Edgar Filing: Green Plains Renewable Energy, Inc.

Effective Portion of Cash Flow
Hedges Recognized in

Three Months Ended
March 31,

Other Comprehensive Income (Loss)

Commodity Contracts

37af28be9cb146b

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

For the Quarterly Period Ended March 31, 2013

Commission File Number 001-32924

Green Plains Renewable Energy, Inc.

(Exact name of registrant as specified in its charter)


Iowa	84-1652107
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

450 Regency Parkway, Suite 400, Omaha, NE 68114	(402) 884-8700
(Address of principal executive offices, including zip code)	(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

S Yes £ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

S Yes £ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer £ Accelerated filer T Non-accelerated filer £ Smaller reporting company £

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

£ Yes S No

The number of shares of common stock, par value $0.001 per share, outstanding as of April 30, 2013 was 30,115,628 shares.

TABLE OF CONTENTS


		Page
PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets	2

	Consolidated Statements of Operations	3

	Consolidated Statements of Comprehensive Income	4

	Consolidated Statements of Cash Flows	5

	Notes to Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35

Item 4.	Controls and Procedures	37


PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	38

Item 1A.	Risk Factors	38

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38

Item 3.	Defaults Upon Senior Securities	38

Item 4.	Mine Safety Disclosures	38

Item 5.	Other Information	38

Item 6.	Exhibits	39

Signatures		40

GREEN PLAINS RENEWABLE ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)


	March 31,		December 31,
	2013		2012
	(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	229,808	$	254,289
Restricted cash		11,824		25,815
Accounts receivable, net of allowances of $219 and $219, respectively		78,896		80,537
Inventories		165,381		172,009
Prepaid expenses and other		7,579		12,314
Deferred income taxes		3,934		2,133
Derivative financial instruments		26,244		20,938
Total current assets		523,666		568,035
Property and equipment, net of accumulated depreciation of
$177,175 and $164,445, respectively		697,382		708,110
Goodwill		40,877		40,877
Other assets		31,485		32,712
Total assets	$	1,293,410	$	1,349,734

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	70,732	$	95,564
Accrued and other liabilities		24,258		32,475
Unearned revenue		6,982		3,617
Short-term notes payable and other borrowings		158,496		171,302
Current maturities of long-term debt		78,777		129,426
Total current liabilities		339,245		432,384

Long-term debt		401,794		362,549
Deferred income taxes		59,906		60,082
Other liabilities		4,068		4,217
Total liabilities		805,013		859,232

Stockholders' equity
Common stock, $0.001 par value; 75,000,000 shares authorized;
37,316,382 and 36,903,777 shares issued, and 30,116,382
and 29,703,777 shares outstanding, respectively		37		37
Additional paid-in capital		446,472		445,198
Retained earnings		110,095		107,540
Accumulated other comprehensive income (loss)		(2,399)		3,535
Treasury stock, 7,200,000 shares		(65,808)		(65,808)
Total stockholders' equity		488,397		490,502
Total liabilities and stockholders' equity	$	1,293,410	$	1,349,734

See accompanying notes to the consolidated financial statements.

GREEN PLAINS RENEWABLE ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited and in thousands, except per share amounts)


	Three Months Ended March 31,
	2013		2012

Revenues	$	765,476	$	775,395
Cost of goods sold		738,262		766,625
Gross profit		27,214		8,770
Selling, general and administrative expenses		14,510		19,861
Operating income (loss)		12,704		(11,091)
Other income (expense)
Interest income		39		39
Interest expense		(8,070)		(9,067)
Other, net		(520)		(578)
Total other income (expense)		(8,551)		(9,606)
Income (loss) before income taxes		4,153		(20,697)
Income tax expense (benefit)		1,598		(8,001)
Net income (loss)		2,555		(12,696)
Net loss attributable to noncontrolling interests		-		4
Net income (loss) attributable to Green Plains	$	2,555	$	(12,692)

Earnings per share:
Net income (loss) attributable to Green Plains - basic	$	0.09	$	(0.39)
Net income (loss) attributable to Green Plains - diluted	$	0.08	$	(0.39)
Weighted average shares outstanding:
Basic		29,933		32,238
Diluted		30,210		32,238

See accompanying notes to the consolidated financial statements.

