Attached files
| file | filename |
|---|---|
| EX-31.2 - SOUTH DAKOTA SOYBEAN PROCESSORS LLC | v227473_ex31-2.htm |
| EX-32.2 - SOUTH DAKOTA SOYBEAN PROCESSORS LLC | v227473_ex32-2.htm |
| EX-31.1 - SOUTH DAKOTA SOYBEAN PROCESSORS LLC | v227473_ex31-1.htm |
| EX-32.1 - SOUTH DAKOTA SOYBEAN PROCESSORS LLC | v227473_ex32-1.htm |
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Amendment No. 1)
(Mark One )
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended March 31, 2011
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
COMMISSION FILE NO . 000-50253
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
(Exact Name of Registrant as Specified in its Charter)
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South Dakota
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46-0462968
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(State of Other Jurisdiction of
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(I.R.S. Employer
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|
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Incorporation or Organization)
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Identification No.)
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100 Caspian Avenue, Post Office Box 500, Volga, South Dakota 57071
(Address of Principal Executive Offices)
(605) 627-9240
(Registrant’s Telephone Number)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
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¨ Large Accelerated Filer
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¨ Accelerated Filer
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¨ Non-Accelerated Filer
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x Smaller Reporting Company
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|||
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(do not check if a smaller
reporting company)
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
¨ Yes x No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes ¨ No ¨
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: On May 16, 2011, the registrant had 30,419,000 capital units outstanding.
This amendment is filed to include the signature and amend the certifications of our principal financial officer, Mr. Mark Hyde, to our Quarterly Report on Form 10-Q for the period ended March 31, 2011. It is also amended to include the signed report of our independent accounting firm, Eide Bailly LLP, regarding our consolidated balance sheet as of March 31, 2011 and the related consolidated statements of operations and cash flows for the three-month periods ended March 31, 2011 and 2010.
Mr. Hyde’s signature on our Quarterly Report on Form 10-Q for the period ended March 31, 2011, was omitted and his certifications on Exhibit 31.2 and 32.2 did not reflect his dual position as principal financial officer and principal accounting officer. Mr. Hyde’s signature is now included in the signature block below, in his dual position as chief financial officer and principal accounting officer, and his certifications are amended in Exhibit 31.2 and 32.2 to reflect Mr. Hyde’s dual role as our principal financial and accounting officer. In addition, the signed report of our independent accounting firm, Eide Bailly LLP, regarding our consolidated balance sheet as of March 31, 2011 and the related consolidated statements of operations and cash flows for the three-month periods ended March 31, 2011 and 2010, is included in Part I, Item 1, page 4, below.
This Amendment does not reflect events that have occurred after May 16, 2011, the date upon which the Quarterly Report on Form 10-Q was originally filed with the Securities and Exchange Commission, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way the disclosures made in the initial filing.
PART I – FINANCIAL INFORMATION
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Item 1.
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Financial Statements
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SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2011 AND 2010
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SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
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Index to Financial Statements
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Page
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|||
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS
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4
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||
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FINANCIAL STATEMENTS
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|||
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Condensed Consolidated Balance Sheets as of March 31, 2011 (unaudited) and December 31, 2010
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5
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||
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Condensed Consolidated Statements of Operations for the three-month periods ended March 31, 2011 and 2010 (unaudited)
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7
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||
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Condensed Consolidated Statements of Cash Flows for the three-month periods ended March 31, 2011 and 2010 (unaudited)
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8
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||
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Notes to Condensed Consolidated Financial Statements
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9
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3
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Managers
South Dakota Soybean Processors, LLC
Volga, South Dakota
We have reviewed the condensed consolidated balance sheet of South Dakota Soybean Processors, LLC (the “Company”), as of March 31, 2011 and the related condensed consolidated statements of operations and cash flows for the three-month periods ended March 31, 2011 and 2010. These interim financial statements are the responsibility of the Company’s management.
