News Column

LAKE AREA CORN PROCESSORS LLC - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

August 14, 2014

We prepared the following discussion and analysis to help you better understand our financial condition, changes in our financial condition, and results of operations for the three and six month periods ended June 30, 2014, compared to the same periods of the prior year. This discussion should be read in conjunction with the consolidated financial statements and the Management's Discussion and Analysis section for the fiscal year ended December 31, 2013, included in the Company's Annual Report on Form 10-K for 2013.

Disclosure Regarding Forward-Looking Statements

This report contains historical information, as well as forward-looking statements that involve known and unknown risks and relate to future events, our future financial performance, or our expected future operations and actions. In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "future," "intend," "could," "hope," "predict," "target," "potential," "continue" or the negative of these terms or other similar expressions. These forward-looking statements are only our predictions based on current information and involve numerous assumptions, risks and uncertainties. Our actual results or actions may differ materially from these forward-looking statements for many reasons, including the reasons described in this report and our annual report on Form 10-K for the fiscal year ended December 31, 2013.

The cautionary statements referred to in this section also should be considered in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf. We undertake no duty to update these forward-looking statements, even though our situation may change in the future. Furthermore, we cannot guarantee future results, events, levels of activity, performance, or achievements. We caution you not to put undue reliance on any forward-looking statements, which speak only as of the date of this report. You should read this report and the documents that we reference in this report and have filed as exhibits completely and with the understanding that our actual future results may be materially different from what we currently expect. We qualify all of our forward-looking statements by these cautionary statements.

Overview

Lake Area Corn Processors, LLC is a South Dakota limited liability company that owns and manages its wholly-owned subsidiary, Dakota Ethanol, L.L.C.Dakota Ethanol, L.L.C. owns and operates an ethanol plant located near Wentworth, South Dakota that has a nameplate production capacity of 40 million gallons of ethanol per year. Lake Area Corn Processors, LLC is referred to in this report as "LACP," the "company," "we," or "us." Dakota Ethanol, L.L.C. is referred to in this report as "Dakota Ethanol" "we" "us" or the "ethanol plant."

Our revenue is derived from the sale and distribution of our ethanol, distillers grains and corn oil. The ethanol plant currently operates in excess of its nameplate capacity, producing approximately 48 million gallons of ethanol per year. Corn is supplied to us primarily from our members who are local agricultural producers and from purchases of corn on the open market. We have engaged Renewable Products Marketing Group, Inc. ("RPMG") to market all of the ethanol and corn oil that we produce at the ethanol plant. Further, RPMG, Inc. markets all of the distillers grains that we produce that we do not market internally to local customers.

We are in the process of making approximately $7 million in capital improvements to the ethanol plant related to various equipment upgrades designed to improve our energy efficiency and increase our total production by eliminating bottlenecks in our production process. As of June 30, 2014, we have paid $3.3 million in costs related to this project. We anticipate that these projects will be completed by the end of our third quarter of 2014. We plan to finance the plant upgrades using cash from our operations and amounts we have available to borrow on our long-term revolving debt. Management does not anticipate securing additional equity or debt financing in order to complete these projects.

To date, we have paid a total of $16,291,000 in distributions to our members or $0.55 per membership unit, during our 2014 fiscal year. This amount includes a $0.10 per unit distribution which was declared and paid in July 2014 after the end of our second quarter of 2014.

14



--------------------------------------------------------------------------------

Table of Contents

Results of Operations

Comparison of the Fiscal Quarters Ended June 30, 2014 and 2013

The following table shows the results of our operations and the percentage of revenues, cost of revenues, operating expenses and other items to total revenues in our consolidated statements of income for the fiscal quarters ended June 30, 2014 and 2013: 2014 2013 Income Statement Data Amount % Amount % Revenues $ 30,468,555 100.0 $ 38,288,817 100.0 Cost of Revenues 21,337,052 70.0 35,860,462 93.7 Gross Profit 9,131,503 30.0 2,428,355 6.3 Operating Expense 883,570 2.9 1,070,134 2.8 Income from Operations 8,247,933 27.1 1,358,221 3.5 Other Income 2,004,428 6.6 99,822 0.3 Net Income $ 10,252,361 33.6 $ 1,458,043 3.8 Revenues



Revenue from ethanol sales decreased by approximately 19% during our second quarter of 2014 compared to the same period of 2013. Revenue from distillers grains sales decreased by approximately 28% during our second quarter of 2014 compared to the same period of 2013. Revenue from corn oil sales decreased by approximately 2% during our second quarter of 2014 compared to the same period of 2013. Despite these decreases in revenue, we continue to experience strong operating margins due to comparatively larger decreases in our cost of revenues.

