Alto Ingredients (ALTO) 10-Q 8 Nov 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 08, 2016
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, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		39,634,084
Trading Symbol	PEIX
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2,016

Consolidated Balance Sheets (Un

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Current Assets:
Cash and cash equivalents	$ 40,639	$ 52,712
Accounts receivable, net (net of allowance for doubtful accounts of $350 and $25, respectively)	68,824	61,346
Inventories	64,988	60,820
Prepaid inventory	7,630	5,973
Income tax receivables	6,114	10,654
Derivative Instruments	3,242	2,081
Other current assets	5,781	4,356
Total current assets	197,218	197,942
Property and equipment, net	452,478	464,960
Other Assets:
Intangible assets, net	2,678	2,678
Other assets	4,752	9,100
Total other assets	7,430	11,778
Total Assets	657,126	674,680
Current Liabilities:
Accounts payable - trade	26,790	30,520
Accrued liabilities	15,107	10,072
Current portion - capital leases	4,525	4,248
Current portion - long-term debt	153,701	17,003
Derivative instruments	3,492	1,848
Accrued PE Op Co. purchase	3,828	3,828
Other current liabilities	5,656	5,390
Total current liabilities	213,099	72,909
Long-term debt, net of current portion	63,552	203,861
Capital leases, net of current portion	754	4,183
Warrant liabilities at fair value	326	273
Deferred tax liabilities	1,174	1,174
Other liabilities	17,739	20,736
Total Liabilities	296,644	303,136
Commitments and Contingencies (Note 7)
Pacific Ethanol, Inc. Stockholders' Equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized	1	1
Common stock, $0.001 par value; 300,000,000 shares authorized; 39,634,084 and 38,974,972 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively	40	39
Non-voting common stock, $0.001 par value; 3,553,000 shares authorized; 3,540,132 shares issued and outstanding as of September 30, 2016 and December 31, 2015	4	4
Additional paid-in capital	904,387	902,843
Accumulated other comprehensive income	1,040	1,040
Accumulated deficit	(544,990)	(532,383)
Total Stockholders' Equity	360,482	371,544
Total Liabilities and Stockholders' Equity	$ 657,126	$ 674,680

Consolidated Balance Sheets (U3

Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Accounts receivable, net of allowance	$ 350	$ 25
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Liquidation preference	$ 18,075
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	39,634,084	38,974,972
Common stock, shares outstanding	39,634,084	38,974,972
Nonvoting Common Stock [Member]
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	3,553,000	3,553,000
Common stock, shares issued	3,540,132	3,540,132
Common stock, shares outstanding	3,540,132	3,540,132
Series A Preferred Stock [Member]
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 [Member]
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

Consolidated Statements of Oper

Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Statement [Abstract]
Net sales	$ 417,806	$ 380,622	$ 1,183,039	$ 814,419
Cost of goods sold	411,442	388,002	1,157,902	816,532
Gross profit (loss)	6,364	(7,380)	25,137	(2,113)
Selling, general and administrative expenses	5,971	7,446	20,436	16,344
Income (loss) from operations	393	(14,826)	4,701	(18,457)
Fair value adjustments	(69)	1,202	(53)	1,413
Interest expense, net	(3,874)	(5,167)	(16,643)	(7,187)
Other income, net	32	203	92	16
Loss before provision (benefit) for income taxes	(3,518)	(18,588)	(11,903)	(24,215)
Provision (benefit) for income taxes	0	(3,925)	(245)	(6,095)
Consolidated net loss	(3,518)	(14,663)	(11,658)	(18,120)
Net loss attributed to noncontrolling interests	0	0	0	87
Net loss attributed to Pacific Ethanol, Inc.	(3,518)	(14,663)	(11,658)	(18,033)
Preferred stock dividends	(319)	(319)	(949)	(946)
Net loss available to common stockholders	$ (3,837)	$ (14,982)	$ (12,607)	$ (18,979)
Net loss per share, basic and diluted	$ (0.09)	$ (0.36)	$ (0.30)	$ (0.63)
Weighted-average shares outstanding, basic and diluted	42,226	41,861	42,156	30,170

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Operating Activities:
Consolidated net loss	$ (11,658)	$ (18,120)
Adjustments to reconcile consolidated net loss to net cash provided by (used in) operating activities:
Depreciation and amortization of intangibles	26,526	15,103
Interest expense added to term debt	9,451	0
Deferred income taxes	0	(120)
Fair value adjustments	53	(1,413)
Amortization of debt discount	930	383
Amortization of deferred financing fees	97	178
Non-cash compensation	1,888	1,465
Loss (gain) on derivative instruments	(1,669)	1,552
Bad debt expense (recoveries)	325	(357)
Changes in operating assets and liabilities:
Accounts receivable	(7,803)	(5,980)
Inventories	(4,168)	(205)
Prepaid expenses and other assets	5,503	(1,399)
Prepaid inventory	(1,657)	495
Accounts payable and accrued expenses	(2,789)	(9,020)
Net cash provided by (used in) operating activities	15,029	(17,438)
Investing Activities:
Additions to property and equipment	(14,045)	(17,680)
Net cash from Aventine acquisition	0	18,756
Proceeds from (purchases of) cash collateralized letters of credit	4,113	(4,574)
Net cash used in investing activities	(9,932)	(3,498)
Financing Activities:
Net proceeds from Kinergy's line of credit	2,913	29,718
Proceeds from assessment financing	1,020	0
Principal payments on borrowings	(17,003)	(13,833)
Payments on capital leases	(3,151)	(3,399)
Proceeds from exercise of warrants	0	368
Preferred stock dividends paid	(949)	(946)
Net cash provided by (used in) financing activities	(17,170)	11,908
Net decrease in cash and cash equivalents	(12,073)	(9,028)
Cash and cash equivalents at beginning of period	52,712	62,084
Cash and cash equivalents at end of period	40,639	53,056
Supplemental Information:
Interest paid	7,256	6,043
Income tax refunds received	4,784	0
Noncash financing and investing activities
Reclass of warrant liability to equity upon warrant exercises	0	72
Reclass of noncontrolling interests to APIC upon acquisitions of ownership positions in PE Op Co.	0	560
Accrued payment for ownership positions in PE Op Co.	$ 0	$ 3,828