GREEN PLAINS RENEWABLE ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited and in thousands)


	Three Months Ended March 31,
	2013		2012

Net income (loss)	$	2,555	$	(12,696)
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on derivatives arising during period,
net of tax expense (benefit) of $8,502 and $(25), respectively		(12,637)		43
Reclassification of realized losses on derivatives, net of tax
benefit of $4,509 and $1,491, respectively		6,703		2,590
Total other comprehensive income (loss), net of tax		(5,934)		2,633
Comprehensive loss		(3,379)		(10,063)
Comprehensive loss attributable to noncontrolling interests		-		4
Comprehensive loss attributable to Green Plains	$	(3,379)	$	(10,059)

See accompanying notes to the consolidated financial statements.

GREEN PLAINS RENEWABLE ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited and in thousands)


	Three Months Ended March 31,
	2013		2012
Cash flows from operating activities:
Net income (loss)	$	2,555	$	(12,696)
Adjustments to reconcile net income (loss) to net cash
used by operating activities:
Depreciation and amortization		12,609		13,158
Amortization of debt issuance costs		1,055		775
Deferred income taxes		2,015		(6,482)
Stock-based compensation expense		883		1,171
Undistributed equity in loss of affiliates		520		578
Allowance for doubtful accounts		-		46
Other		806		-
Changes in operating assets and liabilities before
effects of business combinations:
Accounts receivable		1,641		13,534
Inventories		6,628		(21,477)
Derivative financial instruments		(15,277)		(8,264)
Prepaid expenses and other assets		4,735		4,909
Accounts payable and accrued liabilities		(33,050)		(80,716)
Unearned revenues		3,365		2,745
Other		392		(172)
Net cash used by operating activities		(11,123)		(92,891)

Cash flows from investing activities:
Purchases of property and equipment		(1,881)		(5,660)
Acquisition of businesses, net of cash acquired		-		(1,490)
Other		(803)		-
Net cash used by investing activities		(2,684)		(7,150)

Cash flows from financing activities:
Proceeds from the issuance of long-term debt		21,400		16,000
Payments of principal on long-term debt		(32,815)		(13,080)
Proceeds from short-term borrowings		847,650		782,086
Payments on short-term borrowings		(861,251)		(710,653)
Payments for repurchase of common stock		-		(10,445)
Change in restricted cash		13,991		(5,204)
Payments of loan fees		(40)		(292)
Other		391		1,630
Net cash provided (used) by financing activities		(10,674)		60,042

Net change in cash and cash equivalents		(24,481)		(39,999)
Cash and cash equivalents, beginning of period		254,289		174,988
Cash and cash equivalents, end of period	$	229,808	$	134,989

Continued on the following page

GREEN PLAINS RENEWABLE ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited and in thousands)


Continued from the previous page
	Three Months Ended March 31,
	2013		2012

Supplemental disclosures of cash flow:
Cash paid for income taxes	$	1,289	$	457
Cash paid for interest	$	7,880	$	7,032

Supplemental noncash investing and financing activities:
Assets acquired in acquisitions and mergers	$	-	$	1,590
Less: liabilities assumed		-		(100)
Net assets acquired	$	-	$	1,490

Short-term note payable issued to repurchase common stock	$	-	$	27,162

See accompanying notes to the consolidated financial statements.

GREEN PLAINS RENEWABLE ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. BASIS OF PRESENTATION, DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

References to the Company

References to “Green Plains” or the “Company” in the consolidated financial statements and in these notes to the consolidated financial statements refer to Green Plains Renewable Energy, Inc., an Iowa corporation, and its subsidiaries.

Consolidated Financial Statements

The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and entities which it controls. All significant intercompany balances and transactions have been eliminated on a consolidated basis for reporting purposes. Unconsolidated entities are included in the financial statements on an equity basis. Results for the interim periods presented are not necessarily indicative of results to be expected for the entire year.

The accompanying unaudited consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles, or GAAP, for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The consolidated financial statements should be read in conjunction with the Company’s annual report on Form 10-K for the year ended December 31, 2012.

The unaudited financial information reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented. The adjustments are of a normal recurring nature, except as otherwise noted.

Use of Estimates in the Preparation of Consolidated Financial Statements

The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Description of Business

Green Plains is North America’s fourth largest ethanol producer. The Company operates its business within four segments: (1) production of ethanol and distillers grains, collectively referred to as ethanol production, (2) corn oil production, (3) grain handling and storage, collectively referred to as agribusiness, and (4) marketing and logistics services for Company-produced and third-party ethanol, distillers grains, corn oil and other commodities, and the operation of blending and terminaling facilities, collectively referred to as marketing and distribution. Additionally, the Company is a partner in a joint venture that was formed to commercialize advanced photo-bioreactor technologies for the growing and harvesting of algal biomass.

