v2.4.0.6
Document and Entity Information
6 Months Ended
Mar. 31, 2013
May 01, 2013
Document and Entity Information [Abstract]    
Entity Registrant Name Lincolnway Energy, LLC  
Entity Central Index Key 0001350420  
Current Fiscal Year End Date --09-30  
Entity Filer Category Non-accelerated Filer  
Document Type 10-Q  
Document Period End Date Mar. 31, 2013  
Document Fiscal Year Focus 2013  
Document Fiscal Period Focus Q2  
Amendment Flag false  
Entity Common Stock, Shares Outstanding   42,049
v2.4.0.6
Balance Sheets (USD $)
Mar. 31, 2013
Sep. 30, 2012
CURRENT ASSETS    
Cash and cash equivalents $ 3,420,766 $ 151,824
Derivative financial instruments (Note 8 and 9) 0 71,978
Trade and other accounts receivable (Note 7) 4,611,730 9,276,324
Inventories (Note 3) 6,958,423 5,922,936
Prepaid expenses and other 282,862 325,361
Total current assets 15,273,781 15,748,423
PROPERTY AND EQUIPMENT    
Land and land improvements 6,949,062 6,949,062
Buildings and improvements 1,625,531 1,604,305
Plant and process equipment 79,583,047 79,580,097
Office furniture and equipment 400,891 405,188
Construction in progress 4,455 21,226
Property, plant and equipment, gross 88,562,986 88,559,878
Accumulated depreciation (55,209,136) (51,313,592)
Property, plant and equipment, net 33,353,850 37,246,286
OTHER ASSETS    
Restricted cash 351,000 351,000
Financing costs, net of amortization of $322,918 and $305,384 149,043 166,577
Deposits 298,350 298,350
Investments 196,102 190,488
Other assets, noncurrent 994,495 1,006,415
Assets 49,622,126 54,001,124
CURRENT LIABILITIES    
Accounts payable 1,402,431 1,018,976
Accounts payable, related party (Note 6) 530,241 829,067
Current maturities of long-term debt (Note 5) 51,506 50,968
Current settlement payable, related party (Note 6) 425,000 425,000
Revolving credit loan (Note 4) 3,776,000 200,000
Accrued expenses 965,369 896,744
Derivative financial instruments (Note 8 and 9) 118,270 0
Total current liabilities 7,268,817 3,420,755
NONCURRENT LIABILITIES    
Long-term debt, less current maturities (Note 5) 161,165 3,424,053
Settlement payable, net of current amount, related party (Note 6) 850,000 1,275,000
Deferred revenue 1,000,000 0
Other 450,000 450,000
Total noncurrent liabilities 2,461,165 5,149,053
COMMITMENTS AND CONTINGENCY (Notes 7 and 10)      
MEMBERS' EQUITY    
Member contributions, 42,049 units issued and outstanding 38,990,105 38,990,105
Retained earnings 902,039 6,441,211
Members' Equity 39,892,144 45,431,316
Liabilities and Equity $ 49,622,126 $ 54,001,124
v2.4.0.6
Balance Sheets Parenthetical Statement (USD $)
6 Months Ended 12 Months Ended
Mar. 31, 2013
Sep. 30, 2012
OTHER ASSETS    
Financing costs, net of amortization of $ 322,918 $ 305,384
MEMBER'S EQUITY    
Units issued and outstanding 42,049 42,049
v2.4.0.6
Statements of Operations (USD $)
3 Months Ended 6 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Mar. 31, 2013
Mar. 31, 2012
Revenues (Notes 2 and 6) $ 47,474,370 $ 42,079,889 $ 94,887,044 $ 85,341,365
Cost of goods sold 48,484,016 43,033,139 98,672,688 83,565,094
Gross profit (loss) (1,009,646) (953,250) (3,785,644) 1,776,271
General and administrative expenses 783,544 727,450 1,666,242 1,400,592
(Gain) on sale of property (Note 11)     0 (496,098)
Operating income (loss) (1,793,190) (1,680,700) (5,451,886) 871,777
Other income (expense):        
Interest income 1,040 2,038 1,888 4,287
Interest expense (23,985) (30,947) (89,174) (79,435)
Other income (expense) (22,945) (28,909) (87,286) (75,148)
Net income (loss) $ (1,816,135) $ (1,709,609) $ (5,539,172) $ 796,629
Weighted average units outstanding 42,049 42,049 42,049 42,049
Net income (loss) per unit - basic and diluted $ (43.19) $ (40.66) $ (131.73) $ 18.95
v2.4.0.6
Statement of Cash Flows (USD $)
6 Months Ended
Mar. 31, 2013
Mar. 31, 2012
CASH FLOWS FROM OPERATING ACTIVITIES    
Net income (loss) $ (5,539,172) $ 796,629
Adjustments to reconcile net income (loss) to net cash provided by operating activities:    
Depreciation and amortization 3,919,581 3,906,716
Gain on sale of property 0 (496,098)
Changes in working capital components:    
Derivative financial instruments 190,248 457,371
Trade and other accounts receivable 4,664,594 1,421,374
Inventories (1,035,487) (1,889,872)
Prepaid expenses and other 42,499 36,188
Deposits 0 178,087
Accounts payable 383,455 (157,300)
Accounts payable, related party (298,826) (235,965)
Settlement fee payable, related party (425,000) 0
Deferred revenue 1,000,000 0
Accrued expenses 68,625 (200,157)
Net cash provided by operating activities 2,970,517 3,816,973
CASH FLOWS FROM INVESTING ACTIVITIES    
Purchase of property and equipment (9,611) (991,111)
Proceeds from sale of property 0 1,181,000
Increase in investments (5,614) (7,518)
Net cash provided by (used in) investing activities (15,225) 182,371
CASH FLOWS FROM FINANCING ACTIVITIES    
Net proceeds from revolving credit loan 3,576,000 0
Proceeds from long-term borrowings 1,100,000  
Payments on long-term borrowings (4,362,350) (2,427,323)
Net cash provided by (used in) financing activities 313,650 (2,427,323)
Net increase in cash and cash equivalents 3,268,942 1,572,021
CASH AND CASH EQUIVALENTS    
Beginning 151,824 34,135
Ending 3,420,766 1,606,156
SUPPLEMENTAL DISCLOSURE OF CASH FLOW    
INFORMATION, cash paid for interest 83,072 106,008
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES    
Distributions included in accrued expenses $ 0 $ 1,051,225
v2.4.0.6
Nature of Business and Significant Accounting Policies
6 Months Ended
Mar. 31, 2013
Nature of Business and Significant Accounting Policies [Abstract]  
Nature of Business and Significant Accounting Policies
Nature of Business and Significant Accounting Policies