We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with auditing standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of South Dakota Soybean Processors, LLC as of December 31, 2010, and the related consolidated statements of operations, changes in members’ equity, and cash flows for the year then ended (not presented herein); and in our report dated March 30, 2011, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2010, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
/s/ Eide Bailly LLP
May 16, 2011
Greenwood Village, Colorado
4
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SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
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CONDENSED CONSOLIDATED BALANCE SHEETS
|
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March 31,
|
||||||||
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2011
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December 31,
|
|||||||
|
(Unaudited)
|
2010
|
|||||||
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CURRENT ASSETS
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||||||||
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Cash and cash equivalents
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$
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5,345
|
$
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91,600
|
||||
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Trade accounts receivable, less allowance for uncollectible accounts of $52,000 and $35,000 at March 31, 2011 and December 31, 2010, respectively
|
33,100,063
|
21,613,858
|
||||||
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Inventories
|
29,564,020
|
42,616,963
|
||||||
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Margin deposits
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1,113,559
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2,331,414
|
||||||
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Prepaid expenses
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419,046
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514,879
|
||||||
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Total current assets
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64,202,033
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67,168,714
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||||||
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PROPERTY AND EQUIPMENT
|
62,188,405
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60,858,944
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||||||
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Less accumulated depreciation
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(34,918,329
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)
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(34,396,272
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)
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||||
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Total property and equipment, net
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27,270,076
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26,462,672
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||||||
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OTHER ASSETS
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||||||||
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Investments in cooperatives
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7,948,261
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7,922,574
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||||||
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Notes receivable - members
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148,898
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148,898
|
||||||
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Patents and other intangible assets, net
|
847,086
|
844,058
|
||||||
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Total other assets
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8,944,245
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8,915,530
|
||||||
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Total assets
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$
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100,416,354
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$
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102,546,916
|
||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
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SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
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CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
|
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March 31,
|
||||||||
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2011
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December 31,
|
|||||||
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(Unaudited)
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2010
|
|||||||
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CURRENT LIABILITIES
|
||||||||
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Excess of outstanding checks over bank balance
|
$
|
3,217,821
|
$
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1,734,940
|
||||
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Current maturities of long-term debt
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1,322,536
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233,421
|
||||||
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Note payable - seasonal loan
|
25,859,205
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24,790,669
|
||||||
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Accounts payable
|
2,090,387
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1,126,303
|
||||||
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Accrued commodity purchases
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22,154,863
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27,854,623
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||||||
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Accrued expenses
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1,875,518
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1,841,052
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||||||
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Accrued interest
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164,603
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155,700
|
||||||
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Total current liabilities
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56,684,933
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57,736,708
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||||||
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LONG-TERM LIABILITIES
|
||||||||