Revenue Recognition

The Company recognizes revenue when all of the following criteria are satisfied: persuasive evidence of an arrangement exists; risk of loss and title transfer to the customer; the price is fixed and determinable; and collectability is reasonably assured.

For sales of ethanol, distillers grains and other commodities by the Company’s marketing business, revenue is recognized when title to the product and risk of loss transfer to an external customer. Revenues related to marketing operations for third parties are recorded on a gross basis as the Company takes title to the product and assumes risk of loss. Unearned revenue is reflected on the consolidated balance sheets for goods in transit for which the Company has received payment and title has not been transferred to the customer. Revenues from the Company’s biofuel terminal operations, which include ethanol transload and splash blending services, are recognized as these services are rendered.

The Company routinely enters into fixed-price, physical-delivery ethanol sales agreements. In certain instances, the Company intends to settle the transaction by open market purchases of ethanol rather than by delivery from its own production. These transactions are reported net as a component of revenues. Revenues also include realized gains and losses on related derivative financial instruments, ineffectiveness on cash flow hedges, and reclassifications of realized gains and losses on effective cash flow hedges from accumulated other comprehensive income (loss).

Sales of agricultural commodities are recognized when title to the product and risk of loss transfer to the customer, which is dependent on the agreed upon sales terms with the customer. These sales terms provide for passage of title either at the time shipment is made or at the time the commodity has been delivered to its destination and final weights, grades and settlement prices have been agreed upon with the customer. Revenues related to grain merchandising are presented gross in the statements of operations with amounts billed for shipping and handling included in revenues and also as a component of cost of goods sold. Revenues from grain storage are recognized as services are rendered.

Cost of Goods Sold

Cost of goods sold includes costs for direct labor, materials and certain plant overhead costs. Direct labor includes all compensation and related benefits of non-management personnel involved in the operation of the Company’s ethanol plants. Grain purchasing and receiving costs, other than labor costs for grain buyers and scale operators, are also included in cost of goods sold. Direct materials consist of the costs of corn feedstock, denaturant, and process chemicals. Corn feedstock costs include unrealized gains and losses on related derivative financial instruments not designated as cash flow hedges, inbound freight charges, inspection costs and transfer costs. Corn feedstock costs also include realized gains and losses on related derivative financial instruments, ineffectiveness on cash flow hedges, and reclassifications of realized gains and losses on effective cash flow hedges from accumulated other comprehensive income (loss). Plant overhead costs primarily consist of plant utilities, plant depreciation and outbound freight charges. Shipping costs incurred directly by the Company, including railcar lease costs, are also reflected in cost of goods sold.

The Company uses exchange-traded futures and options contracts to minimize the effects of changes in the prices of agricultural commodities on its agribusiness segment’s grain inventories and forward purchase and sales contracts. Exchange-traded futures and options contracts are valued at quoted market prices. Grain inventories held for sale, forward purchase contracts and forward sale contracts in the agribusiness segment are valued at market prices, where available, or other market quotes adjusted for differences, primarily transportation, between the exchange-traded market and the local markets on which the terms of the contracts are based. Changes in the fair value of grain inventories held for sale, forward purchase and sale contracts, and exchange-traded futures and options contracts in the agribusiness segment, are recognized in earnings as a component of cost of goods sold. These contracts are predominantly settled in cash. The Company is exposed to loss in the event of non-performance by the counter-party to forward purchase and forward sales contracts.

Derivative Financial Instruments

To minimize the risk and the effects of the volatility of commodity price changes primarily related to corn, ethanol and natural gas, the Company uses various derivative financial instruments, including exchange-traded futures, and exchange-traded and over-the-counter options contracts. The Company monitors and manages this exposure as part of its overall risk management policy. As such, the Company seeks to reduce the potentially adverse effects that the volatility of these markets may have on its operating results. The Company may take hedging positions in these commodities as one way to mitigate risk. While the Company attempts to link its hedging activities to purchase and sales activities, there are situations in which these hedging activities can themselves result in losses.

By using derivatives to hedge exposures to changes in commodity prices, the Company has exposures on these derivatives to credit and market risk. The Company is exposed to credit risk that the counterparty might fail to fulfill its performance obligations under the terms of the derivative contract. The Company minimizes its credit risk by entering into transactions with high quality counterparties, limiting the amount of financial exposure it has with each counterparty and monitoring the financial condition of its counterparties. Market risk is the risk that the value of the financial instrument might be adversely affected by a change in commodity prices or interest rates. The Company manages market risk by incorporating monitoring parameters within its risk management strategy that limit the types of derivative instruments and derivative strategies the Company uses, and the degree of market risk that may be undertaken by the use of derivative instruments.