1. Organization and Basis of Pr

1. Organization and Basis of Presentation	9 Months Ended
	Sep. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Basis of Presentation	Organization and Business The Company’s acquisition of Aventine Renewable Energy Holdings, Inc. (now, Pacific Ethanol Central, LLC, a Delaware limited liability company, “Aventine”) was consummated on July 1, 2015, and as a result, the Company’s accompanying consolidated financial statements do not include the results of Aventine for the six months ended June 30, 2015. 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 over 800 million gallons of ethanol, on an annualized basis, and produces over one 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 $54,966,000 and $42,049,000 at September 30, 2016 and December 31, 2015, respectively, were used as collateral under Kinergy’s operating line of credit. The allowance for doubtful accounts was $350,000 and $25,000 as of September 30, 2016 and December 31, 2015, respectively. The Company recorded a bad debt expense of $39,000 and $325,000 for the three and nine months ended September 30, 2016, respectively, and bad debt recoveries of $360,000 and $357,000 for the three and nine months ended September 30, 2015, respectively. The Company does not have any off-balance sheet credit exposure related to its customers. Provision for Income Taxes Financial Instruments Reclassifications Recent Accounting Pronouncements In May 2014, the FASB issued new guidance on the recognition of revenue. The guidance states that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard 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. In March and April 2016, the FASB issued further revenue recognition guidance amending principal vs. agent considerations whether 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 and services. The Company is currently evaluating the impact of the adoption of this accounting standard update on its consolidated results of operations and 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 adopt the guidance as to future acquisitions. In April 2016, the FASB issued new guidance to reduce the complexity of certain aspects of accounting for employee share-based payment transactions. Currently, accruals of compensation costs are based on an estimated forfeiture rate. The new guidance allows an entity to make an entity-wide accounting policy election to either continue using an estimate of forfeitures or account for forfeitures only when they occur. The guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company is currently evaluating the impact of the guidance on its consolidated results of operations and financial condition. 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 have been 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. On January 1, 2016, the Company adopted this guidance for all periods presented on the consolidated balance sheets. The impact of the adoption was a reclassification of other assets to long-term debt, net of current portion of $364,000 and $462,000 as of September 30, 2016 and December 31, 2015, respectively. Basis of Presentation – Interim Financial Statements Use of Estimates

2. Segments

2. Segments	9 Months Ended
	Sep. 30, 2016
Segment Reporting [Abstract]
Segments	The Company reports its financial and operating performance in two segments: (1) ethanol production, which includes the production and sale of ethanol and co-products, with all eight of the Company’s production facilities aggregated, and (2) marketing and distribution, which includes marketing and merchant trading for Company-produced ethanol and co-products and third-party ethanol. The following tables set forth certain financial data for the Company’s operating segments (in thousands): Three Months Ended Nine Months Ended 2016 2015 2016 2015 Net Sales Ethanol Production: Net sales to external customers $ 266,299 $ 248,158 $ 767,171 $ 456,114 Intersegment net sales 306 251 829 336 Total production segment net sales 266,605 248,409 768,000 456,450 Marketing and distribution: Net sales to external customers 151,507 132,464 415,868 358,304 Intersegment net sales 2,018 1,792 5,861 3,364 Total marketing and distribution net sales 153,525 134,256 421,729 361,668 Intersegment eliminations (2,324 ) (2,043 ) (6,690 ) (3,699 ) Net sales as reported $ 417,806 $ 380,622 $ 1,183,039 $ 814,419 Cost of goods sold: Ethanol production $ 262,964 $ 261,069 $ 759,210 $ 468,229 Marketing and distribution 153,406 130,756 412,225 357,337 Intersegment eliminations (4,928 ) (3,823 ) (13,533 ) (9,034 ) Cost of goods sold as reported $ 411,442 $ 388,002 $ 1,157,902 $ 816,532 Income (loss) before provision for income taxes: Ethanol production $ (2,903 ) $ (22,154 ) $ (19,171 ) $ (26,352 ) Marketing and distribution (1,524 ) 1,970 4,654 (161 ) Corporate activities 909 1,596 2,614 2,298 $ (3,518 ) $ (18,588 ) $ (11,903 ) $ (24,215 ) Depreciation and amortization: Ethanol production $ 8,631 $ 8,195 $ 25,839 $ 14,585 Marketing and distribution – 5 3 147 Corporate activities 226 155 684 371 $ 8,857 $ 8,355 $ 26,526 $ 15,103 Interest expense: Ethanol production $ 3,521 $ 4,987 $ 15,600 $ 6,831 Marketing and distribution 353 180 1,043 356 Corporate activities – – – – $ 3,874 $ 5,167 $ 16,643 $ 7,187 The following table sets forth the Company’s total assets by operating segment (in thousands): September 30, 2016 December 31, 2015 Total assets: Ethanol production $ 512,285 $ 536,013 Marketing and distribution 128,895 107,069 Corporate assets 15,946 31,598 $ 657,126 $ 674,680

3. Inventories

3. Inventories	9 Months Ended
	Sep. 30, 2016
Inventory Disclosure [Abstract]
Inventories	Inventories consisted primarily of bulk ethanol, corn, co-products, Low-Carbon Fuel Standard (“LCFS”) credits and unleaded fuel, and are valued at the lower-of-cost-or-net realizable value, with cost determined on a first-in, first-out basis. Inventory balances consisted of the following (in thousands): September 30, 2016 December 31, 2015 Finished goods $ 35,410 $ 31,153 LCFS credits 11,532 6,957 Raw materials 9,848 9,891 Work in progress 6,481 11,121 Other 1,717 1,698 Total $ 64,988 $ 60,820

