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Pacific Ethanol Inc. Reports Operating Results (10-Q)

November 15, 2010 | About:
10qk

10qk

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Pacific Ethanol Inc. (PEIX) filed Quarterly Report for the period ended 2010-09-30.

Pacific Ethanol Inc. has a market cap of $71.13 million; its shares were traded at around $0.858 with and P/S ratio of 0.22. PEIX is in the portfolios of Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

On October 6, 2010, we raised $35.0 million through the issuance of $35.0 million in principal amount of senior convertible notes, or Notes, and warrants, or Warrants, to purchase an aggregate of 20,588,235 shares of our common stock. On that same date we sold our 42% interest in Front Range Energy, LLC, or Front Range, for $18.5 million in cash, paid off our outstanding indebtedness to Lyles United, LLC and Lyles Mechanical Co. in the aggregate amount of approximately $17.0 million and purchased a 20% ownership interest in New PE Holdco for an aggregate purchase price of $23.3 million.

For the periods through June 29, 2010, our consolidated financial statements include the financial statements of the Plant Owners. On June 29, 2010, the Plant Owners emerged from bankruptcy, and the ownership of the Plant Owners was transferred to New PE Holdco. Accordingly, for the three months ended September 30, 2010, we did not consolidate the Plant Owners financial statements as we had no ownership interest in the Plant Owners during the period. Also, under the Plan, we removed the Plant Owners assets of $175.0 million and liabilities of $294.4 million from our balance sheet, resulting in a net gain of $119.4 million for the three months ended June 30, 2010. On October 6, 2010, we purchased 20% ownership interest in New PE Holdco, which gives us the largest equity position. Based on our ownership interest as well as our asset management and marketing agreements with New PE Holdco, we believe we will consolidate its financial results with ours beginning in the fourth quarter of 2010.

Effective January 1, 2010, we adopted the new guidance to Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, 810, Consolidations, which resulted in our conclusion that, under the FASB s guidance, we are no longer the primary beneficiary and, effective January 1, 2010, we prospectively adopted the guidance resulting in a deconsolidation of the financial results of Front Range. Upon deconsolidation, on January 1, 2010, we removed $62.6 million of assets and $18.6 million of liabilities from our consolidated balance sheet and recorded a cumulative debit adjustment to retained earnings of $1.8 million. The periods presented in this report prior to the effective date of the deconsolidation continue to include related balances associated with our prior ownership interest in Front Range. Effective January 1, 2010, we began accounting for our investment in Front Range under the equity method, with equity earnings recorded in other income (expense) in the consolidated statements of operations. On October 6, 2010, we sold our ownership interest in Front Range, resulting in a loss on the sale in the amount of $12.1 million for the three months ended September 30, 2010, as we reduced the carrying value of our investment in Front Range to its fair value equal to the $18.5 million sale price.

Our average sales price per gallon increased 12% to $1.93 for the three months ended September 30, 2010 from an average sales price per gallon of $1.73 for the three months ended September 30, 2009. This increase in average sales price per gallon is consistent with the average CBOT price per gallon, which increased 13% to $1.80 for the three months ended September 30, 2010 from $1.59 for the three months ended September 30, 2009.

Our average sales price per gallon increased 7% to $1.81 for the nine months ended September 30, 2010 from an average sales price per gallon of $1.70 for the nine months ended September 30, 2009. This increase in average sales price per gallon is also consistent with the average CBOT price per gallon, which increased 6% to $1.70 for the nine months ended September 30, 2010 from $1.61 for the nine months ended September 30, 2009.

SG&A decreased $0.5 million to $2.7 million for the three months ended September 30, 2010 as compared to $3.2 million for the same period in 2009, primarily due to the following factors:

Read the The complete Report

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