Principal business activity:  Lincolnway Energy, LLC (the Company), located in Nevada, Iowa, was formed in May 2004 to pool investors to build a 50 million gallon annual production dry mill corn-based ethanol plant.  The Company began making sales on May 30, 2006 and became operational during the quarter ended June 30, 2006.

Basis of presentation and other information: The balance sheet as of September 30, 2012 was derived from the Company's audited balance sheet as of that date.  The accompanying financial statements as of and for the three and six months ended March 31, 2013 and 2012 are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim periods.  These unaudited financial statements and notes should be read in conjunction with the audited financial statements and notes thereto, for the year ended September 30, 2012 contained in the Company's Annual Report  on Form 10-K.  The results of operations for the interim periods presented are not necessarily indicative of the results for the entire year.

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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Trade accounts receivable: Trade accounts receivable are recorded at original invoice amounts less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering customers financial condition, credit history and current economic conditions. Receivables are written off when deemed uncollectible. Recoveries of receivables written off are recorded when received. A receivable is considered past due if any portion of the receivable is outstanding more than 90 days.

Deferred revenue: Deferred revenue represents fees received under a service agreement in advance of services being performed. The related revenue is deferred and recognized as the services are performed over the term of the contract.
  
Income taxes:  The Company is organized as a partnership for federal and state income tax purposes and generally does not incur income taxes.  Instead, the Company's earnings and losses are included in the income tax returns of the members.  Therefore, no provision or liability for federal or state income taxes has been included in these financial statements.

Earnings per unit:  Basic and diluted earnings per unit have been computed on the basis of the weighted average number of units outstanding during each period presented.

Fair value of financial instruments:  The carrying amounts of cash and cash equivalents, derivative financial instruments, trade and other accounts receivable, restricted cash, accounts payable and accrued expenses approximate fair value.  The carrying amount of long-term debt approximates fair value because the interest rates fluctuate with market rates or the fixed rates approximate current rates offered to the Company for debt with similar terms and maturities.

Reclassification: Certain amounts in the 2012 cash flow statement have been reclassified to be consistent with their 2013 presentation.
v2.4.0.6
Revenue
6 Months Ended
Mar. 31, 2013
Revenue by product [Abstract]  
Revenue
Revenue

Components of revenue are as follows:
(Excludes hedging activity)
 
Three Months
 
Three Months
 
Six Months
 
Six Months
 
 
 Ended
 
 Ended
 
 Ended
 
 Ended
(In thousands)
 
March 31, 2013
 
March 31, 2012
 
March 31, 2013
 
March 31, 2012
Ethanol
 
$
34,127

 
$
31,428

 
$
68,140

 
$
65,141

Distillers' Grains
 
12,320

 
9,713

 
24,798

 
17,851

Other
 
1,027

 
976

 
1,949

 
2,386

v2.4.0.6
Inventories
6 Months Ended
Mar. 31, 2013
Inventory Disclosure [Abstract]  
Inventories
Inventories

Inventories consist of the following as of:
 
March 31,
2013
 
September 30,
2012
 
 
 
 
Raw materials, including corn, coal, chemicals and supplies
$
3,644,100

 
$
2,048,130

Work in process
1,265,324

 
1,432,257

Ethanol and distillers grains
2,048,999

 
2,442,549

Total
$
6,958,423

 
$
5,922,936



As of March 31, 2013 and September 30, 2012 the Company recognized a reserve of none and $368,000, respectively, for a lower of cost or market inventory adjustment.
v2.4.0.6
Revolving Credit Loan
6 Months Ended
Mar. 31, 2013
Revolving Credit Loan [Abstract]  
Revolving Credit Loan
Revolving Credit Loan
 