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Long-term debt, less current maturities
|
14,200,000
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13,883,383
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||||||
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Deferred compensation
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44,007
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57,166
|
||||||
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Total long-term liabilities
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14,244,007
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13,940,549
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||||||
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COMMITMENTS AND CONTINGENCIES
|
||||||||
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MEMBERS' EQUITY
|
||||||||
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Class A Units, no par value, 30,419,000 units issued and outstanding, net of subscriptions receivable of $2,259 at March 31, 2011 and December 31, 2010
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29,487,414
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30,869,659
|
||||||
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Total liabilities and members' equity
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$
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100,416,354
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$
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102,546,916
|
||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
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SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
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FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2011 AND 2010
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|
2011
|
2010
|
|||||||
|
NET REVENUES
|
$
|
100,794,182
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$
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66,930,758
|
||||
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COST OF REVENUES
|
||||||||
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Cost of product sold
|
93,458,040
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58,119,064
|
||||||
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Production
|
3,712,518
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3,911,379
|
||||||
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Freight and rail
|
4,268,387
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4,005,112
|
||||||
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Brokerage fees
|
82,807
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98,363
|
||||||
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Total cost of revenues
|
101,521,752
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66,133,918
|
||||||
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GROSS PROFIT (LOSS)
|
(727,570
|
)
|
796,840
|
|||||
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OPERATING EXPENSES
|
||||||||
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Administration
|
959,068
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1,056,128
|
||||||
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OPERATING LOSS
|
(1,686,638
|
)
|
(259,288
|
)
|
||||
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OTHER INCOME (EXPENSE)
|
||||||||
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Interest expense
|
(538,115
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)
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(330,881
|
)
|
||||
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Other non-operating income
|
550,601
|
527,190
|
||||||
|
Patronage dividend income
|
292,207
|
211,282
|
||||||
|
Total other income (expense)
|
304,693
|
407,591
|
||||||
|
INCOME (LOSS) BEFORE
|
||||||||
|
INCOME TAXES
|
(1,381,945
|
)
|
148,303
|
|||||
|
INCOME TAX EXPENSE
|
(300
|
)
|
(100
|
)
|
||||
|
NET INCOME (LOSS)
|
$
|
(1,382,245
|
)
|
$
|
148,203
|
|||
|
BASIC AND DILUTED EARNINGS
|
||||||||
|
(LOSS) PER CAPITAL UNIT
|
$
|
(0.05
|
)
|
$
|
0.00
|
|||
|
WEIGHTED AVERAGE NUMBER OF UNITS
|
||||||||
|
OUTSTANDING FOR CALCULATION
|
||||||||
|
OF BASIC AND DILUTED EARNINGS
|
||||||||
|
(LOSS) PER CAPITAL UNIT
|
30,419,000
|
30,419,000
|
||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
|
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2011 AND 2010
|
|
2011
|
2010
|
|||||||
|
OPERATING ACTIVITIES
|
||||||||
|
Net income (loss)
|
$
|
(1,382,245
|
)
|
$
|
148,203
|
|||
|
Charges and credits to net income (loss) not affecting cash:
|
||||||||
|
Depreciation and amortization
|
541,550
|
546,566
|
||||||
|
(Gain) loss on sales of property and equipment
|
-
|
15,348
|
||||||
|
Non-cash patronage dividends
|
(102,272
|
)
|
(73,949
|
)
|
||||
|
Change in current assets and liabilities
|
(1,825,040
|
)
|
(1,666,966
|
)
|
||||
|
NET CASH (USED FOR) OPERATING ACTIVITIES
|
(2,768,007
|
)
|
(1,030,798
|
)
|
||||
|
INVESTING ACTIVITIES
|
||||||||
|
Retirement of patronage dividends
|
76,585
|
-
|
||||||
|
Patent costs
|
(22,521
|
)
|
(36,081
|
)
|
||||
|
Purchase of property and equipment
|
(1,329,461
|
)
|
(322,337
|
)
|
||||
|
NET CASH (USED FOR) INVESTING ACTIVITIES
|
(1,275,397
|
)
|
(358,418
|
)
|
||||
|
FINANCING ACTIVITIES
|
||||||||
|
Change in excess of outstanding checks over bank balances
|
1,482,881
|
(3,230,434
|
)
|
|||||
|
Net proceeds (payments) from seasonal borrowings
|
1,068,536
|
5,850,009
|
||||||
|
Proceeds from long-term debt
|
1,463,000
|
-
|
||||||
|
Principal payments on long-term debt
|
(57,268
|
)
|
(1,300,000
|
)
|
||||
|
NET CASH FROM FINANCING ACTIVITIES
|
3,957,149
|
1,319,575
|
||||||
|
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
(86,255
|
)
|
(69,641
|
)
|
||||
|
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
|
91,600
|
69,791
|
||||||
|
CASH AND CASH EQUIVALENTS, END OF YEAR
|
$
|
5,345
|
$
|
150
|
||||
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
||||||||
|
|
2011
|
2010
|
||||||
|
Cash paid during the year for:
|
||||||||
|
Interest
|
$
|
529,212
|
$
|
310,311
|
||||
|
Income taxes
|
$
|
-
|
$
|
-
|
||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
NOTE 1 - PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES
The financial statements as of and for the periods ended March 31, 2011 and 2010 reflect, in the opinion of management of South Dakota Soybean Processors, LLC (the “Company”, “LLC”, “we”, “our”, or “us”), all normal recurring adjustments necessary for a fair statement of the financial position and results of operations and cash flows for the interim periods presented. The results of operations and cash flows for interim periods are not necessarily indicative of results for a full year due in part to the seasonal nature of some of the Company’s businesses. The consolidated balance sheet data as of December 31, 2010 has been derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America.