The Company evaluates its contracts that involve physical delivery to determine whether they may qualify for the normal purchases or normal sales exemption and are expected to be used or sold over a reasonable period in the normal course of business. Any contracts that do not meet the normal purchase or sales criteria are recorded at fair value with the change in fair value recorded in operating income unless the contracts qualify for, and the Company elects, hedge accounting treatment.

Certain qualifying derivatives within the ethanol production segment are designated as cash flow hedges. Prior to entering into cash flow hedges, the Company evaluates the derivative instrument to ascertain its effectiveness. For cash flow hedges, any ineffectiveness is recognized in current period results, while other unrealized gains and losses are reflected in accumulated other comprehensive income until gains and losses from the underlying hedged transaction are realized. In the event that it becomes probable that a forecasted transaction will not occur, the Company would discontinue cash flow hedge treatment, which would affect earnings. These derivative financial instruments are recognized in current assets or other current liabilities at fair value.

At times, the Company hedges its exposures to changes in the value of inventories and designates certain qualifying derivatives as fair value hedges. The carrying amount of the hedged inventory is adjusted through current period results for changes in the fair value arising from changes in underlying prices. Any ineffectiveness is recognized in current period results to the extent that the change in the fair value of the inventory is not offset by the change in the fair value of the derivative.

Recent Accounting Pronouncements

Effective January 1, 2013, the Company adopted the amended guidance in ASC Topic 210, Balance Sheet. The amended guidance addresses disclosure of offsetting financial assets and liabilities. It requires entities to add disclosures showing both gross and net information about instruments and transactions eligible for offset in the balance sheet and instruments and transactions subject to an agreement similar to a master netting arrangement. The updated disclosures have been implemented retrospectively and do not impact the Company’s financial position or results of operations.

Effective January 1, 2013, the Company adopted the amended guidance in ASC Topic 220, Comprehensive Income. The amended guidance requires entities to disclose additional information about reclassification adjustments, including (1) changes in accumulated other comprehensive income by component and (2) significant items reclassified out of accumulated other comprehensive income by presenting the amount reclassified and the individual income statement line items affected. The updated disclosures have been implemented prospectively and do not impact our financial position or results of operations. See Note 10, Stockholders’ Equity, for expanded disclosures.

2. FAIR VALUE DISCLOSURES

The following methods, assumptions and valuation techniques were used in estimating the fair value of the Company’s financial instruments:

Level 1 – unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 1 unrealized gains and losses on commodity derivatives relate to exchange-traded open trade equity and option values in the Company’s brokerage accounts.

Level 2 – directly or indirectly observable inputs such as quoted prices for similar assets or liabilities in active markets other than quoted prices included within Level 1; quoted prices for identical or similar assets in markets that are not active; and other inputs that are observable or can be substantially corroborated by observable market data by correlation or other means. Grain inventories held for sale in the agribusiness segment are valued at nearby futures values, plus or minus nearby basis levels.

Level 3 – unobservable inputs that are supported by little or no market activity and that are a significant component of the fair value of the assets or liabilities. The Company currently does not have any recurring Level 3 financial instruments.

There have been no changes in valuation techniques and inputs used in measuring fair value. Consistent with past practice, on March 31, 2013, exchange-traded futures for corn were classified as Level 2 measurements to reflect the price limit set by the exchange for that day.

The following tables set forth the Company’s assets and liabilities by level that were accounted for the periods indicated (in thousands):



	Fair Value Measurements at March 31, 2013
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Reclassification for Balance Sheet
	(Level 1)		(Level 2)		Presentation		Total
Assets:
Cash and cash equivalents	$	229,808	$	-	$	-	$	229,808
Restricted cash		14,024		-		-		14,024
Margin deposits		17,038		-		(17,038)		-
Inventories carried at market		-		42,865		-		42,865
Unrealized gains on derivatives		431		22,310		3,503		26,244
Total assets measured at fair value	$	261,301	$	65,175	$	(13,535)	$	312,941

Liabilities:
Unrealized losses on derivatives	$	13,311	$	2,600	$	(13,535)	$	2,376
Other		173		-		-		173
Total liabilities measured at fair value	$	13,484	$	2,600	$	(13,535)	$	2,549



