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Investments and Restricted Deposits

6 Months Ended

Jul. 31, 2011

Investment And Deposits Disclosure [Text Block]

Note 12. Investments and Restricted Deposits

The Company has approximately $743,000 at July 31, 2011 and January 31, 2011 on deposit with the Florida Department of Financial Services to secure its obligation to fulfill future obligations related to extended warranty contracts sold in the state of Florida. As such, this deposit is restricted from use for general corporate purposes.

In addition to the deposit with the Florida Department of Financial Services, the Company has $857,000 at July 31, 2011 and January 31, 2011 invested in a money market mutual fund to satisfy Florida Department of Financial Services regulations. As such, this investment is restricted from use for general corporate purposes.

The following table summarizes equity method investments at July 31, 2011 and January 31, 2011 (amounts in thousands):


Entity	Ownership Percentage			Carrying Amount July 31, 2011		Carrying Amount January 31, 2011


Big River		10	%	$	31,295	$	29,443
Patriot		23	%		23,132		21,829
NuGen		48	%		20,079		16,077

Total Equity Method Investments				$	74,506	$	67,349

The following table summarizes income recognized from equity method investments for the periods presented (amounts in thousands):


	Three Months Ended July 31,				Six Months Ended July 31,
	2011		2010		2011		2010


Big River	$	1,583	$	627	$	2,854	$	1,961
Patriot		469		456		1,373		1,969
NuGen		1,709		—		5,316		—

Total	$	3,761	$	1,083	$	9,543	$	3,930

Effective July 1, 2010, the Company purchased a 48% equity interest in NuGen which operates an ethanol producing facility in Marion, South Dakota with an annual nameplate capacity of 100 million gallons. The Company’s investment included $2,410,361 paid at closing to the then sole shareholder of NuGen and $6,805,055 contributed directly to NuGen. At July 1, 2010 an additional $6,451,300 was due based upon cash distributions from NuGen that the Company is entitled to until such balance is paid (“Contingent Consideration”). At July 31, 2011 the Contingent Consideration gross balance due was $3,377,000. The carrying value of the Contingent Consideration was $2,265,000 at July 31, 2011, of which $62,000 is included in other current liabilities and $2,203,000 is included in other long-term liabilities on the Consolidated Condensed Balance Sheet. At July 1, 2010, the Company estimated the fair value of the Contingent Consideration to be $3,578,000. This liability was recorded at the acquisition date and has been reduced as payments are made by the Company to the seller of the 48% equity interest in NuGen.

The Company has an option to purchase for a purchase price of $1,138,389, (which is payable in cash, partially based upon cash distributions from NuGen that the Company is entitled to receive) additional ownership units from NuGen’s majority shareholder, which, if exercised, would result in the Company owning 51% of the total outstanding voting and economic interests of NuGen on a fully diluted basis.

Undistributed earnings of equity method investees totaled approximately $24.3 million and $18.4 million at July 31, 2011 and January 31, 2011, respectively. During the first six months of fiscal years 2011 and 2010, the Company received dividends from equity method investees of approximately $2.3 million and $0.8 million, respectively.

Summarized financial information for each of the Company’s equity method investees is presented in the following table for the three and six months ended June 30, 2011 and June 30, 2010 (amounts in thousands):


Three Months Ended June 30, 2011	Big River		Patriot		NuGen


Net sales and revenue	$	236,478	$	101,650	$	86,913
Gross profit	$	8,402	$	4,071	$	6,103
Income from continuing operations	$	16,305	$	2,012	$	3,893
Net income	$	16,305	$	2,012	$	3,893

Three Months Ended June 30, 2010	Big River		Patriot


Net sales and revenue	$	157,620	$	50,665
Gross profit	$	12,275	$	5,354
Income from continuing operations	$	6,453	$	1,957
Net income	$	6,453	$	1,957

Six Months Ended June 30, 2011	Big River		Patriot		NuGen


Net sales and revenue	$	478,706	$	189,966	$	168,051
Gross profit	$	31,473	$	9,534	$	14,992
Income from continuing operations	$	29,334	$	5,888	$	11,743
Net income	$	29,334	$	5,888	$	11,743


Six Months Ended June 30, 2010	Big River		Patriot


Net sales and revenue	$	314,537	$	107,609
Gross profit	$	26,595	$	14,998
Income from continuing operations	$	20,167	$	8,442
Net income	$	20,167	$	8,442

Patriot, Big River and NuGen have debt agreements that limit and restrict amounts the companies can pay in the form of dividends or advances to owners. The restricted net assets of Patriot, Big River and NuGen combined at June 30, 2011 and January 31, 2011 are approximately $363.9 million and $355.1 million, respectively. The Company’s proportionate share of restricted net assets of Patriot, Big River and NuGen combined at June 30, 2011 and January 31, 2011 are approximately $59.1 million and $52.4 million, respectively.

On January 31, 2011, the Company sold 814,000 of its membership units in Levelland Hockley County Ethanol, LLC (“Levelland Hockley”) for $1, reducing the ownership interest in Levelland Hockley from 56% to 49%. As a result, the Company no longer had a controlling financial interest in Levelland Hockley, and, therefore, effective January 31, 2011, the Company deconsolidated Levelland Hockley and began using the equity method of accounting. In connection with the deconsolidation, the Company recorded its remaining non controlling equity interest and debt investments at fair value. The Company’s estimate of fair value for all of its investments in Levelland Hockley was $0 at July 31, 2011 and January 31, 2011. On April 27, 2011, Levelland Hockley voluntarily filed for protection under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court, Northern District of Texas. As a result, the Company no longer can exercise significant influence over Levelland Hockley and began using the cost method of accounting. There was no change in the carrying value of the Company’s investments in Levelland Hockley as a result of the change to the cost method of accounting.