Member]
Accumulated projected benefit obligation	3,700
Net periodic expense	49
Expected payout remainder of fiscal year	$ 100

8. COMMON STOCK AND WARRANTS (D

8. COMMON STOCK AND WARRANTS (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Warrants exercised, shares received	0	3,095,000	42,000	5,942,000
Warrants exercised, cash received	$ 0	$ 24,417	$ 368	$ 42,656
Warrants expired unexercised, shares	432,000
Warrants outstanding	349,000		349,000
Warrants outstanding, average exercise price	$ 7.02		$ 7.02
Cash inducements paid		$ 1,471		$ 2,271
Warrants exercised on a cashless basis				291,000
Restricted Stock [Member]
Unrecognized costs related to nonvested restricted stock	$ 4,400		$ 4,400
Weighted average period			2 years 6 months
Restricted Stock [Member] | August 2015
Restricted stock granted			5,000
Grant date fair value			$ 7.03
Restricted Stock [Member] | July 2015
Restricted stock granted			67,000
Grant date fair value			$ 9.83
Restricted Stock [Member] | June 2015
Restricted stock granted			41,000
Grant date fair value			$ 10.87
Restricted Stock [Member] | March 2015
Restricted stock granted			194,000
Grant date fair value			$ 10.20

9. COMMITMENTS AND CONTINGENC36

9. COMMITMENTS AND CONTINGENCIES (Details Narrative) $ in Thousands	9 Months Ended
	Sep. 30, 2015USD ($)
Litigation contingency liability	$ 3,300
Corn contract
Purchase commitments	10,625
Ethanol [Member]
Purchase commitments	$ 7,749
Indexed-price purchase contracts	23,892,000 gallons
Ethanol contracts
Sales commitments	$ 6,953
Indexed-price contracts to sell	176,108,000 gallons
Co-Products [Member]
Sales commitments	$ 18,778
Indexed-price contracts to sell	13,000 tons

10. FAIR VALUE MEASUREMENTS (De

10. FAIR VALUE MEASUREMENTS (Details-Significant Assumptions and Fair Value) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Significant assumptions used in the valuations
Warrants Outstanding	349,000
Fair value (in dollars)	$ 501	$ 1,986
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
Original issuance 7/3/2012
Significant assumptions used in the valuations
Exercise price	$ 6.09	$ 6.09
Volatility	50.00%	56.10%
Risk free interest rate	0.64%	0.89%
Term (years)	1 year 9 months 4 days	2 years 6 months 4 days
Discount for Marketability restrictions	25.30%	32.80%
Warrants Outstanding	211,000	211,000
Fair value (in dollars)	$ 355	$ 811
Original issuance 12/13/2011
Significant assumptions used in the valuations
Exercise price	$ 8.43	$ 8.43
Volatility	46.70%	54.30%
Risk free interest rate	0.33%	0.67%
Term (years)	1 year 2 months 16 days	1 year 11 months 12 days
Discount for Marketability restrictions	20.00%	28.70%
Warrants Outstanding	138,000	138,000
Fair value (in dollars)	$ 146	$ 427

10. FAIR VALUE MEASUREMENTS (38

10. FAIR VALUE MEASUREMENTS (Details-Fair value measurements) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Assets:
Assets	$ 1,012	$ 1,586
Liabilities:
Liabilities	2,527	3,135
Commodity contracts [Member]
Assets:
Assets	1,012	1,586
Liabilities:
Liabilities	2,026	1,149
Warrants [Member]
Liabilities:
Liabilities	501	1,986
Level 1 [Member]
Assets:
Assets	1,012	1,586
Liabilities:
Liabilities	2,026	1,149
Level 1 [Member] | Commodity contracts [Member]
Assets:
Assets	1,012	1,586
Liabilities:
Liabilities	2,026	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	501	1,986
Level 3 [Member] | Commodity contracts [Member]
Assets:
Assets	0	0
Liabilities:
Liabilities	0	0
Level 3 [Member] | Warrants [Member]
Liabilities:
Liabilities	$ 501	$ 1,986

10. FAIR VALUE MEASUREMENTS (39

10. FAIR VALUE MEASUREMENTS (Details-Level 3) - Level 3 [Member] - Warrants [Member] $ in Thousands	9 Months Ended
	Sep. 30, 2015USD ($)
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning Balance	$ 1,986
Exercises of warrants	(72)
Expiration of warrants	(527)
Adjustments to fair value for the period	(886)
Ending Balance	$ 501

11. EARNINGS PER SHARE (Details

11. EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Loss Numerator
Net income (loss) attributed to Pacific Ethanol, Inc.	$ (14,663)	$ 4,025	$ (18,033)	$ 8,771
Less: Preferred stock dividends	(319)	(319)	(946)	(946)
Basic income (loss) per share:
Income (loss) available to common stockholders	$ (14,982)	$ 3,706	$ (18,979)	$ 7,825
Shares available to common stockholders	41,861	22,986	30,170	19,713
Add: Warrants		1,321		2,360
Diluted shares available to common stockholders	41,861	24,307	30,170	22,073
Income available to common stockholders, per share basic	$ (.36)	$ .16	$ (.63)	$ .40
Income available to common stockholders, per share diluted	$ (.36)	$ .15	$ (.63)	$ .35

11. EARNINGS PER SHARE (Detai41

11. EARNINGS PER SHARE (Details Narrative) - shares	3 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2015
Dilutive securities
Potentially dilutive weighted-average shares from convertible securities not considered in calculation of diluted shares	897,000	786,000