Ethanol

Our ethanol revenue was approximately $5.5 million less during our second quarter of 2014 compared to our second quarter of 2013, a decrease of approximately 19%. This decrease in ethanol revenue was due to a decrease in both the amount of ethanol we sold and the average price we received for the ethanol we sold during our second quarter of 2014 compared to our second quarter of 2013. We sold approximately 10% fewer gallons of ethanol during our second quarter of 2014 compared to the same period of 2013, a decrease of approximately 1,200,000 gallons, due to rail logistics issues which required us to produce and sell less ethanol. Management anticipates continued difficulty with ethanol transportation logistics as the railroads work to increase capacity to meet current demand. Management anticipates that as we complete our plant upgrade projects, we will experience increased ethanol production in our fourth quarter of 2014, provided we can continue to ship our ethanol in a timely manner in order to continue operating at capacity. However, if economic factors in the ethanol industry occur, such as a reduction or elimination of the Federal Renewable Fuels Standard (RFS) for 2014, we may be forced to reduce production.

The average price we received for our ethanol was approximately $0.24 per gallon less during our second quarter of 2014 compared to our second quarter of 2013, a decrease of approximately 10%. Management attributes this decrease in ethanol prices with lower corn prices during our 2014 fiscal year which typically results in lower ethanol prices. Management anticipates continued lower ethanol prices due to anticipated lower corn prices and relatively stable ethanol demand. However, if the EPA significantly reduces the RFS requirement for corn-based ethanol for 2014, it could negatively impact demand for ethanol and may result in lower ethanol prices for the rest of our 2014 fiscal year.

Ethanol prices have recently been supported by rail logistics issues which have restricted ethanol supplies in the United States. During 2014, many ethanol producers have experienced delays in shipping their ethanol by rail as a result of a combination of poor weather conditions and a lack of shipping capacity by the railroads. Management believes that due to increased economic activity in the United States, including an improved corn crop in the fall of 2013, the railroads have experienced increased demand for rail shipments. Management believes that the railroads do not have sufficient infrastructure and manpower to accommodate this increased demand. As a result, shipments of ethanol have been delayed which have reduced ethanol supply in the market and resulted in increased ethanol prices. Management anticipates that ethanol prices will continue to be supported by the supply

15



--------------------------------------------------------------------------------

Table of Contents

constraints until rail shipping times normalize. While these shipping delays have been reduced as the weather has improved following the winter months, management believes that until the railroads increase capacity to accommodate increased demand, these delays may occur in the future.

Distillers Grains

Our total distillers grains revenue decreased by approximately 28% during our second quarter of 2014 compared to the same period of 2013 due to decreased distillers grains prices and production. For our second quarter of 2014, we sold approximately 37% of our total distillers grains in the dried form and approximately 63% of our total distillers grains in the modified/wet form. By comparison, for our second quarter of 2013, we sold approximately 13% of our total distillers grains in the dried form and approximately 87% of our total distillers grains in the modified/wet form. We experienced premium pricing for our dried distillers grains during our first two quarters of 2014 and as a result we produced more distillers grains in the dried form. We determine the mix between dried distillers grains and modified/wet distillers grains we sell based on market conditions and the relative profitability of selling the different forms of distillers grains. We consume additional natural gas when we produce dried distillers grains as compared to modified/wet distillers grains which can impact the profit we generate from sales of dried distillers grains. Management anticipates that we will maintain the current mix between dried distillers grains and modified/wet distillers grains going forward unless market conditions change in a way that favors one product over the other.

The average price we received for our dried distillers grains was approximately 23% less during our second quarter of 2014 compared to the same period of 2013, a decrease of approximately $54 per ton. The average price we received for our modified/wet distillers grains was approximately 26% less for our second quarter of 2014 compared to the same period of 2013, a decrease of approximately $64 per ton. Management attributes the decrease in the selling price of our distillers grains with decreasing corn and feed prices. Distillers grains prices typically fluctuate based on the price of corn, soy bean meal and other competing feed products.