	Fair Value Measurements at December 31, 2012
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Reclassification for Balance Sheet
	(Level 1)		(Level 2)		Presentation		Total
Assets:
Cash and cash equivalents	$	254,289	$	-	$	-	$	254,289
Restricted cash		28,015		-		-		28,015
Margin deposits		12,847		-		(12,847)		-
Inventories carried at market		-		61,763		-		61,763
Unrealized gains on derivatives		7,337		3,254		10,347		20,938
Total assets measured at fair value	$	302,488	$	65,017	$	(2,500)	$	365,005

Liabilities:
Unrealized losses on derivatives	$	2,544	$	2,103	$	(2,500)	$	2,147
Other		107		-		-		107
Total liabilities measured at fair value	$	2,651	$	2,103	$	(2,500)	$	2,254

The Company believes the fair values of its debt, accounts receivable and accounts payable approximate book value, which were $639.1 million, $78.9 million and $70.7 million, respectively, at March 31, 2013 and $663.3 million, $80.5 million and $95.6 million, respectively, at December 31, 2012. The Company estimates the fair value of its outstanding debt using Level 2 inputs.

Although the Company currently does not have any recurring Level 3 financial measurements, the fair values of the tangible assets and goodwill acquired represent Level 3 measurements and were derived using a combination of the income approach, the market approach and the cost approach as considered appropriate for the specific assets being valued.

3. SEGMENT INFORMATION

Company management reviews financial and operating performance in the following four separate operating segments: (1) production of ethanol and distillers grains, collectively referred to as ethanol production, (2) corn oil production, (3) grain handling and storage, collectively referred to as agribusiness, and (4) marketing and logistics services for Company-produced and third-party ethanol, distillers grains, corn oil and other commodities, and the operation of blending and terminaling facilities, collectively referred to as marketing and distribution. Selling, general and administrative expenses, primarily consisting of compensation of corporate employees, professional fees and overhead costs not directly related to a specific operating segment, are reflected in the table below as corporate activities.

During the normal course of business, the Company enters into transactions between segments. Examples of these intersegment transactions include, but are not limited to, the ethanol production segment selling ethanol to the marketing and distribution segment and the agribusiness segment selling grain to the ethanol production segment. These intersegment activities are recorded by each segment at prices approximating market and treated as if they are third-party transactions. Consequently, these transactions impact segment performance. However, revenues and corresponding costs are eliminated in consolidation and do not impact the Company’s consolidated results.

In December 2012, the Company sold twelve grain elevators located in northwestern Iowa and western Tennessee. The transaction involved approximately 32.6 million bushels, or 83%, of the Company’s reported agribusiness grain storage capacity and all of its agronomy and retail petroleum operations. The divested assets were reported within the Company’s agribusiness segment.

The following are certain financial data for the Company’s operating segments for the periods indicated (in thousands):



	Three Months Ended March 31,
	2013		2012
Revenues:
Ethanol production:
Revenues from external customers	$	44,408	$	45,358
Intersegment revenues		464,651		412,819
Total segment revenues		509,059		458,177
Corn oil production:
Revenues from external customers		-		508
Intersegment revenues		15,699		13,011
Total segment revenues		15,699		13,519
Agribusiness:
Revenues from external customers		22,125		72,825
Intersegment revenues		64,919		45,402
Total segment revenues		87,044		118,227
Marketing and distribution:
Revenues from external customers		698,943		656,704
Intersegment revenues		1,289		67
Total segment revenues		700,232		656,771
Revenues including intersegment activity		1,312,034		1,246,694
Intersegment eliminations		(546,558)		(471,299)
Revenues as reported	$	765,476	$	775,395


	Three Months Ended March 31,
	2013		2012
Gross profit (loss):
Ethanol production	$	1,230	$	(10,035)
Corn oil production		7,909		7,936
Agribusiness		1,226		6,246
Marketing and distribution		17,055		4,186
Intersegment eliminations		(206)		437
	$	27,214	$	8,770
Operating income (loss):
Ethanol production	$	(2,349)	$	(13,880)
Corn oil production		7,810		7,848
Agribusiness		369		669
Marketing and distribution		12,986		510
Intersegment eliminations		(161)		471
Corporate activities		(5,951)		(6,709)
	$	12,704	$	(11,091)

The following table sets forth revenues by product line for the periods indicated (in thousands):



