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F-13
F-13
Effective January 1, 2012, the Company will be permitted to adopt the amended guidance in ASC Topic 350,
Intangibles
– Goodwill and Other
. The amended guidance permits an entity to first assess qualitative factors to determine whether it is
more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it
is necessary to perform the two-step goodwill impairment test. The more-likely-than-not threshold is defined as having a
likelihood of more than 50 percent. The Company has determined that the changes to the accounting standards will not
impact its disclosure or reporting requirements.
3. ACQUISITIONS
Acquisition of Otter Tail
In March 2011, the Company acquired an ethanol plant with an expected annual production capacity of 60 mmgy and
certain other assets near Fergus Falls, Minnesota from Otter Tail Ag Enterprises, LLC, or Otter Tail, for $59.7 million.
Consideration included $19.2 million of indebtedness to MMCDC New Markets Fund II, LLC, valued at $18.8 million, and
$35.0 million in financing from a group of nine lenders, led by AgStar Financial Services, with the remaining $5.9 million
paid in cash. The operating results of Otter Tail have been included in the Company’s consolidated financial statements since
March 24, 2011, providing revenue and operating income of $33.6 million and $0.1 million, respectively, for the year ended
December 31, 2011.
$
4,986
738
51,925
(409)
Other
(138)
57,102
2,600
$ 59,702
Current liabilities
Total identifiable net assets
Goodwill
Purchase price
Amounts of identifiable assets acquired
and liabilities assumed
(in thousands)
Inventory
Other current assets
Property and equipment, net
The amounts above reflect final purchase price allocations. Goodwill related to the acquisition is tax deductible and
results largely from economies of scale expected to be realized in the Company’s operations.
Consolidated pro forma revenue and operating income, had the acquisition of the Otter Tail ethanol plants occurred on
January 1, 2010, would have been $3.6 billion and $99.1 million, respectively, for the year ended December 31, 2011 and
$2.2 billion and $92.1 million, respectively, for the year ended December 31, 2010. This unaudited information is based on
historical results of operations and is not necessarily indicative of the results that would have been achieved had the
acquisitions occurred on such date.
Acquisition of Remaining Interest in BlendStar
In January 2009, the Company acquired a 51% ownership interest in BlendStar, which operates nine blending and
terminaling facilities with approximately 625 mmgy of total throughput capacity in seven states in the south central U.S. On
July 19, 2011, the Company acquired the remaining 49% of BlendStar from the noncontrolling holders. BlendStar’s
operations are included in the marketing and distribution segment.