The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. The effects of all intercompany accounts and transactions have been eliminated.
These statements should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2010, included in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission on March 30, 2011.
Use of estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Recent accounting pronouncements
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not expect the future adoption of any such pronouncements to have a material impact on the Company’s financial condition or results of operations.
NOTE 2 - ACCOUNTS RECEIVABLE
Accounts receivable are considered past due when payments are not received on a timely basis in accordance with the Company’s credit terms. Accounts considered uncollectible are written off. The Company’s estimate of the allowance for doubtful accounts is based on historical experience, its evaluation of the current status of receivables, and unusual circumstances, if any.
(continued on next page)
9
|
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
The following table provides information regarding the Company’s allowance for doubtful accounts receivable as of March 31, 2011 and December 31, 2010:
|
Charged
|
||||||||||||||||
|
Balance at
|
(Credited) to
|
Balance at
|
||||||||||||||
|
Beginning of
|
Costs and
|
End of
|
||||||||||||||
|
Description
|
Period
|
Expenses
|
Deductions
|
Period
|
||||||||||||
|
Allowance for doubtful accounts deducted from assets for the period ended:
|
||||||||||||||||
|
December 31, 2010:
|
$
|
91,629
|
$
|
121,894
|
$
|
(178,534
|
)
|
$
|
34,989
|
|||||||
|
March 31, 2011:
|
$
|
34,989
|
$
|
30,000
|
$
|
(13,312
|
)
|
$
|
51,677
|
|||||||
NOTE 3 - INVENTORIES
Inventories consist of the following at March 31, 2011 and December 31, 2010:
|
2011
|
2010
|
|||||||
|
Finished goods
|
$
|
7,198,766
|
$
|
12,698,000
|
||||
|
Raw materials
|
22,255,547
|
29,809,256
|
||||||
|
Supplies & miscellaneous
|
109,707
|
109,707
|
||||||
|
Totals
|
$
|
29,564,020
|
$
|
42,616,963
|
||||
Finished goods and raw materials are valued at estimated market value, which approximates net realizable value. In addition, futures and option contracts are marked to market through cost of revenues, with unrealized gains and losses recorded in the above inventory amounts. Supplies and other inventories are stated at the lower of cost, determined by the first-in, first-out method, or market.
NOTE 4 - NOTES PAYABLE – SEASONAL LOAN
The Company has entered into a revolving credit agreement with CoBank, which expires July 1, 2011. The Company may borrow up to $40 million under this agreement to finance inventory and accounts receivable. Interest accrues at a variable rate (4.10% at March 31, 2011). Advances on the revolving credit agreement are secured and limited to qualifying inventory and accounts receivable, net of any accrued commodity purchases. There were advances outstanding of $25,859,205 and $24,790,669 at March 31, 2011 and December 31, 2010, respectively. The remaining available funds to borrow under the terms of the revolving credit agreement are approximately $14,141,000 as of March 31, 2011.
