Note 2 - Equity Method Investments

3 Months Ended

Mar. 31, 2013

Equity Method Investments and Joint Ventures Disclosure [Text Block]

Note 2.  Equity Method Investments.

As of March 31, 2013, the Company’s investments accounted for on the equity method of accounting consist of the following: (1) 30 percent interest in ICP, which manufactures alcohol for fuel, industrial and beverage applications, and (2) 50 percent interest in D.M. Ingredients, GmbH, (“DMI”), which produces certain specialty starch and protein ingredients.   

Processing completed a series of related transactions on November 20, 2009 pursuant to which Processing contributed its Pekin plant and certain maintenance and repair materials to a newly-formed company, ICP, and then sold 50 percent of the membership interest in ICP to Illinois Corn Processing Holdings (“ICP Holdings”), an affiliate of SEACOR Energy Inc.

On February 1, 2012, ICP Holdings exercised its option to purchase an additional 20 percent of the membership interest in ICP.  The sales price was $9,103 and was determined in accordance with the LLC Interest Purchase Agreement.  Following its exercise, ICP Holdings owns 70 percent of ICP, is entitled to name 4 of ICP’s 6 advisory board members, and generally has control of ICP’s day to day operations.  Processing owns 30 percent of ICP and is entitled to name 2 of ICP’s 6 advisory board members

Under a marketing agreement between ICP and the Company, (the “Marketing Agreement”), ICP manufactured and supplied food grade and industrial-use alcohol products for the Company, and the Company purchased, marketed and sold such products for a marketing fee.  Effective January 1, 2013, the Marketing Agreement expired.  The Company no longer plans to source products from ICP.

ICP’s term loan and revolving credit agreement with an affiliate of SEACOR Energy Inc. expired as of December 31, 2012 and has not been renewed.  The Company has no further funding requirement to ICP.

The ICP Limited Liability Company Agreement gives the Company and its joint venture partner, ICP Holdings, certain rights to shut down the Pekin plant if ICP operates at an EBITDA loss of $500 in any quarter.  Such rights are conditional in certain instances, but are absolute if EBITDA losses aggregate $1,500 over any three consecutive quarters or if ICP’s net working capital is less than $2,500.  For the quarter ended March 31, 2013, ICP experienced an EBITDA loss in excess of the $500 threshold.

The ICP Limited Liability Company Agreement also provides for a reallocation of profit and loss upon notice of shutdown that is rejected by ICP Holdings.  Such shutdown notice was provided on April 18, 2013 under the terms of the ICP Limited Liability Company Agreement, and such notice was rejected by ICP Holdings.  The Company believes that the allocation of profit and loss for the second quarter of 2013 will be 12 percent to the Company and 88 percent to ICP Holdings.  The exercise of this option does not affect the 30 percent equity ownership and would not impact the Company’s allocation if ICP were to be sold.  The allocation of profit and loss will revert to 30 percent to the Company for any quarter following a quarter-end measurement when the shutdown rights as described above are not triggered by the financial results of ICP or not elected by the Company.

Summary Financial Information

Condensed financial information related to the Company’s non-consolidated equity method investment in ICP is shown below.

	Quarter Ended
	March 31, 2013			March 31, 2012
ICP’s Operating results:
Net sales (a)	$	32,850		$	58,053
Cost of sales and expenses (b)		36,080			56,925
Net income (loss)	$	(3,230	)	$	1,128

(a) Includes related party sales to MGPI of $2,687 and $15,994 for the quarters ended March 31, 2013 and 2012, respectively.

(b) Includes depreciation and amortization of $1,170 and $1,259 for the quarters ended March 31, 2013 and 2012, respectively.

	March 31, 2013		December 31, 2012
ICP’s Balance Sheet:
Current assets	$	27,952	$	19,972
Noncurrent assets		18,686		19,856
Total assets	$	46,638	$	39,828
Current liabilities	$	26,667	$	16,631
Noncurrent liabilities		208		203
Equity		19,763		22,994
Total liabilities and equity	$	46,638	$	39,828

The Company’s equity in earnings (loss) is as follows:

	Quarter Ended
	March 31, 2013			March 31, 2012
ICP (30% interest) (a)	$	(969	)	$	473
DMI (50% interest)		27			(36	)
	$	(942	)	$	437

(a) The Company’s ownership percentage of ICP was 50 percent through February 1, 2012, when the Company sold 20 percent of its investment.  From February 2, 2012 through March 31, 2012, and until March 31, 2013, the Company’s ownership percentage in ICP was 30 percent.

The Company’s investment in joint ventures is as follows:

	March 31, 2013		December 31, 2012
ICP (30% interest)	$	5,929	$	6,898
DMI (50% interest)		418		403
	$	6,347	$	7,301