Management anticipates that distillers grains prices will continue to follow the corn and soy bean meal market. Due to the fact that corn prices have decreased since the harvest in the fall of 2013 and management anticipates continued lower corn prices during our 2014 fiscal year.

Corn Oil

Our total pounds of corn oil sold increased by approximately 9% during our second quarter of 2014 compared to the same period of 2013, an increase of approximately 199,000 pounds, primarily due to improved operating efficiency by our corn oil extraction equipment. This increase in corn oil extraction occurred despite the fact that the corn we are using during our 2014 fiscal year tends to have less corn oil compared to the corn we were using during our 2013 fiscal year. Management anticipates that corn oil production will continue to be variable based on the total production of ethanol at our plant and by operating efficiencies we achieve at the ethanol plant. Offsetting the increase in corn oil production was a decrease in the average price we received for our corn oil of approximately 9% for our second quarter of 2014 compared to the same period of 2013, a decrease of approximately $0.04 per pound. This decrease in market corn oil prices was primarily due to lower corn oil demand. The biodiesel industry has been impacted by recent legislative changes, including the expiration of the biodiesel blenders' tax credit and uncertainty regarding the biodiesel use requirements for 2014 under the RFS. Since biodiesel production is a major source of corn oil demand, lower biodiesel demand has impacted corn oil prices. In addition, corn oil prices have been impacted by lower corn prices. Management anticipates continued lower corn oil prices as additional corn oil supply enters the market along with volatile corn oil demand.

Cost of Revenues

The primary raw materials we use to produce our products are corn and natural gas. Our cost of revenues relating to corn was approximately 46% less for our second quarter of 2014 compared to the same period of 2013 due to lower corn prices and corn consumption during the 2014 period. Our average cost per bushel of corn decreased by approximately 44% for our second quarter of 2014 compared to our second quarter of 2013. Management attributes the decrease in corn prices with lower market corn prices as a result of the large corn crop which was harvested in the fall of 2013. Management anticipates continued lower corn prices during our 2014 fiscal year unless we were to experience either localized or national poor growing conditions which negatively impact the amount of corn harvested in the fall of 2014.

We used approximately 4% less bushels of corn during our second quarter of 2014 compared to the same period of 2013 due to decreased production at the ethanol plant. Management anticipates that our corn consumption will remain at current levels until our plant upgrade project is complete which will likely result in increased corn consumption due to anticipated increases in ethanol production.

16



--------------------------------------------------------------------------------

Table of Contents

Our cost of revenues related to natural gas increased by approximately $66,000, an increase of approximately 4%, for our second quarter of 2014 compared to our second quarter of 2013. This increase was due to an increase in market natural gas prices during our second quarter of 2014 compared to the same period of 2013. Management attributes the higher natural gas prices during 2014 to a longer and colder winter which reduced natural gas supplies in the United States. Our average cost per MMBtu of natural gas during our second quarter of 2014 was approximately 7% higher compared to the price for our second quarter of 2013. While domestic natural gas supplies have started to return to more normal levels, management anticipates higher natural gas prices will continue in our 2014 fiscal year. If we experience another cold and long winter in 2014/2015, these high natural gas prices will likely return and may increase.

We used approximately 2% less MMBtus of natural gas during our second quarter of 2014 compared to the same period of 2013 due to decreased production during the 2014 period. Management anticipates that our natural gas consumption will remain at current levels despite anticipated increases in production due to energy efficiency projects we are pursuing as part of our plant upgrade projects.

Operating Expenses

Our operating expenses were lower for our second quarter of 2014 compared to the same period of 2013 due primarily to a one-time pledge to support a technical development center that we paid in 2013 partially offset by increased wages and bonuses due to our increased profitability.

Other Income and Expense

Our income related to our investments was higher for our second quarter of 2014 compared to the same period of 2013 due to our investments in Guardian Hankinson, LLC and RPMG, our product marketer. We did not have the investment in Guardian Hankinson, LLC during the second quarter of 2013. We had more interest expense during our second quarter of 2014 compared to the same period of 2013 due to having more debt outstanding during the 2014 period.