	Three Months Ended March 31,
	2013		2012
Revenues:
Ethanol	$	579,493	$	583,535
Distillers grains		131,548		100,604
Corn oil		17,096		13,155
Grain		26,320		64,219
Agronomy products		52		7,118
Other		10,967		6,764
	$	765,476	$	775,395

The following are total assets for our operating segments for the periods indicated (in thousands):



	March 31,		December 31,
	2013		2012
Total assets:
Ethanol production	$	805,022	$	831,939
Corn oil production		22,835		27,751
Agribusiness		161,559		179,930
Marketing and distribution		203,277		184,541
Corporate assets		126,703		150,797
Intersegment eliminations		(25,986)		(25,224)
	$	1,293,410	$	1,349,734

4. INVENTORIES

Inventories are carried at the lower of cost or market, except grain held for sale, which is valued at market value. The components of inventories are as follows (in thousands):


	March 31,		December 31,
	2013		2012
Finished goods	$	65,032	$	58,080
Grain held for sale		42,865		61,763
Raw materials		33,481		28,494
Work-in-process		12,861		13,326
Supplies and parts		11,142		10,346
	$	165,381	$	172,009

5. GOODWILL

The Company did not have any changes in the total carrying amount of goodwill, which was $40.9 million, during the three months ended March 31, 2013. Goodwill of $30.3 million is attributable to the ethanol production segment and $10.6 million is attributable to the marketing and distribution segment.

6. DERIVATIVE FINANCIAL INSTRUMENTS

At March 31, 2013, the Company’s consolidated balance sheet reflects unrealized losses, net of tax, of $2.4 million in accumulated other comprehensive loss. The Company expects that all of the unrealized losses at March 31, 2013 will be reclassified into operating income over the next 12 months as a result of hedged transactions that are forecasted to occur. The amount ultimately realized in operating income, however, will differ as commodity prices change.

Fair Values of Derivative Instruments

The following table provides information about the fair values of the Company’s derivative financial instruments and the line items on the consolidated balance sheets in which the fair values are reflected (in thousands):


	Asset Derivatives'						Liability Derivatives'
	Fair Value						Fair Value
	March 31,			December 31,			March 31,		December 31,
	2013			2012			2013		2012
Derivative financial instruments (1)	$	9,206	(2)	$	8,091	(3)	$	-	$	-
Accrued and other liabilities		-			-			2,376		2,103
Other liabilities		-			-			-		44
Total	$	9,206		$	8,091		$	2,376	$	2,147

(1) Derivative financial instruments as reflected on the consolidated balance sheets include margin deposit assets of $17.0 million and $12.8 million at March 31, 2013 and December 31, 2012, respectively.

(2) Balance at March 31, 2013 includes $6.4 million of net unrealized gains on derivative financial instruments designated as cash flow hedging instruments.

(3) Balance at December 31, 2012 includes $2.1 million of net unrealized gains on derivative financial instruments designated as cash flow hedging instruments.

Refer to Note 2 - Fair Value Disclosures, which also contains fair value information related to derivative financial instruments.

Effect of Derivative Instruments on Consolidated Statements of Operations and Consolidated Statements of Stockholders’ Equity and Comprehensive Income

The following tables provide information about the gain or loss recognized in income and other comprehensive income on the Company’s derivative financial instruments and the line items in the financial statements in which such gains and losses are reflected (in thousands):



Gains (Losses) on Derivative Instruments Not	Three Months Ended March 31,
Designated in a Hedging Relationship	2013		2012
Revenue	$	(11,669)	$	(2,885)
Cost of goods sold		11,017		1,185
Net decrease recognized in earnings before tax	$	(652)	$	(1,700)



Gain (Loss) Due to Ineffectiveness	Three Months Ended March 31,
of Cash Flow Hedges	2013		2012
Revenue	$	(6)	$	5
Cost of goods sold		(25)		(64)
Net decrease recognized in earnings before tax	$	(31)	$	(59)



Gains (Losses) Reclassified from Accumulated Other Comprehensive Income (Loss)	Three Months Ended March 31,
into Net Income (Loss)	2013		2012
Revenue	$	(10,379)	$	617
Cost of goods sold		(833)		(4,698)
Net decrease recognized in earnings before tax	$	(11,212)	$	(4,081)



Gain (Loss) from Fair Value	Three Months Ended March 31,
Hedges of Ethanol Inventory	2013		2012
Revenue (effect of change in inventory value)	$	301	$	1,218
Revenue (effect of fair value hedge)		(301)		(1,218)
Ineffectiveness recognized in earnings before tax	$	-	$	-

There were no gains or losses due to the discontinuance of cash flow hedge treatment or fair value hedge exposure during the three months ended March 31, 2013.