The Company entered into a new master loan agreement with a financial institution on August 20, 2012. One of the supplements of the agreement is a monitored revolving credit loan for up to $10,000,000. The amount available and outstanding under the loan cannot exceed the borrowing base as calculated per the agreement (approximately $6,000,000 as of March 31, 2013). The purpose of the loan is to finance inventory and receivables. The Company will pay interest monthly on the unpaid balance at a variable rate (adjusted on a weekly basis) based upon the one-month LIBOR index rate plus 3.25%. The Company will also pay a commitment fee on the average daily unused portion of the loan at the rate of .30% per annum, payable monthly. The term of the loan will expire, and the Company must pay all unpaid principal amounts outstanding under the loan, on July 1, 2013. The loan is secured by substantially all assets of the Company and subject to certain financial and nonfinancial covenants as defined in the master loan agreement. There was a balance of $3,776,000 outstanding as of March 31, 2013.
v2.4.0.6
Long-Term Debt
6 Months Ended
Mar. 31, 2013
Long-term Debt, Unclassified [Abstract]  
Long-Term Debt
Long-Term Debt

Long-term debt consists of the following as of:

 
March 31,
2013
 
September 30,
2012
 
 
 
 
Revolving term loan. (A)
$

 
$
3,237,000

 
 

 
 

Note payable to Iowa Department of Transportation. (B)
212,671

 
238,021

 
212,671

 
3,475,021

Less current maturities
(51,506
)
 
(50,968
)
 
$
161,165

 
$
3,424,053


(A)
The Company entered into a new master loan agreement with a financial institution on August 20, 2012. One of the supplements of the agreement is a revolving term loan available for up to $5,000,000. The revolving term loan is to be used to provide working capital. The Company will pay interest on the unpaid balance at a variable interest rate (adjusted on a weekly basis) based upon the one-month LIBOR index rate plus 3.50%. The Company will also pay a commitment fee on the average daily unused portion of the loan at the rate of .60% per annum, payable monthly. The loan is secured by substantially all assets of the Company and subject to certain financial and nonfinancial covenants as defined in the master loan agreement. The term of the loan will expire, and the Company must pay all unpaid principal amounts outstanding under the revolving term loan, on June 1, 2017. The September 30, 2012 balance was paid off during the quarter ended December 31, 2012.

(B)
The Company entered into a $500,000 loan agreement with the Iowa Department of Transportation (IDOT) in February 2005.  The proceeds were disbursed upon submission of paid invoices.  Interest at 2.11% began accruing on January 1, 2007.  Principal payments will be due semiannually through July 2016.  The loan is secured by all rail track material constructed as part of the plant construction.  The debt is subordinate to the above financial institution revolving term loan (A) and revolving credit loan (Note 4.)
v2.4.0.6
Related-Party Transactions
6 Months Ended
Mar. 31, 2013
Related Party Transactions [Abstract]  
Related-Party Transactions
Related-Party Transactions

The Company entered into an agreement on January 24, 2006 with the Heart of Iowa Coop , dba Key Cooperative (Key), a member of the Company, to provide 100% of the requirement of corn for use in the operation of the ethanol plant. The agreement may be terminated before the end of the term by providing six months' notice of termination and paying the other party $2,000,000, reduced by $50,000 for each completed year of the agreement.

On April 10, 2012, the Company delivered notice to Key to terminate the Amended and Restated Grain Handling Agreement they hold with Key. The termination of the agreement was six months from the date of the notice, October 10, 2012. The Company recorded a termination cost of $1,700,000 as required under the agreement, which was expensed for the quarter ending June 30, 2012. Payments of $425,000 will be made annually over a four year period with interest at the prime rate on the date of termination, due on January 1 of each year. On December 28, 2012 the first payment of $425,000 plus $12,412 of accrued interest was made. Accrued interest payable to Key is $10,217 and none as of March 31, 2013 and 2012, respectively. On January 10, 2013, the Company began originating its own corn.

The Company purchased corn from Key totaling $21,765,266 and $63,022,389 for the three and six months ended March 31, 2013.  There were corn purchases of $34,667,303 and $64,458,716 for the three and six months ended March 31, 2012. As of March 31, 2013, the Company has a cash corn contract with Key representing 85,429 bushels of corn, for a commitment of $613,382.   The cash contract will be delivered in April 2013.   The Company also has several corn basis contracts that will mature at various dates through October 2013 and total 2,098,800 bushels of corn. The Company has made some fuel and propane purchases from Key amounting to $17,992 and $41,650, respectively for the three and six months ended March 31, 2013.
There were miscellaneous purchases of $14,128 and $44,197 for the three and six months ended March 31, 2012. As of March 31, 2013 the amount due to Key is $163,381.

For both the three and six months ended March 31, 2013, the Company purchased corn totaling $3,614,715 from Heartland Co-op, a member of the Company. For both the three and six months ended March 31, 2012, the Company had no purchases from Heartland Co-op.The Company has a corn cash contract with Heartland Co-op that will be delivered in April 2013. The cash contract represents 111,375 bushels of corn for a commitment of $815,265. As of March 31, 2013 the amount due to Heartland Co-op is $299,668.

For both the three and six months ended March 31, 2013, the Company made corn purchases to several other members totaling $2,075,324, As of March 31, 2013 the Company entered into several cash corn contracts with several members representing 52,833 bushels and a commitment of $398,848. These contracts mature at various dates through May 2013.