Comparison of the Six Months Ended June 30, 2014 and 2013

The following table shows the results of our operations and the percentage of revenues, cost of revenues, operating expenses and other items to total revenues in our consolidated statements of income for the six months ended June 30, 2014 and 2013: 2014 2013 Income Statement Data Amount % Amount % Revenues $ 68,759,645 100.0 $ 76,581,285 100.0 Cost of Revenues 48,760,913 70.9 70,556,122 92.1 Gross Profit 19,998,732 29.1 6,025,163 7.9 Operating Expense 1,916,950 2.8 1,826,305 2.4 Income from Operations 18,081,782 26.3 4,198,858 5.5 Other Income 4,144,881 6.0 205,229 0.3 Net Income $ 22,226,663 32.3 $ 4,404,087 5.8 Revenues



Revenue from ethanol sales decreased by approximately 4% during the six months ended June 30, 2014 compared to the same period of 2013. Revenue from distillers grains decreased by approximately 31% during the six months ended June 30, 2014 compared to the same period of 2013. Revenue from corn oil decreased by approximately 12% during the six months ended June 30, 2014 compared to the same period of 2013.

17



--------------------------------------------------------------------------------

Table of Contents

Ethanol

Our ethanol revenue was approximately $2,268,000 less during the six months ended June 30, 2014 compared to the same period of 2013, a decrease of approximately 4%. The average price we received for our ethanol decreased by approximately 1% for the six months ended June 30, 2014 compared to the same period of 2013, a decrease of approximately$0.02 per gallon of ethanol sold. Our total gallons of ethanol sold during the six months ended June 30, 2014 was approximately 3% less than during the same period of 2013, a decrease of approximately 763,000 gallons. This decrease was due to logistics issues which required us to reduce production along with a longer maintenance shutdown.

Distillers Grains

Our total distillers grains revenue decreased by approximately $5,438,000 for the six months ended June 30, 2014 compared to the same period of 2013. We sold approximately 1% fewer tons of distillers grains during the six months ended June 30, 2014 compared to the same period of 2013. The average price we received for our dried distillers grains decreased by approximately $68 per ton, a decrease of approximately 28%, for the six months ended June 30, 2014 compared to the same period of 2013. The average price we received for our modified/wet distillers grains decreased by approximately $79 per ton, a decrease of approximately 30%, for the six months ended June 30, 2014 compared to the same period of 2013. For the six months ended June 30, 2014, we sold approximately 33% of our distillers grains in the dried form and approximately 67% in the modified/wet form. During the six months ended June 30, 2013, we sold approximately 11% of our distillers grains in the dried form and approximately 89% in the modified/wet form.

Corn Oil

Our total pounds of corn oil sold increased by approximately 1% during the six months ended June 30, 2014 compared to the same period of 2013 due to improved efficiency in operating our corn oil extraction equipment. Offsetting this increase in production, the average price we received for our corn oil decreased by approximately 11% for the six months ended June 30, 2014 compared to the same period of 2013.

Cost of Revenues

Our cost of revenues related to corn was approximately 40% less for the six months ended June 30, 2014 compared to the same period of 2013. Our average cost per bushel of corn decreased by approximately 40% for the six months ended June 30, 2014 compared to the same period of 2013, a decrease of approximately $2.78 per bushel of corn. We used approximately 1% fewer bushels of corn during the six months ended June 30, 2014 compared to the same period of 2013. Our cost of revenues related to natural gas increased by approximately $1,847,000, an increase of approximately 60%, for the six months ended June 30, 2014 compared to the same period of 2013. Our average cost per MMBtu of natural gas during the six months ended June 30, 2014 was approximately 61% higher compared to the same period of 2013, an increase of approximately $2.73 per MMBtu of natural gas. We used approximately 1% less natural gas during the six months ended June 30, 2014 compared to the same period of 2013. This decrease was due to decreased production at the plant.

Operating Expense

Our operating expenses increased by approximately 5%, or approximately $91,000, for the six months ended June 30, 2014 compared to the same period of 2013. This increase was due primarily to increased wages and bonuses due to our increased profitability. The increased wages were partially offset by a one-time pledge to support a technical development center that we paid in 2013.

Other Income and Expense

Our interest expense was higher for the six months ended June 30, 2014 compared to the same period of 2013 because of interest costs from our term-loan. We had more income from our investments during the six months ended June 30, 2014 compared to the same period of 2013 due primarily to our investment Guardian Hankinson, LLC and in our marketer, RPMG.

