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We are a leading, vertically-integrated producer, marketer and distributer of ethanol. We focus on generating stable
operating margins through our diversified business segments and our risk management strategy. We believe that owning and
operating assets throughout the ethanol value chain enables us to mitigate changes in commodity prices and differentiates us
from companies focused only on ethanol production. Today, we have operations throughout the ethanol value chain,
beginning upstream with our agronomy and grain handling operations, continuing through our approximately 740 million
gallons per year, or mmgy, of ethanol production capacity and ending downstream with our ethanol marketing, distribution
and blending facilities.
Our management reviews our operations in four separate operating segments:
Ethanol Production.
We operate a total of nine ethanol plants in Indiana, Iowa, Michigan, Minnesota, Nebraska and
Tennessee, with approximately 740 mmgy of total ethanol production capacity. At capacity, these plants collectively
will consume approximately 265 million bushels of corn and produce approximately 2.1 million tons of distillers
grains annually.
Corn Oil Production
. We operate corn oil extraction systems at all nine of our ethanol plants, with the capacity to
produce approximately 130 million pounds annually. The corn oil systems are designed to extract non-edible corn
oil from the whole stillage process immediately prior to production of distillers grains. Industrial uses for corn oil
include feedstock for biodiesel, livestock feed additives, rubber substitutes, rust preventatives, inks, textiles, soaps
and insecticides.
Agribusiness.
We operate three lines of business within our agribusiness segment: bulk grain, agronomy and
petroleum. In our bulk grain business, we have 15 grain elevators with approximately 39.1 million bushels of total
storage capacity. We sell fertilizer and other agricultural inputs and provide application services to area producers,
through our agronomy business. Additionally, we sell petroleum products including diesel, soydiesel, blended
gasoline and propane, primarily to agricultural producers and consumers. We believe our bulk grain business
provides synergies with our ethanol production segment as it supplies a portion of the feedstock for our ethanol
plants.
Marketing and Distribution.
Our in-house marketing business is responsible for the sales, marketing and
distribution of all ethanol, distillers grains and corn oil produced at our nine ethanol plants. We also market and
distribute ethanol for third-party ethanol producers with production capacity totaling approximately 260 mmgy.
Additionally, our wholly-owned subsidiary, BlendStar LLC, operates nine blending or terminaling facilities with
approximately 625 mmgy of total throughput capacity in seven states in the south central United States.
We have redefined our operating segments to segregate corn oil production as a reportable segment to reflect the manner
by which executive management manages, allocates resources to, and measures the performance of our businesses. We
initiated corn oil production in October 2010, with implementation of such extraction technology at all of our ethanol plants
completed during 2011. Corn oil production was previously reported as a component of our marketing and distribution
segment; however, all prior period segment results have been restated to reflect this change.
We intend to continue to take a disciplined approach in evaluating new opportunities related to potential acquisition of
additional ethanol plants by considering whether the plants fit within the design, engineering and geographic criteria we have
developed. In our marketing and distribution segment, our strategy is to renew existing marketing contracts, as well as enter
new contracts with other ethanol producers. We also intend to pursue opportunities to develop or acquire additional grain
elevators and agronomy businesses, specifically those located near our ethanol plants. We believe that owning additional
agribusiness operations in close proximity to our ethanol plants enables us to strengthen relationships with local corn
producers, allowing us to source corn more effectively and at a lower average cost. We also plan to continue to grow our
downstream access to customers and are actively seeking new marketing opportunities with other ethanol producers.
We continue our support of the BioProcess Algae joint venture, which is focused on developing technology to grow and
harvest algae, which consume carbon dioxide, in commercially viable quantities. Construction of Phase II was completed and
the Grower Harvesters™ bioreactors were successfully started up in January 2011. Phase II allows for verification of growth
rates, energy balances and operating expenses, which are considered to be some of the key steps to commercialization. The
cost of the Phase II project was shared by the joint venture partners. As part of the Phase II funding, we increased our
ownership in BioProcess Algae to 35%. During the third quarter of 2011, BioProcess Algae constructed an outdoor Grower
Harvester system next to our Shenandoah ethanol plant, which is successfully producing algae. BioProcess Algae
successfully completed its first round of algae-based poultry feed trials, in conjunction with the University of Illinois. The