4. Derivatives

4. Derivatives	9 Months Ended
	Sep. 30, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Derivatives	The business and activities of the Company expose it to a variety of market risks, including risks related to changes in commodity prices. The Company monitors and manages these financial exposures as an integral part of its risk management program. This program recognizes the unpredictability of financial markets and seeks to reduce the potentially adverse effects that market volatility could have on operating results. Commodity Risk – Cash Flow Hedges Commodity Risk – Non-Designated Hedges Non Designated Derivative Instruments As of September 30, 2016 Assets Liabilities Type of Instrument Balance Sheet Location Fair Balance Sheet Location Fair Commodity contracts Derivative instruments $ 3,242 Derivative instruments $ 3,492 $ 3,242 $ 3,492 As of December 31, 2015 Assets Liabilities Type of Instrument Balance Sheet Location Fair Balance Sheet Location Fair Commodity contracts Derivative instruments $ 2,081 Derivative instruments $ 1,848 $ 2,081 $ 1,848 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 September 30, Type of Instrument Statements of Operations Location 2016 2015 Commodity contracts Cost of goods sold $ 2,242 $ (251 ) $ 2,242 $ (251 ) Unrealized Losses Three Months Ended September 30, Type of Instrument Statements of Operations Location 2016 2015 Commodity contracts Cost of goods sold $ (1,383 ) $ (824 ) $ (1,383 ) $ (824 ) Realized Gains (Losses) Nine Months Ended September 30, Type of Instrument Statements of Operations Location 2016 2015 Commodity contracts Cost of goods sold $ 2,152 $ (101 ) $ 2,152 $ (101 ) Unrealized Losses Nine Months Ended September 30, Type of Instrument Statements of Operations Location 2016 2015 Commodity contracts Cost of goods sold $ (483 ) $ (1,451 ) $ (483 ) $ (1,451 )

5. Debt

5. Debt	9 Months Ended
	Sep. 30, 2016
Debt Disclosure [Abstract]
Debt	Long-term borrowings are summarized as follows (in thousands): September 30, 2016 December 31, 2015 Kinergy operating line of credit $ 63,916 $ 61,003 Plant term debt 155,070 162,622 218,986 223,625 Less unamortized discount (1,369 ) (2,299 ) Less unamortized debt financing costs (364 ) (462 ) Less short-term portion (153,701 ) (17,003 ) Long-term debt $ 63,552 $ 203,861 Kinergy Operating Line of Credit Plant Term Debt The term loan facility matures on September 24, 2017, and as such the Company has reclassified the outstanding balance to current liabilities. The Company is currently pursuing several viable alternatives to refinance the term debt. On February 26, 2016, the Company retired the $17,003,000 outstanding balance of the Pacific Ethanol West Plants’ term debt by purchasing the lender’s position for cash at par without any prepayment penalty. The purchase increased the amount of the term debt held by Pacific Ethanol to a combined $58,766,000, which is eliminated upon consolidation. As a result, the Company has no continuing obligations to any third-party lender under the credit agreements associated with the Pacific Ethanol West Plants’ term debt. At September 30, 2016, there were approximately $127.9 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. Capitalized Interest

6. Common Stock and Warrants

6. Common Stock and Warrants	9 Months Ended
	Sep. 30, 2016
Stockholders' Equity Note [Abstract]
Common Stock and Warrants	Stock Incentive Plan Warrant Exercises Grants of Stock

7. Commitments and Contingencie

7. Commitments and Contingencies	9 Months Ended
	Sep. 30, 2016
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Sales Commitments Purchase Commitments Litigation – General The Company has evaluated all outstanding cases, including the following pending cases, and has recorded an aggregate of $3.3 million as a litigation contingency liability with respect to its outstanding cases for amounts that are probable and estimable. Western Sugar Cooperative 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 (“USDA”) program. Western Sugar was one of the entities that warehoused this sugar for ARE, Inc. The suit alleges that ARE, Inc. breached a contract with Western Sugar by failing to pay increased rates that it demanded for the storage of ARE, Inc.’s sugar, or alternatively is due additional payment under Western Sugar’s equitable claims. Western Sugar alleges that its higher rates apply because ARE, Inc. failed to timely order the sugar for immediate delivery, thereby allowing Western Sugar to set its own storage rates and avoid the lower USDA contract rate that ARE, Inc. paid. Western Sugar claims damages in the amount of approximately $8.6 million. ARE, Inc. filed answers to Western Sugar’s complaint and amended the complaint generally denying Western Sugar’s allegations and asserting various defenses, including that ARE Inc. never entered into a storage contract with Western Sugar, that ARE, Inc. paid the rate that Western Sugar was due under the governing USDA contract documents, or alternatively that ARE, Inc. paid a reasonable rate and that Western Sugar’s claimed rates constitute an impermissible penalty. The Company filed a motion for summary judgment seeking a determination that Western Sugar’s four claims fail as a matter of law. The court granted the motion in part and dismissed one claim, while finding that disputed factual matters remain for trial on Western Sugar’s other three claims. A trial date has not yet been scheduled, but is expected in the first half of 2017. GS CleanTech Corporation 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 are invalid and, therefore, not infringed. GS CleanTech said it would appeal this decision when the remaining claim in the suit has been decided. The only remaining claim alleged that GS CleanTech inequitably conducted itself before the United States Patent and Trademark Office when obtaining the patents at issue. A trial in the District Court for the Southern District of Indiana was conducted in October 2015 on that single issue as well as whether GS CleanTech’s behavior during prosecution of the patents renders this an “exceptional case” which would allow the District Court to award the Defendants reimbursement of their attorneys’ fees expended for defense of the case. On September 15, 2016, the District Court issued an Order finding that GS CleanTech, the inventors and GS CleanTech’s counsel committed inequitable conduct in the prosecution of the GS CleanTech patents before the United States Patent and Trademark Office. As a result, the District Court issued a Final Judgment on September 15, 2016 dismissing with prejudice all of GS CleanTech’s cases against the Defendants, including Pacific Ethanol, Inc., PE Stockton and PE Magic Valley. The District Court’s ruling of inequitable conduct results in the unenforceability of the GS CleanTech patents against third parties, and also enables the Defendants to pursue reimbursement of their costs and attorneys’ fees from GS CleanTech and its counsel. The Company believes that GS CleanTech may appeal the District Court’s rulings as well as its earlier decision that the GS CleanTech patents are invalid. The Company did not record a provision for these matters as of December 31, 2015 as the District Court had ruled that all of the GS CleanTech patents in the suit are invalid and, therefore, not infringed. Further, the Company believes a material adverse ruling on appeal against Pacific Ethanol, Inc., PE Stockton and/or PE Magic Valley is not probable.

