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Investments and Restricted Deposits
 3 Months Ended
Apr. 30, 2012
Investments And Deposits [Text Block]

Note 11. Investments and Restricted Deposits


          The Company has approximately $383,000 and $743,000 at April 30, 2012 and January 31, 2012, respectively, 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 $620,000 at April 30, 2012 and January 31, 2012 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 April 30, 2012 and January 31, 2012 (amounts in thousands):


 

 

 

 

 

 

 

 

 

 

 

Entity

 

Ownership
Percentage

 

Carrying Amount
April 30, 2012

 

Carrying Amount
January 31, 2012

 

 

 

 

 

 

Big River

 

 

10

%

$

32,922

 

$

34,370

 

Patriot

 

 

26

%

 

27,159

 

 

27,309

 

 

 

 

 

 

 

 

Total Equity Method Investments

 

 

 

 

$

60,081

 

$

61,679

 

 

 

 

 

 

 

 


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


 

 

 

 

 

 

 

 

 

 

Three Months Ended
April 30,

 

 

 

2012

 

2011

 

 

 

 

 

 

Big River

 

$

557

 

$

1,271

 

Patriot

 

 

(115

)

 

904

 

NuGen

 

 

—

 

 

3,607

 

 

 

 

 

Total

 

$

442

 

$

5,782

 

 

 

 

 


          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 accounted for this investment using the equity method of accounting. On November 1, 2011, the Company acquired an additional 50% equity interest in NuGen. Following the purchase, the Company owned all of the outstanding Class A membership interest units in NuGen, representing a 100% voting interest and a 98% equity interest in NuGen. Effective November 1, 2011, the Company ceased using the equity method of accounting and began consolidating the results of NuGen. Prior to consolidation, the Company recorded the results of NuGen on a one month lag. During fiscal year 2011, NuGen adopted the same fiscal year as the Company. As a result, the Company no longer records the results of NuGen on a one month lag. NuGen repurchased shares from noncontrolling interests holders during fiscal year 2012. This increased the Company’s equity interest in NuGen to 99%.


          Undistributed earnings of equity method investees totaled approximately $21.2 million and $22.8 million at April 30, 2012 and January 31, 2012, respectively. During the first three months of fiscal years 2012 and 2011, the Company received dividends from equity method investees of approximately $2.0 million and $2.3 million, respectively.


          Summarized financial information for each of the Company’s equity method investees is presented in the following table for the three months ended April 30, 2012 and 2011, on a delayed basis of one month (amounts in thousands):


 

 

 

 

 

 

 

 

 

 

Three Months
Ended
April 30, 2012

 

 

 

Patriot

 

Big River

 

 

 

 

 

 

Net sales and revenue

 

$

89,812

 

$

291,003

 

Gross profit

 

$

1,777

 

$

14,008

 

(Loss) income from

 

 

 

 

 

 

 

continuing operations

 

$

(436

)

$

5,718

 

Net (loss) income

 

$

(436

)

$

5,718

 


 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
April 30, 2011

 

 

 

Patriot

 

Big River

 

NuGen

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales and revenue

 

$

88,316

 

$

242,245

 

$

81,138

 

Gross profit

 

$

5,462

 

$

23,089

 

$

8,889

 

Income from continuing operations

 

$

3,876

 

$

13,029

 

$

7,850

 

Net income

 

$

3,876

 

$

13,029

 

$

7,850

 


          Patriot and Big River 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 and Big River combined at April 30, 2012 and January 31, 2012 are approximately $409.5 million and $326.2 million, respectively. The Company’s proportionate share of restricted net assets of Patriot and Big River combined at April 30, 2012 and January 31, 2012 are approximately $54.5 million and $44.2 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 April 30, 2012 and January 31, 2012. 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.