The following table summarizes the volumes of open commodity derivative positions as of March 31, 2013 (in thousands):



March 31, 2013
	Exchange Traded		Non-Exchange Traded
Derivative Instruments	Net Long & (Short) (1)		Long (2)	(Short) (2)	Unit of Measure	Commodity
Futures	(6,055)				Bushels	Corn and Soybeans
Futures	24,515	(3)			Bushels	Corn
Futures	(10,152)				Gallons	Ethanol
Futures	(140,994)	(3)			Gallons	Ethanol
Futures	(1,680)	(4)			Gallons	Ethanol
Options	(12)				Bushels	Corn, Soybeans and Wheat
Options	(3,866)				Gallons	Ethanol
Forwards			6,840	(1,146)	Bushels	Corn, Soybeans and Milo
Forwards			17,574	(246,414)	Gallons	Ethanol
Forwards			39	(112)	Tons	Distillers Grains
Forwards			96	(52,272)	Pounds	Corn Oil

(1)	Exchange traded futures and options are presented on a net long and (short) position basis. Options are presented on a delta-adjusted basis.

(2)	Non-exchange traded forwards are presented on a gross long and (short) position basis including both fixed-price and basis contracts.

(3)	Futures used for cash flow hedges.

(4)	Futures used for fair value hedges.

Energy trading contracts that do not involve physical delivery are presented net in revenues on the consolidated statements of operations. Revenues and cost of goods sold under such contracts are summarized in the table below for the periods indicated (in thousands):



	Three Months Ended March 31,
	2013		2012
Revenue	$	1,982	$	6,575
Cost of goods sold		1,962		6,485

7. DEBT

The principal balances of the components of long-term debt are as follows (in thousands):


	March 31,		December 31,
	2013		2012
Green Plains Bluffton:
$70.0 million term loan	$	39,268	$	41,018
$20.0 million revolving term loan		20,000		20,000
$22.0 million revenue bond		16,660		17,510
Green Plains Central City:
$55.0 million term loan		37,280		38,635
$30.5 million revolving term loan		28,639		28,639
$11.0 million revolving line of credit		10,600		10,600
Equipment financing loan		88		105
Green Plains Holdings II:
$26.4 million term loan		20,414		21,914
$51.1 million revolving term loan		45,320		45,320
Green Plains Obion:
$60.0 million term loan		11,079		13,479
$37.4 million revolving term loan		37,400		37,400
Equipment financing loan		283		334
Economic development grant		1,313		1,335
Green Plains Ord:
$25.0 million term loan		17,055		17,675
$13.0 million revolving term loan		12,151		12,151
$5.0 million revolving line of credit		4,749		4,749
Green Plains Otter Tail:
$30.3 million term loan		21,605		22,791
$4.7 million revolver		4,675		4,675
$19.2 million note payable		19,047		19,014
Capital lease payable		23		53
Green Plains Shenandoah:
$17.0 million revolving term loan		17,000		17,000
Green Plains Superior:
$40.0 million term loan		13,875		15,250
$10.0 million revolving term loan		10,000		10,000
Equipment financing loan		72		89
Corporate:
$90.0 million convertible notes		90,000		90,000
Notes Payable		1,625		1,625
Capital Lease		350		403
Other		-		211
Total long-term debt		480,571		491,975
Less: current portion of long-term debt		(78,777)		(129,426)
Long-term debt	$	401,794	$	362,549

Short-term notes payable and other borrowings at March 31, 2013 included working capital revolvers at Green Plains Grain and Green Plains Trade with outstanding balances of $110.5 million and $48.0 million, respectively. Short-term notes payable and other borrowings at December 31, 2012 included working capital revolvers at Green Plains Grain and Green Plains Trade with outstanding balances of $105.0 million and $39.1 million, respectively, and a $27.2 million short-term note payable issued in conjunction with the March 2012 repurchase of common stock.