8. Pension and Retirement Benef

8. Pension and Retirement Benefit Plans	9 Months Ended
	Sep. 30, 2016
Compensation and Retirement Disclosure [Abstract]
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 prior to 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 December 31, 2015, the Pension Plan’s accumulated projected benefit obligation was $16.6 million, with a fair value of plan assets of $12.6 million. The underfunded amount of $4.0 million is recorded on the Company’s consolidated balance sheet in other noncurrent liabilities. For the three months ended September 30, 2016, the Pension Plan’s net periodic expense was $29,000, comprised of $172,000 in interest cost and $56,000 in service cost, partially offset by $199,000 of expected return on plan assets. For the nine months ended September 30, 2016, the Pension Plan’s net periodic expense was $87,000, comprised of $516,000 in interest cost and $168,000 in service cost, partially offset by $597,000 of expected return on plan assets. 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 December 31, 2015, the Postretirement Plan’s accumulated projected benefit obligation was $3.6 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, 2016, the Postretirement Plan’s net periodic expense was $47,000, comprised of $35,000 of interest cost and $12,000 of service cost. For the nine months ended September 30, 2016, the Postretirement Plan’s net periodic expense was $141,000, comprised of $105,000 of interest cost and $36,000 of service cost.

9. Fair Value Measurements

9. Fair Value Measurements	9 Months Ended
	Sep. 30, 2016
Fair Value Disclosures [Abstract]
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 records its warrants issued in December 2011 and July 2012 at fair value using Level 3 inputs. Warrants Significant assumptions used and related fair values for the warrants as of September 30, 2016 were as follows: Original Issuance Exercise Price Volatility Risk Free Interest Rate Term (years) Market Discount Warrants Outstanding Fair Value 7/3/2012 $ 6.09 46.3% 0.52% 0.76 15.7% 211,000 $ 296,000 12/13/2011 $ 8.43 37.7% 0.25% 0.20 6.7% 138,000 30,000 $ 326,000 Significant assumptions used and related fair values for the warrants as of December 31, 2015 were as follows: Original Issuance Exercise Price Volatility Risk Free Interest Rate Term (years) Market Discount Warrants Outstanding Fair Value 7/3/2012 $ 6.09 49.1% 0.86% 1.51 22.9% 211,000 $ 200,000 12/13/2011 $ 8.43 48.4% 0.65% 0.95 18.3% 138,000 73,000 $ 273,000 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 recurring fair value measurements by level at September 30, 2016 (in thousands): Fair Value Level 1 Level 2 Level 3 Assets: Derivative financial instruments (1) $ 3,242 $ 3,242 $ – $ – $ 3,242 $ 3,242 $ – $ – Liabilities: Warrants (3) $ (326 ) $ – $ – $ (326 ) Derivative financial instruments (4) (3,492 ) (3,492 ) – – $ (3,818 ) $ (3,492 ) $ – $ (326 ) The following table summarizes recurring fair value measurements by level at December 31, 2015 (in thousands): Fair Value Level 1 Level 2 Level 3 Assets: Derivative financial instruments (1) $ 2,081 $ 2,081 $ – $ – Defined benefit plan assets (2) (pooled separate accounts): Large U.S. Equity 3,662 – 3,662 – Small/Mid U.S. Equity 1,099 – 1,099 – International Equity 1,525 – 1,525 – Fixed Income 6,281 – 6,281 – $ 14,648 $ 2,081 $ 12,567 $ – Liabilities: Warrants (3) $ (273 ) $ – $ – $ (273 ) Derivative financial instruments (4) (1,848 ) (1,848 ) – – $ (2,121 ) $ (1,848 ) $ – $ (273 ) __________ (1) Included in derivative instruments in the consolidated balance sheets. (2) Fair values of plan assets are determined annually and therefore are not included as of September 30, 2016. For further descriptions of these assets see the Company’s Form 10-K for the year ended December 31, 2015. (3) Included in warrant liabilities at fair value in the consolidated balance sheets. (4) Included in derivative instruments 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, 2015 $ 273 Adjustments to fair value for the period 53 Balance, September 30, 2016 $ 326

10. Earnings Per Share

10. Earnings Per Share	9 Months Ended
	Sep. 30, 2016
Earnings Per Share [Abstract]
Earnings Per Share	The following tables compute basic and diluted earnings per share (in thousands, except per share data): Three Months Ended September 30, 2016 Loss Shares Per-Share Net loss attributed to Pacific Ethanol $ (3,518 ) Less: Preferred stock dividends (319 ) Basic and diluted loss per share: Loss available to common stockholders $ (3,837 ) 42,226 $ (0.09 ) Three Months Ended September 30, 2015 Loss Shares Per-Share 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 ) Nine Months Ended September 30, 2016 Loss Shares Per-Share Net loss attributed to Pacific Ethanol $ (11,658 ) Less: Preferred stock dividends (949 ) Basic and diluted loss per share: Loss available to common stockholders $ (12,607 ) 42,156 $ (0.30 ) Nine Months Ended September 30, 2015 Loss Shares Per-Share 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 ) There were an aggregate of 731,000 and 679,000 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, 2016, respectively. These convertible securities were not considered in calculating net loss per share for the three and nine months ended September 30, 2016, as their effect would have been anti-dilutive.

11. Related Party Transactions

11. Related Party Transactions	9 Months Ended
	Sep. 30, 2016
Related Party Transactions [Abstract]
11. Related Party Transactions	During the three months ended September 30, 2016, the Company entered into a contract to purchase corn from Watermark Farms, Inc., a company owned jointly by one of the Company’s unaffiliated grain procurement agents and a director of the Company. The total delivered price of $128,063 is expected to be settled by the end of 2016. At September 30, 2016, there were no amounts payable by the Company under these arrangements .