(continued on next page)
10
|
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 5 - LONG-TERM DEBT
|
2011
|
2010
|
|||||||
|
Revolving term loan from CoBank, interest at variable rates (4.35% and 4.37% at March 31, 2011 and December 31, 2010, respectively), secured by substantially all property and equipment. Loan matures September 20, 2017.
|
$
|
15,342,200
|
$
|
13,879,200
|
||||
|
180,336
|
237,604
|
|||||||
|
15,522,536
|
14,116,804
|
|||||||
|
Less current maturities
|
(1,322,536
|
)
|
(233,421
|
)
|
||||
|
Totals
|
$
|
14,200,000
|
$
|
13,883,383
|
||||
The Company entered into an agreement as of August 12, 2010 with CoBank to amend and restate its Master Loan Agreement (MLA), which includes both the revolving term loan and the seasonal loan discussed in Note 4. Under the terms and conditions of the MLA, CoBank agreed to make advances to the Company for up to $16,800,000 on the revolving term loan. The available commitment decreases in scheduled periodic increments of $1,300,000 every six months starting September 20, 2011 until maturity on September 20, 2017. The principal balance outstanding on the revolving term loan was $15,342,200 and $13,879,200 as of March 31, 2011 and December 31, 2010, respectively. There was $1,457,800 of remaining commitments available to borrow on the revolving term loan as of March 31, 2011.
Under this agreement, the Company is subject to compliance with standard financial covenants and the maintenance of certain financial ratios. The Company is in violation of one of its loan covenants with CoBank as of March 31, 2011. The loan covenant requires the Company to maintain a minimum working capital of $7.5 million at fiscal year-end (December 31 st ) and $7.0 million at the end of each other period for which financial statements are to be furnished. At March 31, 2011, working capital computed per the agreement with CoBank was approximately $5.4 million. On May 12, 2011 CoBank granted a waiver of this working capital requirement provided that working capital does not go below $4.75 million.
The minimum principal payments on long-term debt obligations, assuming the Company will advance the remaining amounts available on the revolving term loan, are expected to be as follows:
|
For the twelve-month periods ending March 31:
|
||||
|
$
|
2,780,336
|
|||
|
2013
|
2,600,000
|
|||
|
2014
|
2,600,000
|
|||
|
2015
|
2,600,000
|
|||
|
2016
|
2,600,000
|
|||
|
Thereafter
|
3,800,000
|
|||
|
Total
|
$
|
16,980,336
|
||
(continued on next page)
11
|
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 6 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
ASC 815, Derivatives and Hedging requires enhanced disclosures about how these instruments and activities affect the entity’s financial position, financial performance and cash flows. The guidance requires disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. It also provides more information about an entity’s liquidity by requiring disclosure of derivative features that are credit risk-related. Finally, it requires cross-referencing within footnotes to enable financial statement users to locate important information about derivative instruments.
In the ordinary course of business, the Company enters into contractual arrangements as a means of managing exposure to changes in commodity prices. The Company’s derivative instruments primarily consist of commodity futures, options and forward contracts. Although these contracts may be effective economic hedges of specified risks, they are not designated as, nor accounted for, as hedging instruments. These contracts are recorded on the Company’s consolidated balance sheets at fair value as discussed in Note 7, Fair Value of Financial Instruments.
As of March 31, 2011 and December 31, 2010, the value of the Company’s open futures, options and forward contracts was approximately $254,229 and $(803,242), respectively.
|
Amounts As of March 31, 2011
|
||||||||||
|
Balance Sheet
|
Asset
|
Liability
|
||||||||
|
Classification
|
Derivatives
|
Derivatives
|
||||||||
|
Derivatives not designated as hedging instruments:
|
||||||||||
|
Commodity contracts
|
Current Assets
|
$
|
2,788,054
|
$
|
2,533,825
|
|||||
|
Amounts As of December 31, 2010
|
||||||||||
|
Balance Sheet
|
Asset
|
Liability
|
||||||||
|
Classification
|
Derivatives
|
Derivatives
|
||||||||
|
Derivatives not designated as hedging instruments:
|
||||||||||
|
Commodity contracts
|
Current Assets
|
$
|
4,489,163
|
$
|
5,292,405
|
|||||
During the three-month periods ended March 31, 2011 and 2010, net realized and unrealized gains (losses) on derivative transactions were recognized in the consolidated statement of operations as follows:
|
Net Gain (Loss) Recognized on
|
||||||||
|
Derivative Activities for the Three-
|
||||||||
|
Month Periods Ending March 31:
|
||||||||
|
2011
|
2010
|
|||||||
|
Derivatives not designated as hedging instruments:
|
||||||||
|
Commodity contracts
|
$
|
(1,221,313
|
)
|
$
|
2,324,414
|
|||
The Company recorded gains (losses) of $(1,221,313) and $2,324,414 in cost of goods sold related to its commodity derivative instruments for the three-month periods ended March 31, 2011 and 2010, respectively.