Ethanol Production Segment

·	Term Loans

o	Scheduled principal payments are as follows:


•	Green Plains Bluffton	$0.3 million per month
•	Green Plains Central City	$0.5 million per month
•	Green Plains Holdings II	$1.5 million per quarter
•	Green Plains Obion	$2.4 million per quarter
•	Green Plains Ord	$0.2 million per month
•	Green Plains Otter Tail	$0.4 million per month
•	Green Plains Superior	$1.4 million per quarter

o	Final maturity dates (at the latest) are as follows:


•	Green Plains Bluffton	January 31, 2015
•	Green Plains Central City	July 1, 2016
•	Green Plains Holdings II	July 1, 2016
•	Green Plains Obion	May 20, 2014
•	Green Plains Ord	July 1, 2016
•	Green Plains Otter Tail	September 1, 2018
•	Green Plains Superior	July 20, 2015

Revolving Term Loans – The revolving term loans are generally available for advances throughout the life of the commitment, subject, in certain cases, to borrowing base restrictions. Allowable advances under the Green Plains Shenandoah loan agreement are reduced by $1.0 million each six-month period commencing on June 1, 2013. Allowable advances under the Green Plains Superior loan agreement are reduced by $2.5 million each six-month period commencing on the first day of the month beginning six months after repayment of the term loan, but in no event later than January 1, 2016. Allowable advances under the Green Plains Obion loan agreement are reduced by $4.7 million on a semi-annual basis commencing on March 1, 2015. Allowable advances under the Green Plains Holdings II loan agreement are reduced by $2.7 million on a semi-annual basis commencing on April 1, 2012 and are reduced by $5.7 million on a semi-annual basis commencing on October 1, 2016. Interest-only payments are due each month on all revolving term loans until the final maturity date for the Green Plains Bluffton, Green Plains Central City, Green Plains Ord, Green Plains Otter Tail, Green Plains Shenandoah, and Green Plains Superior loan agreements.

o	Final maturity dates (at the latest) are as follows:


•	Green Plains Bluffton	January 31, 2015
•	Green Plains Central City	July 1, 2016
•	Green Plains Holdings II	October 1, 2018
•	Green Plains Obion	June 1, 2018
•	Green Plains Ord	July 1, 2016
•	Green Plains Otter Tail	June 19, 2013
•	Green Plains Shenandoah	March 1, 2018
•	Green Plains Superior	July 1, 2017

Green Plains Bluffton also received $22.0 million in Subordinate Solid Waste Disposal Facility Revenue Bond funds from the City of Bluffton, Indiana. The revenue bond requires: (1) semi-annual principal and interest payments of approximately $1.5 million through March 1, 2019, and (2) a final principal and interest payment of $3.745 million on September 1, 2019. At March 31, 2013, Green Plains Bluffton had $2.5 million of cash that was restricted as to use for payment towards the current maturity and interest of the revenue bond. Such cash is presented as restricted cash on the consolidated balance sheet.

Green Plains Otter Tail also issued $19.2 million in senior notes under New Market Tax Credits financing. The notes bear interest at 4.75% per annum, payable monthly, and require monthly principal payments of approximately $0.3 million beginning in October 2014. The notes mature on September 1, 2018 with an expected outstanding balance of $4.7 million upon maturity.

Subsidiaries within the ethanol production segment were in compliance with their debt covenants as of March 31, 2013.

Agribusiness Segment

Green Plains Grain has a $195.0 million senior secured revolving credit facility with various lenders. The revolving credit facility matures on October 28, 2013.

The revolving credit facility includes total revolving credit commitments of $195.0 million and an accordion feature whereby amounts available under the facility may be increased by up to $55.0 million of new lender commitments upon agent approval. As security for the revolving credit facility, the lender received a first priority lien on certain cash, inventory, accounts receivable and other assets owned by subsidiaries of the agribusiness segment. Advances are subject to interest charges at a rate per annum equal to the LIBOR rate for the outstanding period plus the applicable margin or a rate per annum equal to the base rate plus the applicable margin.

Subsidiaries within the agribusiness segment were in compliance with their debt covenants as of March 31, 2013.

Marketing and Distribution Segment

Green Plains Trade has a senior secured asset-based revolving credit facility pursuant to which the lender will loan up to $130.0 million on eligible collateral. This credit facility was increased from $70.0 million in April 2013. The amount of eligible collateral is determined by a calculated borrowing base value equal to the sum of percentages of eligible receivables and eligible inventories, less certain miscellaneous adjustments. The outstanding balance, if any, is subject to interest charges at the lender’s floating base rate plus 2.5% or LIBOR plus 3.5%. At March 31, 2013, Green Plains Trade had $11.6 million in cash that was restricted for repayment of the then outstanding loan balance. Such cash is presented in restricted cash on the consolidated balance sheets. The revolving credit facility expires on April 26, 2016.