1. Organization and Basis of 17

1. Organization and Basis of Presentation (Policies)	9 Months Ended
	Sep. 30, 2016
Accounting Policies [Abstract]
Organization and Business	Organization and Business The Company’s acquisition of Aventine Renewable Energy Holdings, Inc. (now, Pacific Ethanol Central, LLC, a Delaware limited liability company, “Aventine”) was consummated on July 1, 2015, and as a result, the Company’s accompanying consolidated financial statements do not include the results of Aventine for the six months ended June 30, 2015. 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 over 800 million gallons of ethanol, on an annualized basis, and produces over one 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 $54,966,000 and $42,049,000 at September 30, 2016 and December 31, 2015, respectively, were used as collateral under Kinergy’s operating line of credit. The allowance for doubtful accounts was $350,000 and $25,000 as of September 30, 2016 and December 31, 2015, respectively. The Company recorded a bad debt expense of $39,000 and $325,000 for the three and nine months ended September 30, 2016, respectively, and bad debt recoveries of $360,000 and $357,000 for the three and nine months ended September 30, 2015, respectively. The Company does not have any off-balance sheet credit exposure related to its customers.
Provision for Income Taxes	Provision for Income Taxes
Financial Instruments	Financial Instruments
Reclassifications	Reclassifications
Recent Accounting Pronouncements	Recent Accounting Pronouncements In May 2014, the FASB issued new guidance on the recognition of revenue. The guidance states that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard 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. In March and April 2016, the FASB issued further revenue recognition guidance amending principal vs. agent considerations whether 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 and services. The Company is currently evaluating the impact of the adoption of this accounting standard update on its consolidated results of operations and 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 adopt the guidance as to future acquisitions. In April 2016, the FASB issued new guidance to reduce the complexity of certain aspects of accounting for employee share-based payment transactions. Currently, accruals of compensation costs are based on an estimated forfeiture rate. The new guidance allows an entity to make an entity-wide accounting policy election to either continue using an estimate of forfeitures or account for forfeitures only when they occur. The guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company is currently evaluating the impact of the guidance on its consolidated results of operations and financial condition. 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 have been 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. On January 1, 2016, the Company adopted this guidance for all periods presented on the consolidated balance sheets. The impact of the adoption was a reclassification of other assets to long-term debt, net of current portion of $364,000 and $462,000 as of September 30, 2016 and December 31, 2015, respectively.
Basis of Presentation-Interim Financial Statements	Basis of Presentation – Interim Financial Statements
Use of Estimates	Use of Estimates

2. Segments (Tables)

2. Segments (Tables)	9 Months Ended
	Sep. 30, 2016
Segment Reporting [Abstract]
Schedule of Financial Date for Operating Segments	Three Months Ended Nine Months Ended 2016 2015 2016 2015 Net Sales Ethanol Production: Net sales to external customers $ 266,299 $ 248,158 $ 767,171 $ 456,114 Intersegment net sales 306 251 829 336 Total production segment net sales 266,605 248,409 768,000 456,450 Marketing and distribution: Net sales to external customers 151,507 132,464 415,868 358,304 Intersegment net sales 2,018 1,792 5,861 3,364 Total marketing and distribution net sales 153,525 134,256 421,729 361,668 Intersegment eliminations (2,324 ) (2,043 ) (6,690 ) (3,699 ) Net sales as reported $ 417,806 $ 380,622 $ 1,183,039 $ 814,419 Cost of goods sold: Ethanol production $ 262,964 $ 261,069 $ 759,210 $ 468,229 Marketing and distribution 153,406 130,756 412,225 357,337 Intersegment eliminations (4,928 ) (3,823 ) (13,533 ) (9,034 ) Cost of goods sold as reported $ 411,442 $ 388,002 $ 1,157,902 $ 816,532 Loss before provision for income taxes: Ethanol production $ (2,903 ) $ (22,154 ) $ (19,171 ) $ (26,352 ) Marketing and distribution (1,524 ) 1,970 4,654 (161 ) Corporate activities 909 1,596 2,614 2,298 $ (3,518 ) $ (18,588 ) $ (11,903 ) $ (24,215 ) Depreciation and amortization: Ethanol production $ 8,631 $ 8,195 $ 25,839 $ 14,585 Marketing and distribution – 5 3 147 Corporate activities 226 155 684 371 $ 8,857 $ 8,355 $ 26,526 $ 15,103 Interest expense: Ethanol production $ 3,521 $ 4,987 $ 15,600 $ 6,831 Marketing and distribution 353 180 1,043 356 Corporate activities – – – – $ 3,874 $ 5,167 $ 16,643 $ 7,187
Schedule of Assets by Operating Segments	September 30, 2016 December 31, 2015 Total assets: Ethanol production $ 512,285 $ 536,013 Marketing and distribution 128,895 107,069 Corporate assets 15,946 31,598 $ 657,126 $ 674,680

3. Inventories (Tables)

3. Inventories (Tables)	9 Months Ended
	Sep. 30, 2016
Inventory Disclosure [Abstract]
Schedule of Inventories	September 30, 2016 December 31, 2015 Finished goods $ 35,410 $ 31,153 LCFS credits 11,532 6,957 Raw materials 9,848 9,891 Work in progress 6,481 11,121 Other 1,717 1,698 Total $ 64,988 $ 60,820