(continued on next page)
12
|
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 7 - FAIR VALUE OF FINANCIAL INSTRUMENTS
ASC 820, Fair Value Measurements and Disclosures defines fair value, establishes a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements. Specifically, this guidance establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. The adoption of ASC 820 had an immaterial impact on the Company’s financial statements. The three levels of hierarchy and examples are as follows
|
·
|
Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange and commodity derivative contracts listed on the Chicago Mercantile Exchange (“CME”).
|
|
|
·
|
Level 2 – Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts, or priced with models using highly observable inputs, such as commodity prices using forward future prices.
|
|
|
·
|
Level 3 – Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights.
|
The following tables set forth financial assets and liabilities measured at fair value in the consolidated balance sheets and the respective levels to which fair value measurements are classified within the fair value hierarchy as of March 31, 2011 and December 31, 2010:
|
Fair Value as of March 31, 2011
|
||||||||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
|
Financial assets:
|
||||||||||||||||
|
Cash equivalents
|
$
|
5,345
|
$
|
-
|
$
|
-
|
$
|
5,345
|
||||||||
|
Inventory
|
$
|
490,046
|
$
|
26,805,600
|
$
|
-
|
$
|
27,295,646
|
||||||||
|
Margin deposits
|
$
|
1,113,559
|
$
|
-
|
$
|
-
|
$
|
1,113,559
|
||||||||
|
Fair Value as of December 31, 2010
|
||||||||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
|
Financial assets:
|
||||||||||||||||
|
Cash equivalents
|
$
|
91,600
|
$
|
-
|
$
|
-
|
$
|
91,600
|
||||||||
|
Inventory
|
$
|
(1,168,677
|
)
|
$
|
41,459,163
|
$
|
-
|
$
|
40,290,486
|
|||||||
|
Margin deposits
|
$
|
2,331,414
|
$
|
-
|
$
|
-
|
$
|
2,331,414
|
||||||||
The fair value of the Company’s long-term debt approximates the carrying value. The interest rates on the long-term debt are similar to rates the Company would be able to obtain currently in the market.
The Company enters into various commodity derivative instruments, including futures, options, swaps and other agreements. The fair value of the Company’s commodity derivatives is determined using unadjusted quoted prices for identical instruments on the CME. The Company estimates the fair market value of their finished goods and raw materials inventories using the market price quotations of similar forward future contracts listed on the CME and adjusts for the local market adjustments derived from other grain terminals in our area.
(continued on next page)
13
|
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
The Company has patronage investments in other cooperatives and common stock in a privately held entity. There is no market for their patronage credits or the entity’s common shares, and it is impracticable to estimate fair value of the Company’s investments. These investments are carried on the balance sheet at original cost plus the amount of patronage earnings allocated to the Company, less any cash distributions received.
NOTE 8 - COMMITMENTS
As of March 31, 2011, the Company had unpaid commitments of approximately $300,000 for construction and acquisition of property and equipment, all of which is expected to be incurred by May 2011.
NOTE 9 - BUSINESS SEGMENT INFORMATION
The Company organizes its business units into two reportable segments: soybean processing and polyurethane. Separate management of each segment is required because each segment is subject to different marketing, production, and technology strategies. The soybean processing segment purchases soybeans and processes them in primarily three products: soybean meal, oil and hulls. The polyurethane segment manufactures a soy-based polyol, which is called Soyol ® , and its resin system and sells them to the polyurethane industry. The segments’ accounting policies are the same as those described in the summary of significant accounting polices. Market prices are used to report intersegment sales.
