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Net cash provided by operating activities was $108.9 million for the year ended December 31, 2011 compared to $34.8
million in 2010. Cash provided by operating activities for the year ended December 31, 2011 was affected by an increase in
accounts payable and a decrease in derivative financial instruments offset partially by increases in accounts receivable and
inventory. Net cash used by investing activities was $54.5 million for the year ended December 31, 2011, primarily due to the
acquisition of our Otter Tail ethanol plant, the construction of additional grain storage and the installation of corn oil
extraction equipment. Net cash used by financing activities was $112.6 million for the year ended December 31, 2011 due to
the repayment of debt, net of proceeds from new issuances, of $68.8 million and $28.2 million in cash outflows for the
repurchase of treasury stock. We made scheduled principal payments and $13.1 million in free cash flow payments for a total
of $206.9 million in debt reduction on our term debt facilities and long-term revolving credit facilities, offset by advances of
$138.1 million from long-term revolving credit facilities, during the year ended December 31, 2011. Green Plains Trade and
Green Plains Grain utilize short-term revolving credit facilities to finance working capital requirements. These facilities are
frequently drawn upon and repaid resulting in significant cash movements that are reflected on a gross basis within financing
activities as proceeds from and payments on short-term notes payable and other borrowings.
Our business is highly impacted by commodity prices, including prices for corn, ethanol, distillers grains and natural gas.
We attempt to reduce the market risk associated with fluctuations in commodity prices through the use of derivative financial
instruments. Sudden changes in commodity prices may require cash deposits with brokers, or margin calls. Depending on our
open derivative positions, we may require significant liquidity with little advanced notice to meet margin calls. We
continuously monitor our exposure to margin calls and believe that we will continue to maintain adequate liquidity to cover
such margin calls from operating results and borrowings. Increases in grain prices and our expanded grain handling capacity
have led to more frequent and larger margin calls.
We are in compliance with our debt covenants related to the period ended December 31, 2011. Based upon our current
forecasts, we believe we will maintain compliance at each of our subsidiaries for the upcoming twelve months, or if
necessary have sufficient liquidity available on a consolidated basis to resolve a subsidiary’s noncompliance; however, no
obligation exists to provide such liquidity for a subsidiary’s compliance. No assurance can be provided that actual operating
results will approximate our forecasts or that we will inject the necessary capital into a subsidiary to maintain compliance
with its respective covenants. In the event actual results differ significantly from our forecasts and a subsidiary is unable to
comply with its respective debt covenants, the subsidiary’s lenders may determine that an event of default has occurred.
Upon the occurrence of an event of default, and following notice, the lenders may terminate any commitment and declare the
entire unpaid balance due and payable.
We believe that we have sufficient working capital for our existing operations. However, we can provide no assurance
that we will be able to secure additional funding for any of our operations. A sustained period of unprofitable operations may
strain our liquidity and make it difficult to maintain compliance with our financing arrangements. While we may seek
additional sources of working capital in response, we can provide no assurance that we will be able to secure this funding if
necessary. We may sell additional equity or borrow additional amounts to improve or preserve our liquidity; expand our
ethanol plants; build additional or acquire existing ethanol plants; or build additional or acquire existing agribusiness and
ethanol distribution facilities. We can provide no assurance that we will be able to secure the funding necessary for these
additional projects or for additional working capital needs at reasonable terms, if at all.
Debt
For additional information related to our debt, see
Note 10 – Debt
included herein as part of the Notes to Consolidated
Financial Statements.
Ethanol Production Segment
Each of our ethanol production segment subsidiaries have credit facilities with lender groups that provide for term and
revolving term loans to finance construction and operation of the production facilities.
The Green Plains Bluffton loan is comprised of a $70.0 million amortizing term loan and a $20.0 million revolving term
loan. At December 31, 2011, $48.0 million related to the term loan was outstanding, along with the entire revolving term
loan. The term loan requires monthly principal payments of approximately $0.6 million. The loans mature on November 19,
2013.