4. Derivatives (Tables)

4. Derivatives (Tables)	9 Months Ended
	Sep. 30, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Schedule of Derivatives Not Designated as Hedging Instruments	As of September 30, 2016 Assets Liabilities Type of Instrument Balance Sheet Location Fair Balance Sheet Location Fair Commodity contracts Derivative instruments $ 3,242 Derivative instruments $ 3,492 $ 3,242 $ 3,492 As of December 31, 2015 Assets Liabilities Type of Instrument Balance Sheet Location Fair Balance Sheet Location Fair Commodity contracts Derivative instruments $ 2,081 Derivative instruments $ 1,848 $ 2,081 $ 1,848
Schedule of Recognized Gains (Losses) for Derivatives	Realized Gains (Losses) Three Months Ended September 30, Type of Instrument Statements of Operations Location 2016 2015 Commodity contracts Cost of goods sold $ 2,242 $ (251 ) $ 2,242 $ (251 ) Unrealized Losses Three Months Ended September 30, Type of Instrument Statements of Operations Location 2016 2015 Commodity contracts Cost of goods sold $ (1,383 ) $ (824 ) $ (1,383 ) $ (824 ) Realized Gains (Losses) Nine Months Ended September 30, Type of Instrument Statements of Operations Location 2016 2015 Commodity contracts Cost of goods sold $ 2,152 $ (101 ) $ 2,152 $ (101 ) Unrealized Losses Nine Months Ended September 30, Type of Instrument Statements of Operations Location 2016 2015 Commodity contracts Cost of goods sold $ (483 ) $ (1,451 ) $ (483 ) $ (1,451 )

5. Debt (Tables)

5. Debt (Tables)	9 Months Ended
	Sep. 30, 2016
Debt Disclosure [Abstract]
Schedule of Long Term Debt	September 30, 2016 December 31, 2015 Kinergy operating line of credit $ 63,916 $ 61,003 Plant term debt 155,070 162,622 218,986 223,625 Less unamortized discount (1,369 ) (2,299 ) Less unamortized debt financing costs (364 ) (462 ) Less short-term portion (153,701 ) (17,003 ) Long-term debt $ 63,552 $ 203,861

9. Fair Value Measurements (Tab

9. Fair Value Measurements (Tables)	9 Months Ended
	Sep. 30, 2016
Fair Value Disclosures [Abstract]
Schedule of Significant Assumptions Used and Related Fair Values for Warrants	Significant assumptions used and related fair values for the warrants as of September 30, 2016 were as follows: Original Issuance Exercise Price Volatility Risk Free Interest Rate Term (years) Market Discount Warrants Outstanding Fair Value 7/3/2012 $ 6.09 46.3% 0.52% 0.76 15.7% 211,000 $ 296,000 12/13/2011 $ 8.43 37.7% 0.25% 0.20 6.7% 138,000 30,000 $ 326,000 Significant assumptions used and related fair values for the warrants as of December 31, 2015 were as follows: Original Issuance Exercise Price Volatility Risk Free Interest Rate Term (years) Market Discount Warrants Outstanding Fair Value 7/3/2012 $ 6.09 49.1% 0.86% 1.51 22.9% 211,000 $ 200,000 12/13/2011 $ 8.43 48.4% 0.65% 0.95 18.3% 138,000 73,000 $ 273,000
Summary of Recurring Fair Value Measurements by Level	The following table summarizes recurring fair value measurements by level at September 30, 2016 (in thousands): Fair Value Level 1 Level 2 Level 3 Assets: Derivative financial instruments (1) $ 3,242 $ 3,242 $ – $ – $ 3,242 $ 3,242 $ – $ – Liabilities: Warrants (3) $ (326 ) $ – $ – $ (326 ) Derivative financial instruments (4) (3,492 ) (3,492 ) – – $ (3,818 ) $ (3,492 ) $ – $ (326 ) The following table summarizes recurring fair value measurements by level at December 31, 2015 (in thousands): Fair Value Level 1 Level 2 Level 3 Assets: Derivative financial instruments (1) $ 2,081 $ 2,081 $ – $ – Defined benefit plan assets (2) (pooled separate accounts): Large U.S. Equity 3,662 – 3,662 – Small/Mid U.S. Equity 1,099 – 1,099 – International Equity 1,525 – 1,525 – Fixed Income 6,281 – 6,281 – $ 14,648 $ 2,081 $ 12,567 $ – Liabilities: Warrants (3) $ (273 ) $ – $ – $ (273 ) Derivative financial instruments (4) (1,848 ) (1,848 ) – – $ (2,121 ) $ (1,848 ) $ – $ (273 ) __________ (1) Included in derivative instruments in the consolidated balance sheets. (2) Fair values of plan assets are determined annually and therefore are not included as of September 30, 2016. For further descriptions of these assets see the Company’s Form 10-K for the year ended December 31, 2015. (3) Included in warrant liabilities at fair value in the consolidated balance sheets. (4) Included in derivative instruments in the consolidated balance sheets.
Schedule of Fair Value of Level 3 Inputs to Warrants	Balance, December 31, 2015 $ 273 Adjustments to fair value for the period 53 Balance, September 30, 2016 $ 326

10. Earnings Per Share (Tables)

10. Earnings Per Share (Tables)	9 Months Ended
	Sep. 30, 2016
Earnings Per Share [Abstract]
Schedule of Computation of Basic and Diluted Earnings Per Share	Three Months Ended September 30, 2016 Loss Shares Per-Share Net loss attributed to Pacific Ethanol $ (3,518 ) Less: Preferred stock dividends (319 ) Basic and diluted loss per share: Loss available to common stockholders $ (3,837 ) 42,226 $ (0.09 ) Three Months Ended September 30, 2015 Loss Shares Per-Share 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 ) Nine Months Ended September 30, 2016 Loss Shares Per-Share Net loss attributed to Pacific Ethanol $ (11,658 ) Less: Preferred stock dividends (949 ) Basic and diluted loss per share: Loss available to common stockholders $ (12,607 ) 42,156 $ (0.30 ) Nine Months Ended September 30, 2015 Loss Shares Per-Share 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 )

1. Organization and Basis of 24

1. Organization and Basis of Presentation (Details Narrative) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016USD ($)EthanolPlants	Sep. 30, 2015USD ($)	Sep. 30, 2016USD ($)EthanolPlants	Sep. 30, 2015USD ($)	Dec. 31, 2015USD ($)
Ethanol production capacity per year			515 million gallons per year
Ethanol market capacity per year			markets over 800 million gallons of ethanol
Other products produced per year			produces over one million tons of co-products
Accounts receivable used as collateral	$ 54,966		$ 54,966		$ 42,029
Allowance for doubtful accounts	350		350		$ 25
Bad debt expense	39		325
Bad debt recoveries		$ 360		$ 357
Benefit for income taxes	$ 0	$ 3,925	$ 245	$ 6,095
Pacific Ethanol Central Plants [Member]
Number of ethanol plants | EthanolPlants	4		4
Pacific Ethanol West Plants [Member]
Number of ethanol plants | EthanolPlants	4		4

