Equity Method Investments

9 Months Ended

Sep. 30, 2017

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments

Equity Method Investments.

As of September 30, 2017, the Company had no investments accounted for using the equity method of accounting. Until July 3, 2017, the Company had a 30 percent interest in Illinois Corn Processing ("ICP"), which manufactured alcohol for fuel, industrial and beverage applications.

On July 3, 2017, the Company completed the sale of its 30 percent equity ownership interest in ICP to Pacific Ethanol Central, LLC ("Pacific Ethanol"), consistent with an Agreement and Plan of Merger ("Merger Agreement") entered into on June 26, 2017.

The Company received total cash proceeds of $9,000 (before transaction expenses and taxes), as well as a secured promissory note ("Note") with a principal amount of $14,008. On September 15, 2017, the Note was paid off and the Company received a total of $14,263, including principal, interest, and a final working capital adjustment. As a result of the ICP sale transaction, for the quarter and year to date period ended September 30, 2017, the Company reported a gain on sale of equity method investment of $11,381 (before tax), on its Condensed Consolidated Statements of Income.

The Merger Agreement also contemplated a special distribution of all of ICP’s cash and cash equivalents to equity owners prior to the closing. On June 28, 2017, the Company received $6,600 representing its 30 percent share of a dividend in the amount of $22,000 approved on June 26, 2017. The Company also received a smaller distribution of $830 on June 30, 2017 representing its 30 percent share of an additional distribution in the amount of $2,765.

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
	September 30, 2017			September 30, 2016		September 30, 2017				September 30, 2016
ICP’s Operating results:
Net sales (a)	$	—		$	44,019	$	78,062			$	134,204
Cost of sales and expenses (b)	—			41,805		79,224				126,671
Net income (loss)	$	—	(c)	$	2,214	$	(1,162	)	(c)	$	7,533

^(a)  Includes related party sales to MGPI of $0 and $6,700 for the quarters ended September 30, 2017 and 2016, respectively. Includes related party sales to MGPI of $17,672 and $19,639 for the year to date periods ended September 30, 2017 and 2016, respectively.

^(b)  Includes depreciation and amortization of $0 and $738 for the quarters ended September 30, 2017 and 2016, respectively. Includes depreciation and amortization of $1,720 and $2,221 for the year to date periods ended September 30, 2017 and 2016, respectively.

^(c)  The Company's equity method investment in ICP ended on July 3, 2017, when it completed the sale of its 30 percent equity ownership interest.

The Company’s equity method investment earnings (loss) and gain on sale of equity method investment, based on unaudited financial statements, was as follows:

	Quarter Ended					Year to Date Ended
	September 30, 2017			September 30, 2016		September 30, 2017				September 30, 2016
Gain on sale of equity method investment	$	11,381	(a)	$	—	$	11,381		(a)	$	—
ICP (30% interest)	—			664		(348		)		2,260
	$	11,381		$	664	$	11,033			$	2,260

^(a)  The Company's equity method investment in ICP ended on July 3, 2017, when it completed the sale of its 30 percent equity ownership interest.

The Company’s equity method investment was as follows:

	September 30, 2017		December 31, 2016
ICP (30% interest)(a)	$	—	$	18,934

^(a) The Company's equity method investment in ICP ended on July 3, 2017, when it completed the sale of its 30 percent equity ownership interest.