5. SEGMENTS

12 Months Ended

Dec. 31, 2015

Segment Reporting [Abstract]

SEGMENTS

The Company previously reported as a single segment, however, as a result of changes in the Company’s business in 2015, after a reassessment, the Company changed the number of its operating and reportable segments as determined under ASC 280.

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.

Income before provision for income taxes includes management fees charged by the Parent to the segment. The production segment incurred $6.0 million, $8.8 million and $5.6 million in management fees for the years ended December 31, 2015, 2014 and 2013, respectively. The marketing and distribution segment incurred $3.9 million, $3.9 million and $3.6 million in management fees for the years ended December 31, 2015, 2014 and 2013, respectively. Corporate activities include selling, general and administrative expenses, consisting primarily of corporate employee compensation, professional fees and overhead costs not directly related to a specific operating segment.

During the normal course of business, the segments do business with each other. The preponderance of this activity occurs when the Company’s marketing segment markets ethanol produced by the production segment for a marketing fee, as discussed in Note 4. These intersegment activities are considered arms’-length transactions. Consequently, although these transactions impact segment performance, they do not impact the Company’s consolidated results since all revenues and corresponding costs are eliminated in consolidation.

Capital expenditures are substantially all incurred at the Company’s production segment.

The following tables set forth certain financial data for the Company’s operating segments (in thousands):

	Years Ended December 31,
	2015			2014			2013
Net Sales:
Ethanol production:
Net sales from external customers	$	710,201		$	562,388		$	507,162
Intersegment net sales		–			–			–
Total segment revenues		710,201			562,388			507,162
Marketing and distribution:
Net sales from external customers		480,975			545,024			401,275
Intersegment net sales		5,262			3,986			3,351
Total segment net sales		486,237			549,010			404,626
Net sales including intersegment activity		1,196,438			1,111,398			911,788
Intersegment eliminations		(5,262	)		(3,986	)		(3,351	)
Net sales as reported	$	1,191,176		$	1,107,412		$	908,437
Cost of goods sold:
Ethanol production	$	719,833		$	473,598		$	492,186
Marketing and distribution		476,411			537,010			393,366
Intersegment eliminations		(12,477	)		(11,681	)		(10,045	)
	$	1,183,767		$	998,927		$	875,507
Income (loss) before provision for income taxes:
Ethanol production	$	(32,723	)	$	72,278		$	3,776
Marketing and distribution		3,200			6,068			5,217
Corporate activities		616			(37,207	)		(10,155	)
	$	(28,907	)	$	41,139		$	(1,162	)
Depreciation and amortization:
Ethanol production	$	23,091		$	12,509		$	11,533
Marketing and distribution		151			551			499
Corporate activities		390			126			104
	$	23,632		$	13,186		$	12,136
Interest expense:
Ethanol production	$	(11,969	)	$	(7,048	)	$	(11,248	)
Marketing and distribution		(625	)		(566	)		(527	)
Corporate activities		–			(1,824	)		(3,896	)
	$	(12,594	)	$	(9,438	)	$	(15,671	)

The following table sets forth the Company’s total assets by operating segment (in thousands):

	Years Ended December 31,
	2015		2014
Total assets:
Ethanol production	$	536,013	$	190,630
Marketing and distribution		107,532		70,068
Corporate assets		31,598		37,198
	$	675,143	$	297,896