2. Segments - Schedule of Finan

2. Segments - Schedule of Financial Date for Operating Segments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Net Sales	$ 417,806	$ 380,622	$ 1,183,039	$ 814,419
Cost of goods sold	411,442	388,002	1,157,902	816,532
Income (loss) before provision for income taxes	(3,518)	(18,588)	(11,903)	(24,215)
Depreciation and amortization	9,018	3,340	26,526	15,103
Interest expense	3,874	5,167	16,643	7,187
Intersubsegment Eliminations [Member]
Net Sales	(2,324)	(2,043)	(6,690)	(3,699)
Cost of goods sold	(4,602)	(2,778)	(13,533)	(9,034)
Ethanol Production [Member]
Net Sales	266,605	248,409	768,000	456,450
Cost of goods sold	262,964	261,069	759,210	456,229
Income (loss) before provision for income taxes	(2,903)	(22,154)	(19,171)	(26,352)
Depreciation and amortization	8,631	8,195	25,829	14,585
Interest expense	3,521	4,987	15,600	6,831
Ethanol Production [Member] | External Customers [Member]
Net Sales	266,299	248,158	767,171	456,114
Ethanol Production [Member] | Intersegment Net Sales [Member]
Net Sales	306	251	829	336
Marketing and Distribution [Member]
Net Sales	153,525	134,256	421,729	361,668
Cost of goods sold	153,406	130,756	412,225	357,337
Income (loss) before provision for income taxes	(1,524)	1,970	4,654	(161)
Depreciation and amortization	0	5	3	147
Interest expense	353	180	1,043	356
Marketing and Distribution [Member] | External Customers [Member]
Net Sales	151,507	132,464	415,868	358,304
Marketing and Distribution [Member] | Intersegment Net Sales [Member]
Net Sales	2,018	1,792	5,861	3,364
Corporate Activities [Member]
Income (loss) before provision for income taxes	909	1,596	2,614	2,298
Depreciation and amortization	226	155	684	371
Interest expense	$ 0	$ 0	$ 0	$ 0

2. Segments - Schedule of Asset

2. Segments - Schedule of Assets by Operating Segments (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Assets	$ 657,126	$ 674,680
Ethanol Production [Member]
Assets	512,285	536,013
Marketing and Distribution [Member]
Assets	128,895	107,069
Corporate Activities [Member]
Assets	$ 15,946	$ 31,598

2. Segments (Details Narrative)

2. Segments (Details Narrative)	9 Months Ended
	Sep. 30, 2016Segments
Segment Reporting [Abstract]
Number of operating segments	2

3. Inventories - Schedule of In

3. Inventories - Schedule of Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Inventory Disclosure [Abstract]
Finished goods	$ 35,410	$ 31,153
LCFS credits	11,532	6,957
Raw materials	9,848	9,891
Work in progress	6,481	11,121
Other	1,717	1,698
Total	$ 64,988	$ 60,820

4. Derivatives - Schedule of De

4. Derivatives - Schedule of Derivatives Not Designated as Hedging Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Commodity contracts - Derivative assets	$ 3,242	$ 2,081
Commodity contracts - Derivative liabilities	3,294	1,848
Commodity Contracts [Member] | Non Designated Derivative Instruments [Member]
Commodity contracts - Derivative assets	3,242	2,081
Commodity contracts - Derivative liabilities	$ 3,492	$ 1,848

4. Derivatives - Schedule of Re

4. Derivatives - Schedule of Recognized Gains (Losses) for Derivatives (Details) - Commodity Contracts [Member] - Non Designated Derivative Instruments [Member] - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Derivative Instruments, Gain (Loss) [Line Items]
Realized Gains (Losses)	$ 2,242	$ (251)	$ 2,152	$ (101)
Unrealized Gains (Losses)	$ (1,383)	$ (824)	$ (483)	$ (1,451)

5. Debt - Schedule of Long Term

5. Debt - Schedule of Long Term Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Debt Disclosure [Abstract]
Kinergy operating line of credit	$ 63,916	$ 61,003
Plant term debt	155,070	162,622
Total debt	218,986	223,625
Less unamortized discount	(1,369)	(2,299)
Less unamortized debt financing costs	(364)	(462)
Less short-term portion	(153,701)	(17,003)
Long-term debt	$ 63,552	$ 203,861

5. Debt (Details Narrative)

5. Debt (Details Narrative) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2016USD ($)	Sep. 30, 2016USD ($)
Asset unavailable for transfer due to loan restrictions	$ 127,900	$ 127,900
Capitalized interest	1,100	1,100
Kinergy Marketing LLC [Member]
Available borrowing base	11,084	11,084
Pacific Ethanol Central Plants [Member]
Deferred interest payments added to debt balance	$ 5,665	$ 9,500
Debt maturity date		Sep. 24, 2017
Payments on debt		$ 17,003

6. Common Stock and Warrants (D

6. Common Stock and Warrants (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Stock issued upon exercise of warrants				42,000
Proceeds from warrant exercises			$ 0	$ 368
Warrants exercised	0	0	0
Non-employee members of the Board of Directors [Member]
Restricted stock granted			95,000
Grant date fair value per share			$ 5.44
Executive officers and other employees [Member]
Restricted stock granted			253,000
Grant date fair value per share			$ 5.44
2016 Stock Incentive Plan [Member]
Shares authorized for issuance	1,150,000		1,150,000