Segment information for the three months ended March 31, 2011 and 2010 are as follows:
|
Soybean
|
||||||||||||
|
Processing
|
Polyurethane
|
Total
|
||||||||||
|
For the Three Months Ended March 31, 2011:
|
||||||||||||
|
Sales to external customers
|
$
|
100,290,316
|
$
|
503,866
|
$
|
100,794,182
|
||||||
|
Intersegment sales
|
-
|
-
|
-
|
|||||||||
|
Depreciation and amortization
|
485,410
|
56,140
|
541,550
|
|||||||||
|
Interest expense
|
448,297
|
89,818
|
538,115
|
|||||||||
|
Segment profit (loss)
|
(933,290
|
)
|
(448,955
|
)
|
(1,382,245
|
)
|
||||||
|
Segment assets
|
96,270,631
|
4,145,723
|
100,416,354
|
|||||||||
|
Expenditures for segment assets
|
1,329,461
|
-
|
1,329,461
|
|||||||||
|
Soybean
|
||||||||||||
|
Processing
|
Polyurethane
|
Total
|
||||||||||
|
For the Three Months Ended March 31, 2010:
|
||||||||||||
|
Sales to external customers
|
$
|
66,453,374
|
$
|
477,384
|
$
|
66,930,758
|
||||||
|
Intersegment sales
|
43,116
|
-
|
43,116
|
|||||||||
|
Depreciation and amortization
|
500,386
|
46,180
|
546,566
|
|||||||||
|
Interest expense
|
262,900
|
67,981
|
330,881
|
|||||||||
|
Segment profit (loss)
|
689,254
|
(541,051
|
)
|
148,203
|
||||||||
|
Segment assets
|
98,370,500
|
4,176,416
|
102,546,916
|
|||||||||
|
Expenditures for segment assets
|
158,976
|
163,361
|
322,337
|
|||||||||
(continued on next page)
14
|
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 10 - SUBSEQUENT EVENT
We evaluated all of our activity and concluded that no subsequent events have occurred that would require recognition in our financial statements or disclosed in the notes to our financial statements.
15
|
Item 6.
|
Exhibits
|
See Exhibit Index.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
SOUTH DAKOTA
|
||
|
SOYBEAN PROCESSORS, LLC
|
||
|
Dated: June 30, 2011
|
||
|
By
|
/s/ Thomas L. Kersting
|
|
|
Thomas L. Kersting
|
||
|
Chief Executive Officer (Principal Executive Officer)
|
||
|
Dated: June 30, 2011
|
||
|
By
|
/s/ Mark Hyde
|
|
|
Mark Hyde
|
||
|
Chief Financial Officer (Principal Financial and Accounting Officer)
|
||
EXHIBIT INDEX
TO
FORM 10-Q/A
OF
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
|
Exhibit
Number
|
Description
|
|
|
3.1(i)
|
Articles of Organization (1)
|
|
|
3.1(ii)
|
Operating Agreement, as amended (2)
|
|
|
3.1(iii)
|
Articles of Amendment to Articles of Organization (3)
|
|
|
4.1
|
Form of Class A Unit Certificate (4)
|
|
|
31.1
|
Rule 13a-14(a)/15d-14(a) Certification
|
|
|
31.2
|
Rule 13a-14(a)/15d-14(a) Certification
|
|
|
32.1
|
Section 1350 Certification
|
|
|
32.2
|
Section 1350 Certification
|
(1) Incorporated by reference from Appendix B to the information statement/prospectus filed as a part of the issuer’s Registration Statement on Form S-4 (File No. 333-75804).
(2) Incorporated by reference from the same numbered exhibit to the issuer’s Form 8-K filed on June 28, 2007.
(3) Incorporated by reference from the same numbered exhibit to the issuer’s Form 10-Q filed on August 14, 2002.
(4) Incorporated by reference from the same numbered exhibit to the issuer’s Registration Statement on Form S-4 (File No. 333-75804).