Web exclusive posted March 28, 2008 at 11:28 a.m. CST 
 
 The partners in a pending ethanol merger released different financial results in mid-March, according to regulatory filings with the U.S. Securities and Exchange Commission. 
 
 One week after announcing its fifth ethanol plant opened, US BioEnergy Corp. announced a $7.2 million net quarterly loss. The company's regulatory filing, in advance of a pending merger with VeraSun Energy Corp., reported a $14 million charge for mark to market losses related to its commodity hedging activities. 
 

 U.S. BioEnergy also incurred a one-time $2.8 million expense related to the merger, according to the accompanying news release. The company also reported $17.4 million net income for 2007 on revenues of $588.6 million. During the last half of 2007, U.S. BioEnergy sold nearly 150 million gallons of ethanol at prices near $1.77 a gallon.
 
 "We are very pleased to deliver another quarter of robust production and sales," U.S. BioEnergy CEO Gordon Ommen said in a statement accompanying the SEC filing. 
 
 Meanwhile, in its SEC filing, VeraSun listed a 100-plus percent increase in quarterly sales and said it had increased annual revenues of 52 percent over 2006. On the eve of the merger, VeraSun reported no liquidity issues that would hinder it from growing in the ethanol industry. While corn prices rise dramatically, VeraSun is exploring cellulosic ethanol production and has a long term plan to reduce expenses and increase production. Later this year, the company will also start producing corn oil for biodiesel at some plants. The large economy of scale after the merger, which is set to be finalized April 1, will benefit VeraSun. 
 
 "We're well positioned with infrastructure in all major ethanol markets including the new markets in the Southeast," VeraSun CEO Don Endres said.
 
 U.S. BioEnergy's mark to market accounting is a device that gained notoriety during the Enron scandal, and is currently the subject of heated debate in the housing mortgage crisis fallout. Many financial institutions have posted huge losses for 2007 attributed to the practice. Futures traders use it when taking a position. They deposit money – a margin – with an exchange to protect the exchange against loss. Contracts are marked at the end of each trading day to present market values. If the trader's contract has increased in value during the day, the exchange deposits the profits into the trader's account. If the trader's contract has decreased in value, the account is debited to cover the loss. The margin is used as collateral if the trader can't cover his losses. 
 
 Companies that elect mark to market accounting have an annual reconciliation on Dec. 31. The stocks they hold at the end of trading on that day are marked as if they were sold that same day at current market prices. If the stock has gone down, the company reports a loss without actually selling the stock. On January 1st, the holdings are re-tallied, as if they were repurchased at the current price. The basis of each holding is then adjusted to reflect these hypothetical gains and losses for tax purposes.
 
 After U.S. BioEnergy took hedging related gains and losses into account, the company's corn costs averaged $3.47 a bushel, or $1.23 per gallon of ethanol sold during the fourth quarter of 2007 compared to $3.15 a bushel, or $1.10 per gallon of ethanol sold during the third quarter of 2007.
 
 U.S. BioEnergy reported nearly $370 million in 2007 construction costs for plants in North Dakota, Minnesota, Iowa and a South Dakota plant that recently began production. The other three 110 MMgy plants are scheduled to begin production later this year.
 
 "Our current expectation is that we will sell approximately 85 million gallons of ethanol in the first quarter of the year, so this represents a little over 7 percent of first quarter volume and less than that in the second quarter," said Rich Atkinson, U.S. BioEnergy's chief financial officer during a conference call with analysts that is posted on the company's Web site.

U.S. BioEnergy posts $7 million quarterly loss; VeraSun reports strong financial position

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U.S. BioEnergy posts $7 million quarterly loss; VeraSun reports strong financial position.css-7jxktu{position:absolute;bottom:0px;left:0px;right:0px;height:3px;border-radius:3px;background-color:var(--chakra-colors-brandBlack);}

Upcoming Events

National Carbon Capture Conference & Expo

2024 International Biomass Conference & Expo

2024 International Fuel Ethanol Workshop & Expo

Biodiesel Summit: Sustainable Aviation Fuel & Renewable Diesel

Carbon Capture & Storage Summit

U.S. BioEnergy posts $7 million quarterly loss; VeraSun reports strong financial position