7. Commitments and Contingenc34

7. Commitments and Contingencies (Details Narrative) $ in Thousands	9 Months Ended
	Sep. 30, 2016USD ($)
Litigation contingency liability	$ 3,300
Solar Project at Madera facility [Member]
Project costs incurred	$ 1,100
Ethanol Purchase Contracts [Member]
Indexed-price purchase contracts	20,670,000 gallons
Fixed-price purchase contracts value	$ 10,536
Ethanol Purchase Contracts [Member] | Suppliers [Member]
Fixed-price purchase contracts value	$ 32,022
Ethanol Sales Contracts [Member]
Open ethanol indexed-price sales contracts	236,324,000 gallons
Open fixed-price sales contracts valued	$ 9,540
Co-products Sales Contracts [Member]
Open ethanol indexed-price sales contracts	142,000 tons
Open fixed-price sales contracts valued	$ 30,797

8. Pension and Retirement Ben35

8. Pension and Retirement Benefit Plans (Details Narrative) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2016	Dec. 31, 2015
Pension Plan [Member]
Accumulated projected benefit obligation			$ 16,600
Fair value of plan assets			12,600
Underfunded amount			4,000
Net periodic expense	$ 29	$ 87
Interest cost	172	516
Service cost	56	168
Partially offset expected return on plan assets	199	597
Postretirement Plan [Member]
Accumulated projected benefit obligation			$ 3,600
Net periodic expense	47	141
Interest cost	35	105
Service cost	$ 12	$ 36

9. Fair Value Measurements - Sc

9. Fair Value Measurements - Schedule of Significant Assumptions Used and Related Fair Values for Warrants (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Fair value	$ 326	$ 273
Original issuance 7/3/2012 [Member]
Exercise price	$ 6.09	$ 6.09
Volatility	46.30%	49.10%
Risk free interest rate	0.52%	0.86%
Term (years)	9 months 4 days	1 year 6 months 4 days
Market Discount	15.70%	22.90%
Warrants Outstanding	211,000	211,000
Fair value	$ 296	$ 200
Original Issuance 12/13/2011 [Member]
Exercise price	$ 8.43	$ 8.43
Volatility	37.70%	48.40%
Risk free interest rate	0.25%	0.65%
Term (years)	2 months 12 days	11 months 12 days
Market Discount	6.70%	18.30%
Warrants Outstanding	138,000	138,000
Fair value	$ 30	$ 73

9. Fair Value Measurements - Su

9. Fair Value Measurements - Summary of Recurring Fair Value Measurements by Level (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	$ 3,242	$ 14,648
Liabilities	(3,818)	(2,121)
Derivative Financial Instrument [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	3,242	2,081
Liabilities	(3,492)	(1,848)
Warrants [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities	(326)	(273)
Defined Benefit Plan Assets Large U.S. Equity [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets		3,662
Defined Benefit Plan Assets Small/Mid U.S. Equity [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets		1,099
Defined Benefit Plan Assets International Equity [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets		1,525
Defined Benefit Plan Assets Fixed Income [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets		6,281
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	3,242	2,081
Liabilities	3,492	(1,848)
Level 1 [Member] | Derivative Financial Instrument [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	3,242	2,081
Liabilities	(3,492)	(1,848)
Level 1 [Member] | Warrants [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities	0	0
Level 1 [Member] | Defined Benefit Plan Assets Large U.S. Equity [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets		0
Level 1 [Member] | Defined Benefit Plan Assets Small/Mid U.S. Equity [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets		0
Level 1 [Member] | Defined Benefit Plan Assets International Equity [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets		0
Level 1 [Member] | Defined Benefit Plan Assets Fixed Income [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets		0
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	12,567
Liabilities	0	0
Level 2 [Member] | Derivative Financial Instrument [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	0
Liabilities	0	0
Level 2 [Member] | Warrants [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities	0	0
Level 2 [Member] | Defined Benefit Plan Assets Large U.S. Equity [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets		3,662
Level 2 [Member] | Defined Benefit Plan Assets Small/Mid U.S. Equity [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets		1,099
Level 2 [Member] | Defined Benefit Plan Assets International Equity [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets		1,525
Level 2 [Member] | Defined Benefit Plan Assets Fixed Income [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets		6,281
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	0
Liabilities	(326)	(273)
Level 3 [Member] | Derivative Financial Instrument [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	0
Liabilities	0	0
Level 3 [Member] | Warrants [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities	$ (326)	(273)
Level 3 [Member] | Defined Benefit Plan Assets Large U.S. Equity [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets		0
Level 3 [Member] | Defined Benefit Plan Assets Small/Mid U.S. Equity [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets		0
Level 3 [Member] | Defined Benefit Plan Assets International Equity [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets		0
Level 3 [Member] | Defined Benefit Plan Assets Fixed Income [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets		$ 0

9. Fair Value Measurements - 38

9. Fair Value Measurements - Schedule of Fair Value of Level 3 Inputs to Warrants (Details) - Level 3 [Member] - Warrants [Member] $ in Thousands	9 Months Ended
	Sep. 30, 2016USD ($)
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning Balance	$ 273
Adjustments to fair value for the period	53
Ending Balance	$ 326

10. Earnings Per Share - Schedu

10. Earnings Per Share - Schedule of Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Earnings Per Share [Abstract]
Net loss attributed to Pacific Ethanol, Inc.	$ (3,518)	$ (14,663)	$ (11,658)	$ (18,033)
Less: Preferred stock dividends	(319)	(319)	(949)	(946)
Loss attributed to common stockholders	$ (3,837)	$ (14,982)	$ (12,607)	$ (18,979)
Weighted-average shares outstanding, basic and diluted	42,226	41,861	42,156	30,170
Net loss per share, basic and diluted	$ (0.09)	$ (0.36)	$ (0.30)	$ (0.63)

10. Earnings Per Share (Details

10. Earnings Per Share (Details Narrative) - shares shares in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2016
Earnings Per Share [Abstract]
Potentially dilutive weighted-average shares from convertible securities outstanding	731	679

11. Related Party Transactions

11. Related Party Transactions (Details Narrative) - Watermark Farms [Member]	Sep. 30, 2016USD ($)
Accounts payable	$ 0
Purchase commitment	$ 128,063