Changes in Financial Condition for the Six Months Ended June 30, 2014

Current Assets

We had less cash on hand at June 30, 2014 compared to December 31, 2013, primarily due to deferred corn payments and distributions which were paid during our 2014 fiscal year. The increase in our inventory is due to having more bushels of

18



--------------------------------------------------------------------------------

Table of Contents

corn on hand at June 30, 2014 compared to December 31, 2013. We had more unrealized gains on our risk management positions as of June 30, 2014 compared to December 31, 2013 which increased the value of our derivative financial instruments at June 30, 2014.

Property and Equipment

Our net property and equipment was higher at June 30, 2014 compared to December 31, 2013 as a result of the capital improvements we are in the process of making, partially offset by regular depreciation of our equipment.

Other Assets

The value of our investments was higher at June 30, 2014 compared to December 31, 2013 primarily due to earnings from our investment in Guardian Hankinson, LLC that were retained in that entity.

Current Liabilities

Our accounts payable was significantly lower at June 30, 2014 compared to December 31, 2013 because our corn suppliers typically seek to defer payments for corn that is delivered at the end of the year for tax purposes which increases our accounts payable at that time. These deferred payments were made early in our first quarter of 2014. We had a greater liability associated with our derivative financial instruments at June 30, 2014 compared to December 31, 2013 due to unrealized losses on our risk management positions at June 30, 2014.

Long-Term Liabilities

The long-term portion of our notes payable was lower at June 30, 2014 compared to December 31, 2013 due to ongoing payments we made on our long-term debt during our 2014 fiscal year. In addition, in May 2014, we made a $1.5 million prepayment on our long-term loan which reduced the outstanding balance of our long-term loan.

Liquidity and Capital Resources

Our main sources of liquidity are cash generated from our continuing operations and amounts we have available to draw on our revolving lines of credit. Management does not anticipate that we will need to raise additional debt or equity financing in the next twelve months and management believes that our current sources of liquidity will be sufficient to continue our operations during that time period. We are in the process of implementing plant upgrades which we anticipate financing from operating cash and our existing loans.

Currently, we have two revolving loans which allow us to borrow funds for working capital. These two revolving loans are described in greater detail below in the section entitled "Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Indebtedness." As of June 30, 2014, we had $1,000 outstanding and $14,999,000 available to be drawn on these revolving loans, after taking into account the borrowing base calculation. Management anticipates that this is sufficient to maintain our liquidity and continue our operations.

The following table shows cash flows for the six months ended June 30, 2014 and 2013:

Six Months Ended June 30, 2014 2013



Net cash provided by operating activities $ 10,804,827$ 1,422,906 Net cash (used in) investing activities (5,786,814 ) (179,288 ) Net cash (used in) financing activities (15,511,954 ) (3,401,972 )

Cash Flow From Operations. Our operating activities provided more cash during the six months ended June 30, 2014 compared to the same period of 2013, primarily due to increased net income during the 2014 period offset by increases in our equity in the net income of our investments as well as cash we used to pay down our accounts payable during the 2014 period.

Cash Flow From Investing Activities. We used more cash for capital projects during the six months ended June 30, 2014 compared to the same period of 2013 as we complete our plant upgrade projects during the 2014 period.

19



--------------------------------------------------------------------------------

Table of Contents

Cash Flow From Financing Activities. Our financing activities used more cash during the six months ended June 30, 2014 compared to the same period of 2013 due to increased payments on our long-term debt along with significantly more cash that we used for distributions during the 2014 period.

Indebtedness

Effective May 15, 2013, we entered into a new comprehensive credit facility with Farm Credit Services of America, PCA and Farm Credit Services of America, FLCA (collectively "FCSA"). Our FCSA credit facility replaced our prior loans with First National Bank of Omaha. Our new FCSA credit facility was originally comprised of a $10 million revolving operating line of credit (the "Operating Line") and a $5 million revolving term commitment (the "Term Revolver"). Our FCSA credit facility was amended in December 2013 to add an additional $10 million term loan (the "Term Loan"). All of our assets, including the ethanol plant and equipment, its accounts receivable and inventory, serve as collateral for our loans with FCSA.

