Equity Method Investments.

As of June 30, 2014, 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.

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, although the Company continues to source product from ICP.

ICP’s revolving credit agreement with an affiliate of SEACOR has been amended and restated extending the maturity to January 1, 2016. The Company has no further funding requirement to ICP.

ICP's Limited Liability Company Agreement generally allocates profits, losses and distributions of cash of ICP based on the percentage of a member's capital contributions to ICP relative to total capital contributions of all members ("Percentage Interest") to ICP, of which the Company has 30 percent and its joint venture partner, ICP Holdings, has 70 percent. That agreement grants the right to either member to elect (the "Electing Member") to shut down the Pekin plant ("Shut Down Election") if ICP operates at an EBITDA loss of $500 in any quarter, subject to the right of the other member (the "Objecting Member") to override that election. If the Objecting Member overrides the election, then EBITDA loss and EBITDA profit for each subsequent quarter are allocated 80 percent to the Objecting Member and 20 percent to the Electing Member until the end of the applicable quarter in which the Electing Member withdraws its Shut Down Election and thereafter allocations revert to a 70-30 split (subject to a catch-up allocation of 80 percent of EBITDA profits to the Objecting Member until it equals the amount of EBITDA loss allocated to such member on an 80-20 basis). ICP experienced an EBITDA loss in excess of $500 for the quarter ended March 31, 2013, which was one factor that prompted the Company to deliver notice of its Shut Down Election on April 18, 2013. However, the Company withdrew its Shut Down Election on March 31, 2014 (thereby causing the allocation of profits and losses to revert to 30 percent to the Company and 70 percent to ICP Holdings as of April 1, 2014) based partially on the strong financial results ICP generated during the period ended June 30, 2014.

In the event of a liquidation or sale of the joint venture, the distribution of capital and earnings is allocated according to Percentage Interest -- 30 percent to the Company and 70 percent to ICP Holdings. During the Shut Down Election period, the Company continued to record its full equity ownership percentage of 30 percent of ICP's net income because management then believed the most likely recovery of its investment was through the sale or dissolution of ICP. This assessment considered a number of facts and circumstances, including management's assessment that a cash distribution from ICP was unlikely, in light of its recent financial results and liquidity uncertainties. However, during the quarter ended June 30, 2014, ICP's financial results and liquidity were significantly improved. In addition, the Company learned that ICP may consider making a cash distribution in the foreseeable future, and that ICP Holdings advocates such a distribution. There can be no assurance that a cash distribution will be made and the Company does not have sufficient voting rights to control the cash distribution policy of ICP. However, based on the changes in facts and circumstances, management reassessed the most likely source as recovery of its investment and determined that it would likely occur through cash distributions rather than through a sale or liquidation of ICP.

As a result of this reassessment, the Company remeasured its cumulative equity in the undistributed earnings of ICP using the allocation specified and described above that applies to a cash distribution to the members. The cumulative effect of this change in estimate resulted in a decrease in equity method investment earnings of ICP of $1,882 for the quarter and year to date periods ended June 30, 2014; a decrease in the earnings per share of $0.11 and $0.10 per share for the quarter and year to date periods ended June 30, 2014; and a decrease in the related equity method investment in ICP at June 30, 2014, of $1,882. Because the Company withdrew its Shut Down Election on March 31, 2014, allocation returned to a 70-30 percent net income split as of April 1, 2014.

Summary Financial Information (unaudited)

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



	Quarter Ended					Year to Date Ended
	June 30, 2014		June 30, 2013			June 30, 2014		June 30, 2013
ICP’s Operating results:
Net sales (a)	$	72,798	$	61,377		$	131,647	$	94,227
Cost of sales and expenses (b)	58,805		(61,034		)	106,747		(97,114		)
Net income (loss)	$	13,993	$	343		$	24,900	$	(2,887	)


(a)	Includes related party sales to MGPI of $8,273 and $741 for the quarters ended June 30, 2014 and 2013, respectively, and $14,618 and $3,400 for the year to date periods ended June 30, 2014 and 2013, respectively.


(b)	Includes depreciation and amortization of $691 and $1,170 for the quarters ended June 30, 2014 and 2013, respectively, and $1,363 and $2,340 for the year to date periods ended June 30, 2014 and 2013, respectively.

The Company’s equity method investment earnings (loss) of joint ventures based on unaudited financial statements is as follows:



	Quarter Ended					Year to Date Ended
	June 30, 2014			June 30, 2013		June 30, 2014		June 30, 2013
ICP (a)	$	2,341		$	62	$	5,588	$	(907	)
DMI (50% interest)	(10		)	9		78		36
	$	2,331		$	71	$	5,666	$	(871	)

(a) Effect of the change in estimate for the quarter and year to date periods ended June 30, 2014 was a reduction of equity method investment earnings of $1,882. The joint venture interest was reduced to 17 percent for the quarter ended June 30, 2014 and to 22 percent for the year to date period ended June 30, 2014. The joint venture interest for the quarter and year to date periods ended June 30, 2013 was 30 percent.

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



	June 30, 2014		December 31, 2013
ICP (26% interest) (a)	$	12,241	$	6,653
DMI (50% interest)	545		470
	$	12,786	$	7,123

(a) Effect of the change in estimate was a decrease in equity interest in ICP of $1,882, or 4 percent, resulting in a reduction of investment in ICP from 30 percent to 26 percent, at June 30, 2014.