The Company is also purchasing anhydrous ammonia and propane from Innovative Ag Services, a member of the Company.  Total purchases for the three and six months ended March 31, 2013 is $128,348 and $224,830, respectively. Total purchases for the three and six months ended March 31, 2012 is $1,633 and $16,520, respectively.
v2.4.0.6
Commitments and Major Customer
6 Months Ended
Mar. 31, 2013
Commitments and Major Customer [Abstract]  
Commitments and Major Customer
Commitments and Major Customer

On January 1, 2013, the Company entered into an agreement with an unrelated entity for marketing, selling and distributing all of the ethanol produced by the Company. For both the three and six months ended March 31, 2013, the Company has expensed $180,586 under this agreement for marketing fees. Revenues with this customer were $34,127,351 for both the three and six months ended March 31, 2013. Trade accounts receivable of $2,585,161 was due from the customer as of March 31, 2013.

The Company had an agreement with an unrelated entity for marketing, selling and distributing all of the ethanol produced by the Company. This agreement ended December 31, 2012. For the three and six months ended March 31, 2013, the Company has expensed none and $138,262, respectively, under this agreement for marketing fees. For the three and six months ended March 31, 2012 the Company has expensed $181,836 and $352,219, respectively. Revenues with this customer were $34,012,975, for both the three and six months ended March 31, 2013. For the three and six months ended March 31, 2012, revenues with this customer were $31,427,345 and $65,140,803.

The Company has an agreement with an unrelated entity for marketing, selling and distributing the distiller's grains. For the three and six months ended March 31, 2013, the Company has expensed marketing fees of $188,278 and $375,674, respectively, under this agreement. The company has expensed marketing fees of $161,596 and $299,884, respectively, for the three and six months ended March 31, 2012. Revenues with this customer were $12,319,911 and $24,798,011, respectively, for the three and six months ended March 31, 2013. For the three and six months ended March 31, 2012, revenues with this customer were $9,712,956 and $17,851,289, respectively. Trade accounts receivable of $1,621,983 was due from the customer as of March 31, 2013.

The Company entered into an agreement on January 1, 2013 with an unrelated party to provide the coal supply for the ethanol plant. The agreement expires on January 1, 2015. The agreement is subject to a minimum purchase requirement. For the calendar year 2013 the estimated purchase commitment totals $2,243,340.

The Company has entered into a variable contract with a supplier of denaturant. The variable contract is for a minimum purchase of 144,000 gallons at the average of the OPIS Conway In-Well Natural Gasoline High and Low price plus $.1875/usg. The term of the contract is from April 1, 2013 through May 30, 2013. The minimum future purchase commitment is $359,784.

As of March 31, 2013, the Company had purchase commitments for forward corn cash contracts with various unrelated parties, totaling 263,533 bushels and $1,711,777. These contracts mature at various dates through January 2014. The Company also has several corn basis contracts that will mature at various dates through March 2014 and total 1,050,000 bushels of corn.
v2.4.0.6
Risk Management
6 Months Ended
Mar. 31, 2013
Risk Management [Abstract]  
Risk Management
Risk Management

The Company's activities expose it to a variety of market risks, including the effects of changes in commodity prices.  These financial exposures are monitored and managed by the Company as an integral part of its overall risk management program.  The Company's risk management program focuses on the unpredictability of commodity markets and seeks to reduce the potentially adverse effects that the volatility of these markets may have on its operating results.

The Company maintains a risk management strategy that uses derivative instruments to minimize significant, unanticipated earnings fluctuations caused by market fluctuations.  The Company's specific goal is to protect the Company from large moves in the commodity costs.

To reduce price risk caused by market fluctuations, the Company generally follows a policy of using exchange-traded futures and options contracts to minimize its net position of merchandisable agricultural commodity inventories and forward purchases and sales contracts.  Exchange traded futures and options contracts are designated as non-hedge derivatives and are valued at market price with changes in market price recorded in operating income through cost of goods sold for corn derivatives and through revenue for ethanol derivatives. The Company treats all contracts with the same counterparty on a net basis on the balance sheet.

Derivatives not designated as hedging instruments are as follows:

 
March 31 2013
 
September 30 2012
Derivative assets
$

 
$
134,050

Derivative liabilities
(422,863
)
 

Cash held by (due to) broker
304,593

 
(62,072
)
Total
$
(118,270
)
 
$
71,978




The effects on operating income from derivative activities is as follows:

 
Three Months
 
Three Months
 
Six Months
 
Six Months
 
Ended
 
Ended
 
Ended
 
Ended
 
March 31, 2013
 
March 31, 2012
 
March 31, 2013
 
March 31, 2012
(Decrease) in revenue due to derivatives related to ethanol sales:
 
 
 
 
 
 
 
Unrealized
$

 
$
(36,842
)
 
$

 
$
(36,842
)
Total effect on revenue

 
(36,842
)
 

 
(36,842
)
 
 
 
 

 
 
 
 
(Increase) decrease in cost of goods sold due to derivatives related to corn costs:
 
 
 
 
 
 
 
Realized
89,981

 
164,650

 
990,716

 
244,213

Unrealized
(399,963
)
 
475,000

 
(422,863
)
 
66,850

Total effect on cost of goods sold
(309,982
)
 
639,650

 
567,853

 
311,063

 
 
 
 

 
 
 
 
Total increase (decrease) to operating income due to derivative activities
$
(309,982
)
 
$
602,808

 
$
567,853

 
$
274,221



Unrealized gains and losses on forward contracts, in which delivery has not occurred, are deemed “normal purchases and normal sales”, and therefore are not marked to market in the Company's financial statements but are subject to a lower of cost or market assessment.
v2.4.0.6
Fair Value Measurements
6 Months Ended
Mar. 31, 2013
Fair Value Disclosures [Abstract]  
Fair Value Measurements
Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  In determining fair value, the Company uses various methods including market, income and cost approaches.  Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique.  These inputs can be readily observable, market-corroborated, or generally unobservable inputs.  The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.  Based on the observability of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy.  The fair value hierarchy ranks the quality and reliability of the information used to determine fair values.  Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1 -
Valuations for assets and liabilities traded in active markets from readily available pricing sources for market transactions involving identical assets or liabilities.
Level 2 -
Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities.
Level 3 -
Valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.

A description of the valuation methodologies used for instruments measured at fair value, including the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.  These valuation methodologies were applied to all of the Company's financial assets and financial liabilities carried at fair value.
 
Derivative financial instruments:  Commodity futures and exchange-traded commodity options contracts are reported at fair value utilizing Level 1 inputs.  For these contracts, the Company obtains fair value measurements from an independent pricing service.  The fair value measurements consider observable data that may include dealer quotes and live trading levels from the CME and NYMEX markets.  The fair value measurements consider observable data that may include dealer quotes and live trading levels from the over-the-counter markets.

The following table summarizes the financial liabilities measured at fair value on a recurring basis as of March 31, 2013 and September 30, 2012, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

 
 
March 31, 2013
 
 
Total
 
Level 1
 
Level 2
 
Level 3
Liabilities, derivative financial instruments
 
$
(422,863
)
 
$
(422,863
)
 
$

 
$

 
 
 
 
 
 
 
 
 
 
 
September 30, 2012
 
 
Total

 
Level 1

 
Level 2

 
Level 3

Assets, derivative financial instruments
 
$
134,050

 
$
134,050

 
$

 
$

v2.4.0.6
Contingency
6 Months Ended
Mar. 31, 2013
Contingency [Abstract]  
Contingency
Contingency

In May 2010, a lawsuit was filed against the Company and approximately twenty other ethanol plants, design firms and equipment manufacturers by an unrelated party claiming the Company's operation of the corn oil extraction system is infringing at least one patent. The plaintiff seeks injunctive relief, an award of damages with interest and any other remedies available under certain patent statutes or otherwise under law.  The Company is currently defending the lawsuit with legal counsel and has asserted various defenses including that it does not infringe and, further, that the patents are invalid.  The Company is unable to determine at this time if the lawsuit will have a material adverse affect on the Company.
v2.4.0.6
Sale of Property
6 Months Ended
Mar. 31, 2013
Sale of Property [Abstract]  
Sale of Property
Sale of Property

On October 5, 2011, the Company completed the sale of a land parcel adjacent to its primary site for a sales price of $1,181,000. A gain of $496,098 was recognized for the sale of the property for the six months ended March 31, 2012.
v2.4.0.6
Subsequent Events
6 Months Ended
Mar. 31, 2013
Subsequent Events [Abstract]  
Subsequent Events
Subsequent Events

On April 17, 2013, the Company entered into a Main Extension and Gas Transportation Agreement with an unrelated party. The agreement is part of the Company's long-term plan to convert the energy source for its ethanol plant from coal to natural gas. The unrelated party will construct a pipeline that will be utilized to transport natural gas to the Company's ethanol plant. The total estimated cost of the construction of the gas pipeline to the Company is $3.2 million. The Company will pay that amount to the unrelated party through a monthly fee that is payable over a 10 year term of the Agreement. Completion of the pipeline is estimated to be the first quarter of calendar year 2015.

The Company also assigned a $3.2 million irrevocable standby letter of credit to the unrelated party to stand as security for the Company's obligation under the Agreement. It is anticipated that the letter of credit may be reduced over time as the Company makes it payment under the Agreement.

The Company also made amendments with its lender to the Master Loan Agreement, Monitored Revolving Credit Supplement and Revolving Term Loan Supplement. The Company increased its line of credit by $7.7 million to cover a portion of the letter of credit and other construction costs that will be incurred to convert from coal to natural gas.
v2.4.0.6
Revenue (Tables)
6 Months Ended
Mar. 31, 2013
Revenue by product [Abstract]  
Revenue from External Customers by Products and Services
Components of revenue are as follows:
(Excludes hedging activity)
 
Three Months
 
Three Months
 
Six Months
 
Six Months
 
 
 Ended
 
 Ended
 
 Ended
 
 Ended
(In thousands)
 
March 31, 2013
 
March 31, 2012
 
March 31, 2013
 
March 31, 2012
Ethanol
 
$
34,127

 
$
31,428

 
$
68,140

 
$
65,141

Distillers' Grains
 
12,320

 
9,713

 
24,798

 
17,851

Other
 
1,027

 
976

 
1,949

 
2,386

v2.4.0.6
Inventories (Tables)
6 Months Ended
Mar. 31, 2013
Inventory Disclosure [Abstract]  
Schedule of Inventory, Current
Inventories consist of the following as of:
 
March 31,
2013
 
September 30,
2012
 
 
 
 
Raw materials, including corn, coal, chemicals and supplies
$
3,644,100

 
$
2,048,130

Work in process
1,265,324

 
1,432,257

Ethanol and distillers grains
2,048,999

 
2,442,549

Total
$
6,958,423

 
$
5,922,936

v2.4.0.6
Long-Term Debt (Tables)
6 Months Ended
Mar. 31, 2013
Long-term Debt, Unclassified [Abstract]  
Schedule of Long-term Debt Instruments
Long-term debt consists of the following as of:

 
March 31,
2013
 
September 30,
2012
 
 
 
 
Revolving term loan. (A)
$

 
$
3,237,000

 
 

 
 

Note payable to Iowa Department of Transportation. (B)
212,671

 
238,021

 
212,671

 
3,475,021

Less current maturities
(51,506
)
 
(50,968
)
 
$
161,165

 
$
3,424,053


(A)
The Company entered into a new master loan agreement with a financial institution on August 20, 2012. One of the supplements of the agreement is a revolving term loan available for up to $5,000,000. The revolving term loan is to be used to provide working capital. The Company will pay interest on the unpaid balance at a variable interest rate (adjusted on a weekly basis) based upon the one-month LIBOR index rate plus 3.50%. The Company will also pay a commitment fee on the average daily unused portion of the loan at the rate of .60% per annum, payable monthly. The loan is secured by substantially all assets of the Company and subject to certain financial and nonfinancial covenants as defined in the master loan agreement. The term of the loan will expire, and the Company must pay all unpaid principal amounts outstanding under the revolving term loan, on June 1, 2017. The September 30, 2012 balance was paid off during the quarter ended December 31, 2012.

(B)
The Company entered into a $500,000 loan agreement with the Iowa Department of Transportation (IDOT) in February 2005.  The proceeds were disbursed upon submission of paid invoices.  Interest at 2.11% began accruing on January 1, 2007.  Principal payments will be due semiannually through July 2016.  The loan is secured by all rail track material constructed as part of the plant construction.  The debt is subordinate to the above financial institution revolving term loan (A) and revolving credit loan (Note 4.)

v2.4.0.6
Risk Management (Tables)
6 Months Ended
Mar. 31, 2013
Risk Management [Abstract]  
Schedule of Other Derivatives Not Designated as Hedging Instruments, Statements of Financial Performance and Financial Position, Location
Derivatives not designated as hedging instruments are as follows:

 
March 31 2013
 
September 30 2012
Derivative assets
$

 
$
134,050

Derivative liabilities
(422,863
)
 

Cash held by (due to) broker
304,593

 
(62,072
)
Total
$
(118,270
)
 
$
71,978

Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance
The effects on operating income from derivative activities is as follows:

 
Three Months
 
Three Months
 
Six Months
 
Six Months
 
Ended
 
Ended
 
Ended
 
Ended
 
March 31, 2013
 
March 31, 2012
 
March 31, 2013
 
March 31, 2012
(Decrease) in revenue due to derivatives related to ethanol sales:
 
 
 
 
 
 
 
Unrealized
$

 
$
(36,842
)
 
$

 
$
(36,842
)
Total effect on revenue

 
(36,842
)
 

 
(36,842
)
 
 
 
 

 
 
 
 
(Increase) decrease in cost of goods sold due to derivatives related to corn costs:
 
 
 
 
 
 
 
Realized
89,981

 
164,650

 
990,716

 
244,213

Unrealized
(399,963
)
 
475,000

 
(422,863
)
 
66,850

Total effect on cost of goods sold
(309,982
)
 
639,650

 
567,853

 
311,063

 
 
 
 

 
 
 
 
Total increase (decrease) to operating income due to derivative activities
$
(309,982
)
 
$
602,808

 
$
567,853

 
$
274,221

v2.4.0.6
Fair Value Measurements (Tables)
6 Months Ended
Mar. 31, 2013
Fair Value Disclosures [Abstract]  
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]
The following table summarizes the financial liabilities measured at fair value on a recurring basis as of March 31, 2013 and September 30, 2012, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

 
 
March 31, 2013
 
 
Total
 
Level 1
 
Level 2
 
Level 3
Liabilities, derivative financial instruments
 
$
(422,863
)
 
$
(422,863
)
 
$

 
$

 
 
 
 
 
 
 
 
 
 
 
September 30, 2012
 
 
Total

 
Level 1

 
Level 2

 
Level 3

Assets, derivative financial instruments
 
$
134,050

 
$
134,050

 
$

 
$

v2.4.0.6
Nature of Business and Significant Accounting Policies (Details)
6 Months Ended
Mar. 31, 2013
gal
D
Principal business activity [Abstract]  
Annual ethanol production 50,000,000
Number of days outstanding for a past due trade receivables 90
v2.4.0.6
Revenue (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Mar. 31, 2013
Mar. 31, 2012
Revenue from External Customer [Line Items]        
Revenue from external customers     $ 1,949 $ 2,386
Ethanol [Member]
       
Revenue from External Customer [Line Items]        
Revenue from external customers 34,127 31,428 68,140 65,141
Distillers' Grains [Member]
       
Revenue from External Customer [Line Items]        
Revenue from external customers 12,320 9,713 24,798 17,851
Other [Member]
       
Revenue from External Customer [Line Items]        
Revenue from external customers $ 1,027 $ 976    
v2.4.0.6
Inventories (Details) (USD $)
Mar. 31, 2013
Sep. 30, 2012
Inventory Disclosure [Abstract]    
Raw materials, including corn, coal, chemicals and supplies $ 3,644,100 $ 2,048,130
Work in process 1,265,324 1,432,257
Ethanol and distillers grains 2,048,999 2,442,549
Total 6,958,423 5,922,936
Inventory valuation reserves   $ 368,000
v2.4.0.6
Revolving Credit Loan (Details) (USD $)
0 Months Ended
Aug. 20, 2012
Mar. 31, 2013
Sep. 30, 2012
Line of Credit Facility [Line Items]      
Debt instrument, basis spread on variable rate 3.50%    
Line of credit facility, unused capacity, commitment fee percentage 0.60%    
Revolving credit loan   $ 3,776,000 $ 200,000
Revolving Credit Facility [Member]
     
Line of Credit Facility [Line Items]      
Line of credit facility, maximum borrowing capacity 10,000,000    
Line of credit facility, remaining borrowing capacity   6,000,000  
Debt instrument, description of variable rate basis LIBOR    
Debt instrument, basis spread on variable rate 3.25%    
Line of credit facility, unused capacity, commitment fee percentage 0.30%    
Revolving credit loan   $ 3,776,000  
v2.4.0.6
Long-Term Debt (Details) (USD $)
0 Months Ended
Aug. 20, 2012
Mar. 31, 2013
Sep. 30, 2012
Debt Instrument [Line Items]      
Revolving term loan   $ 0 [1] $ 3,237,000 [1]
Note payable to Iowa Department of Transportation   212,671 [2] 238,021 [2]
Long-term debt, total   212,671 [2] 3,475,021 [2]
Less current maturities   (51,506) (50,968)
Long-term debt, less current maturities   161,165 3,424,053
Revolving term loan, maximum borrowing capacity 5,000,000    
Debt instrument, basis spread on variable rate 3.50%    
Line of credit facility, unused capacity, commitment fee percentage 0.60%    
Railroad revolving loan fund   $ 500,000  
Debt instrument, interest rate, stated percentage   2.11%  
[1] The Company entered into a new master loan agreement with a financial institution on August 20, 2012. One of the supplements of the agreement is a revolving term loan available for up to $5,000,000. The revolving term loan is to be used to provide working capital. The Company will pay interest on the unpaid balance at a variable interest rate (adjusted on a weekly basis) based upon the one-month LIBOR index rate plus 3.50%. The Company will also pay a commitment fee on the average daily unused portion of the loan at the rate of .60% per annum, payable monthly. The loan is secured by substantially all assets of the Company and subject to certain financial and nonfinancial covenants as defined in the master loan agreement. The term of the loan will expire, and the Company must pay all unpaid principal amounts outstanding under the revolving term loan, on June 1, 2017. The September 30, 2012 balance was paid off during the quarter ended December 31, 2012.
[2] The Company entered into a $500,000 loan agreement with the Iowa Department of Transportation (IDOT) in February 2005. The proceeds were disbursed upon submission of paid invoices. Interest at 2.11% began accruing on January 1, 2007. Principal payments will be due semiannually through July 2016. The loan is secured by all rail track material constructed as part of the plant construction. The debt is subordinate to the above financial institution revolving term loan (A) and revolving credit loan (Note 4.)
v2.4.0.6
Related-Party Transactions (Details) (USD $)
0 Months Ended 3 Months Ended 6 Months Ended
Dec. 28, 2012
Mar. 31, 2013
bu
Jun. 30, 2012
Mar. 31, 2012
Mar. 31, 2013
bu
Mar. 31, 2012
Related Party Transaction [Line Items]            
Settlement fee payable, related party         $ (425,000) $ 0
Interest paid         83,072 106,008
Key Coop [Member]
           
Related Party Transaction [Line Items]            
Related party transaction, description of transaction         100.00%  
Loss on contract termination         2,000,000  
Reduction in termination fee         50,000  
Settlement fee payable, related party     1,700,000      
Payments for legal settlements 425,000       425,000  
Interest paid 12,412          
Interest payable, related parties   10,217   0 10,217 0
Related party transaction, purchases from related party   21,765,266   34,667,303 63,022,389 64,458,716
Corn cash contracts   85,429.26     85,429.26  
Purchase commitment, remaining minimum amount committed   613,382     613,382  
Corn Forward Contract   2,098,800     2,098,800  
Related party transaction, amounts of transaction   17,992   14,128 41,650 44,197
Accounts payable, related parties, current   163,381     163,381  
Heartland [Member]
           
Related Party Transaction [Line Items]            
Related party transaction, purchases from related party   3,614,715     3,614,715  
Corn cash contracts   111,375.05     111,375.05  
Purchase commitment, remaining minimum amount committed   815,265     815,265  
Accounts payable, related parties, current   299,668     299,668  
Several Other Members [Member]
           
Related Party Transaction [Line Items]            
Related party transaction, purchases from related party   2,075,324     2,075,324  
Corn cash contracts   52,832.52     52,832.52  
Purchase commitment, remaining minimum amount committed   398,848     398,848  
Innovative Ag Services [Member]
           
Related Party Transaction [Line Items]            
Related party transaction, purchases from related party   $ 128,348   $ 1,633 $ 224,830 $ 16,520
v2.4.0.6
Commitments and Major Customer (Details) (USD $)
3 Months Ended 6 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Mar. 31, 2013
Mar. 31, 2012
Ethanol [Member]
       
Revenue, Major Customer [Line Items]        
Marketing expense $ 180,586   $ 180,586  
Entity-wide revenue, major customer, amount 34,127,351   34,127,351  
Ethanol receivable 2,585,161   2,585,161  
Ethanol [Member]
       
Revenue, Major Customer [Line Items]        
Marketing expense 0 181,836 138,262 352,219
Entity-wide revenue, major customer, amount 34,012,975 31,427,345 34,012,975 65,140,803
Distillers' Grains [Member]
       
Revenue, Major Customer [Line Items]        
Marketing expense 188,278 161,596 375,674 299,884
Entity-wide revenue, major customer, amount 12,319,911 9,712,956 24,798,011 17,851,289
Distillers grains receivable $ 1,621,983   $ 1,621,983  
v2.4.0.6
Commitments and Major Customer Purchase committments (Details) (USD $)
3 Months Ended 6 Months Ended
Mar. 31, 2013
gal
Mar. 31, 2013
Coal Contract [Member]
   
Long-term Purchase Commitment [Line Items]    
Long-term purchase commitment, amount $ 2,243,340  
Denaturant [Member]
   
Long-term Purchase Commitment [Line Items]    
Long-term purchase commitment, amount   359,784
Denaturant price per unit 0.1875  
Long-term purchase commitment, minimum quantity required 144,000  
Forward Contracts [Member]
   
Long-term Purchase Commitment [Line Items]    
Corn Forward Contract 1,050,000 1,050,000
Long-term purchase commitment, amount   $ 1,711,777
Long-term purchase commitment, minimum quantity required 263,533  
v2.4.0.6
Risk Management (Details) (USD $)
3 Months Ended 6 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Mar. 31, 2013
Mar. 31, 2012
Sep. 30, 2012
Trading Activity, Gains and Losses, Net [Line Items]          
Derivative assets $ 0   $ 0   $ 134,050
Derivative liabilities (422,863)   (422,863)   0
Cash held by (due to) broker 304,593   304,593   (62,072)
Total (118,270)   (118,270)   71,978
Trading activity, gains and losses, net (309,982) 602,808 567,853 274,221  
Revenues [Member]
         
Trading Activity, Gains and Losses, Net [Line Items]          
Trading activity, gains and losses, net 0 (36,842) 0 (36,842)  
Cost of Goods, Total [Member]
         
Trading Activity, Gains and Losses, Net [Line Items]          
Trading activity, gains and losses, net (309,982) 639,650 567,853 311,063  
Gain (Loss) on Settlement of Derivative Instrument [Member] | Cost of Goods, Total [Member]
         
Trading Activity, Gains and Losses, Net [Line Items]          
Trading activity, gains and losses, net 89,981 164,650 990,716 244,213  
Unrealized Gain (Loss or Write-down) [Member] | Revenues [Member]
         
Trading Activity, Gains and Losses, Net [Line Items]          
Trading activity, gains and losses, net 0 (36,842) 0 (36,842)  
Unrealized Gain (Loss or Write-down) [Member] | Cost of Goods, Total [Member]
         
Trading Activity, Gains and Losses, Net [Line Items]          
Trading activity, gains and losses, net $ (399,963) $ 475,000 $ (422,863) $ 66,850  
v2.4.0.6
Fair Value Measurements (Details) (USD $)
Mar. 31, 2013
Sep. 30, 2012
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Assets, derivative financial instruments $ 0 $ 134,050
Fair Value, Measurements, Recurring [Member]
   
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Liabilities, derivative financial instruments (422,863)  
Assets, derivative financial instruments   134,050
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
   
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Liabilities, derivative financial instruments (422,863)  
Assets, derivative financial instruments   134,050
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
   
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Liabilities, derivative financial instruments 0  
Assets, derivative financial instruments   0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
   
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Liabilities, derivative financial instruments 0  
Assets, derivative financial instruments   $ 0
v2.4.0.6
Sale of Property (Details) (USD $)
0 Months Ended 3 Months Ended
Oct. 05, 2011
Mar. 31, 2012
Sale of Property [Abstract]    
Land sales $ 1,181,000  
Gain on sale of property   $ 496,098
v2.4.0.6
Subsequent Events (Details) (Subsequent Event [Member], USD $)
In Millions, unless otherwise specified
0 Months Ended
Aug. 20, 2012
Revolving Credit Facility [Member]
Apr. 17, 2013
Financial Standby Letter of Credit [Member]
Apr. 17, 2013
Pipelines [Member]
Subsequent Event [Line Items]      
Estimated additions to property, plant and equipment     $ 3.2
Property, plant and equipment, additions, term of contract     10 years
Guarantor obligations, current carrying value   3.2  
Line of credit facility, increase, maximum borrowing capacity $ 7.7