Operating Line

The Operating Line has a two year term which matures on May 31, 2015. The total amount that we can draw on the Operating Line is restricted by a formula based on the amount of inventory, receivables and equity we have in certain CBOT futures positions. Interest on the Operating Line accrues at the one month London Interbank Offered Rate ("LIBOR") plus 310 basis points. There is a fee of 0.25% on the portion of the Operating Line that we are not using, which is billed quarterly. The interest rate for this loan at June 30, 2014 was 3.25%. As of June 30, 2014, we had $0 outstanding on the Operating Line and $10,000,000 available to be drawn, taking into account the borrowing base calculation.

Term Revolver

The Term Revolver has a five year term which matures on May 31, 2018. We can use the Term Revolver for draws required to maintain compliance with our working capital requirements, funding approved capital expenditures and funding approved investments in other ethanol production facilities. Interest on the Term Revolver accrues at the one month LIBOR plus 335 basis points. There is a fee of 0.35% on the portion of the Term Revolver that we are not using, which is billed quarterly. As of June 30, 2014, the interest rate was 3.50%. On June 30, 2014, we had $1,000 outstanding and $4,999,000 available to be drawn on this loan.

Term Loan

Our Term Loan has an eight year term which matures on December 31, 2021. We used the proceeds of the Term Loan to pay a portion of our capital contribution to Guardian Hankinson, LLC. The initial amount of the Term Loan was $10,000,000. Pursuant to the Term Loan, we make quarterly principal payments of $312,500 plus accrued interest with a final payment of all remaining principal and unpaid interest on the maturity date of December 31, 2021. Interest on the Term Loan accrues at a variable interest rate. Interest on the Term Loan accrues at the one-month LIBOR plus 3.35% until December 1, 2018. After December 1, 2018, interest on the Term Loan accrues at FCSA's cost of funds rate plus 3.35%. On June 30, 2014, the interest rate on the Term Loan was 3.50%. On June 30, 2014, we had $7,875,000 outstanding on the Term Loan.

Covenants

Our credit facilities with FCSA are subject to various loan covenants. If we fail to comply with these loan covenants, FCSA can declare us to be in default of our loans. The material loan covenants applicable to our credit facilities are our working capital covenant, local net worth covenant and our debt service coverage ratio. We are required to maintain working capital (current assets minus current liabilities) of at least $5 million. We are required to maintain local net worth (total assets minus total liabilities minus the value of certain investments) of at least $18 million. We are required to maintain a debt service coverage ratio of at least 1.25:1.00.

As of June 30, 2014, we were in compliance with all of our loan covenants. Management's current financial projections indicate that we will be in compliance with our financial covenants for the next 12 months and we expect to remain in compliance thereafter. Management does not believe that it is reasonably likely that we will fall out of compliance with our material loan covenants in the next 12 months. If we fail to comply with the terms of our credit agreements with FCSA, and FCSA refuses to waive the non-compliance, FCSA may require us to immediately repay all amounts outstanding on our loans.

20



--------------------------------------------------------------------------------

Table of Contents

Application of Critical Accounting Policies

Management uses estimates and assumptions in preparing our consolidated financial statements in accordance with generally accepted accounting principles. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Of the significant accounting policies described in the notes to our consolidated financial statements, we believe that the following are the most critical:

Derivative Instruments

We enter into short-term forward grain, option and futures contracts as a means of securing corn and natural gas for the ethanol plant and managing exposure to changes in commodity and energy prices. We enter into short-term forward, option and futures contracts for sales of ethanol to manage exposure to changes in energy prices. All of our derivatives are designated as non-hedge derivatives, and accordingly are recorded at fair value with changes in fair value recognized in net income. Although the contracts are considered economic hedges of specified risks, they are not designated as and accounted for as hedging instruments.

As part of our trading activity, we use futures and option contracts offered through regulated commodity exchanges to reduce our risk and we are exposed to risk of loss in the market value of inventories. To reduce that risk, we generally take positions using cash and futures contracts and options.

Unrealized gains and losses related to derivative contracts for corn and natural gas purchases are included as a component of cost of revenues and derivative contracts related to ethanol sales are included as a component of revenues in the accompanying financial statements. The fair values of derivative contracts are presented on the accompanying balance sheet as derivative financial instruments.

Lower of cost or market accounting for inventory

With the significant change in the prices of our main inputs and outputs, the lower of cost or market analysis of inventory can have a significant impact on our financial performance.

The impact of market activity related to pricing of corn and ethanol will require us to continuously evaluate the pricing of our inventory under a lower of cost or market analysis.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Edgar Glimpses


Story Tools






HispanicBusiness.com Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters