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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K
 þ
    
    Annual report under Section 13 or 15(d) of the Securities Exchange Act of 1934.
 For the fiscal year ended December 31, 2008
 o
    
    Transition report under Section 13 or 15(d) of the Exchange Act.
 For the transition period from  to
 Commission file number 000-51965
 WESTERN IOWA ENERGY, LLC
  Iowa
    
    41-2143913(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)1220 S. CENTER STREET, P.O BOX 399WALL LAKE, IOWA
    
    51466(Address of principal executive offices)
    
    (Zip Code)
 (712) 664-2173
 None
 26,447
 o Yes þ No
 o Yes þ No
 Note-
    
    Checking the box above will not relieve any registrant required to file reports
pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those
Sections.
 þ o
 þ
  o Large accelerated filer
    
    o Accelerated filer
    
    þ Non-accelerated filer
    
    o Smaller reporting company(Do not check if a smaller reporting company)
 o þ




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##### 



Table of Contents
 PART I
    
    
    4ITEM 1. BUSINESS
    
    
    4ITEM 1A. RISK FACTORS
    
    
    19ITEM 2. PROPERTIES
    
    
    29ITEM 3. LEGAL PROCEEDINGS
    
    
    30ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    30PART II
    
    
    30ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
    
    
    30ITEM 6. SELECTED FINANCIAL DATA
    
    
    33ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    33ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
    
    
    45ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    46INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
    
    
    46ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    47ITEM 9A. CONTROLS AND PROCEDURES
    
    
    47ITEM 9B. OTHER INFORMATION
    
    
    48PART III
    
    
    48ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
SECTION 16(A) OF THE EXCHANGE ACT
    
    
    48ITEM 11. EXECUTIVE COMPENSATION
    
    
    48ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED MEMBER
MATTERS
    
    
    48ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
    
    
    48ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
    
    
    48ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
    
    
    49SIGNATURES
    
    
    51Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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AVAILABLE INFORMATION
  CAUTIONARY STATEMENTS REGARDING FORWARD LOOKING STATEMENTS
 RISK FACTORS
 
    
    Overcapacity within the biodiesel industry resulting in increased competition and
costs for feedstock and/or decreased prices for our biodiesel and glycerin;
 
    
    Competition with other manufacturers in the biodiesel industry;
 
    
    The availability and adequacy of our cash flow to meet our requirements;
 
    
    Results of our hedging strategies;
 
    
    Changes in interest rates and the availability of credit to support capital
improvements, development, expansion and operations;
 
    
    Decrease in the demand for biodiesel;
 
    
    Changes in plant production capacity or technical difficulties in operating the
plant;
 
    
    Actual biodiesel and glycerin production varying from expectations;
 
    
    Availability and cost of products and raw materials, particularly soybean oil and
animal fats;
 
    
    Changes in the price and market for biodiesel and its co-products;
 
    
    Our ability to market and our reliance on third parties to market our products;
 
    
    Fluctuations in petroleum prices;
 
    
    Competition from alternative fuels and alternative fuel additives;
 
    
    Changes in our business strategy, capital improvement or development plans;
 
    
    Consequences of the domestic and global economic downturn and recent financial
crisis;
 
    
    Our ability to generate free cash flow to invest in our business and service our
debt;
 
    
    Changes in general economic conditions or the occurrence of certain events causing
an economic impact in the agriculture, oil or transportation industries;
 
    
    Changes in the environmental regulations or in our ability to comply with the
environmental regulations that apply to our plant operations;
 
    
    Changes and advances in biodiesel production technology;
 
    
    Our ability to continue to export our biodiesel;
 
    
    Changes in federal, state, or local incentives for biodiesel production;
 
    
    The imposition of tariffs or other duties on biodiesel imported into Europe; and
 
    
    Other factors described elsewhere in this report.
   3




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PART I
 
 ITEM 1. Business.
 General Development of Business
        Financial Information About Segments
   4




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Principal Products
  Biodiesel
   Primary Co-Product  Crude Glycerin
   Principal Products Markets
 Distribution Methods
  Distribution Methods
   5




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Seasonal Demand for Biodiesel
  General Demand for Biodiesel
     6




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Sources and Availability of Raw Materials
 Feedstock Procurement
  
    
    Provide analysis and audit of feedstock suppliers;
 
    
    Purchase feedstock at competitive prices meeting specifications and in
quantities adequate to satisfy the production schedule of our plant;
 
    
    Negotiate for discounts on feedstock, where obtainable;
 
    
    Arrange for transportation, logistics, and scheduling of feedstock deliveries;
 
    
    Provide analysis and audit of bulk transportation providers;
 
    
    Perform due diligence requirements for investigation of suppliers of the
chemical inputs;
 
    
    Provide analysis and audit of chemical suppliers;
 
    
    Purchase chemical inputs at competitive prices meeting specifications for use
in our plant;
 
    
    Negotiate for discounts on the purchase of chemical inputs, where obtainable;
 
    
    Procure adequate chemical inputs to meet our production schedules; and
 
    
    Arrange for transportation, logistics, and scheduling services for chemical
input deliveries by suppliers.
  Feedstock Cost and Supply
    7




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Soybean Oil
  U.S. Soybean Oil Prices for the Past
10 Years
 Marketing Year
    
    Price (cents)1998/99
    
    
    19.901999/00
    
    
    15.602000/01
    
    
    14.152001/02
    
    
    16.462002/03
    
    
    22.042003/04
    
    
    29.972004/05
    
    
    23.012005/06
    
    
    23.412006/07
    
    
    31.022007/08
    
    
    52.032008/2009
    
    
    28.5-31.5
    (1)
 U.S. Soybean Oil Prices
for Preceding Twelve-Month Period
 Month
    
    Price (cents)March
    
    
    57.27April
    
    
    56.58May
    
    
    58.27June
    
    
    62.43July
    
    
    60.54August
    
    
    50.78September
    
    
    46.09October
    
    
    35.50November
    
    
    31.55December
    
    
    29.30January
    
    
    32.16February
    
    
    28.93
    (1)
 (1)
    
    Preliminary Price Source: USDA, Oil Crops Outlook Report, March 12, 2009
   Animal Fats and Other Alternative Feedstocks
    8




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Choice White Grease Prices
2008
 PriceMonth
    
    (cents per lb.)March
    
    
    34.74April
    
    
    40.34May
    
    
    42.25June
    
    
    44.15July
    
    
    50.75August
    
    
    47.06September
    
    
    46.51October
    
    
    38.46November
    
    
    29.68December
    
    
    12.66January
    
    
    21.71February
    
    
    18.47
   Feedstock Cold Flow Properties
  Type of Fuel
    
    Cloud Point
    
    
    Pour PointSoy-based Biodiesel (B100)
    
    
    32oF
    
    
    
    25oFChoice white grease-based Biodiesel (B100)
    
    
    48oF
    
    
    
    42oFBeef tallow-based Biodiesel (B100)
    
    
    61oF
    
    
    
    59oFNo. 2 Ultra Low Sulfur Petroleum Diesel
    
    
    6oF
    
    
    
    -30oFB2 Soy Blend with No. 2 Diesel
    
    
    7oF
    
    
    
    -25oF
  9




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Hedging
  Pretreatment Costs
   Utilities, Energy & Infrastructure
  Electricity .
  10




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Water
 Natural Gas
 Patent, Trademarks and Licenses
  Government Regulation and Federal Biodiesel Supports
  Renewable Fuels Standard
    11




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th
   Federal Biodiesel Supports and Programs
    12




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The Clean Air Act Amendment
  State Legislation
     13




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Effect of Government Incentives and Regulation
   Competition with Other Biodiesel Producers
      14




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
    
    Ag Processing Inc. (AGP) in Sergeant Bluff. This facility produces biodiesel from
refined bleached and deodorized soybean oil produced at its solvent extraction processing
plant in Eagle Grove, Iowa. AGP has completed an expansion of its plant, increasing its
production capacity to 30 million gallons per year.
 
    
    Cargill Inc., located in Iowa Falls. Cargills facility has an annual production
capacity of 37.5 million gallons. Cargill uses soybean oil as its primary feedstock and
its biodiesel plant is located adjacent to its soybean crush facility.
 
    
    Central Iowa Energy, LLC, located in Newton, Iowa. This facility has the capacity to
produce 30 million gallons of biodiesel per year and utilizes both vegetable oil and animal
fats as its feedstock. This biodiesel plant was constructed by REG and is currently managed
by REG.
 
    
    Clinton County BioEnergy, L.L.C., located in Clinton, Iowa. This facility has capacity
to produce 10 million gallons of biodiesel annually and uses soybean oil as its primary
feedstock.
 
    
    Iowa Renewable Energy, LLC, located in Washington, Iowa. The facility has capacity to
produce 30 million gallons of biodiesel per year, from either vegetable oil or animal fat.
This biodiesel plant was constructed by REG and is currently managed by REG.
 
    
    Tri-City Energy, LLC, located in Keokuk, Iowa. The facility has capacity to produce 5
million gallons of biodiesel annually and uses soybean oil as its primary feedstock.
 
    
    Riksch Biofuels L.L.C., located in Crawfordsville, Iowa, is capable of producing 10
million gallons of biodiesel each year.
 
    
    Sioux Biochemical, Inc., located in Sioux Center, Iowa, is capable of producing 1.5
million gallons of biodiesel each year.
 
    
    Soy Solutions of Iowa, LLC, located in Milford, Iowa. This is a stand-alone facility
that purchases soybean oil from the market. The facility has capacity to produce
approximately 2 million gallons of biodiesel annually, and utilizes virgin soybean oil as
its sole feedstock.
 
    
    Western Dubuque Biodiesel, LLC, located near Farley, Iowa. Western Dubuque Biodiesel
has the capacity to produce 30 million gallons of biodiesel per year. It primarily utilizes
soybean oil and is not capable of pretreating animal fats for use in the production
process. This biodiesel plant was constructed by REG and is currently managed by REG.
  15




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most
 Commercial Biodiesel Production Plants (September 29, 2008)
 
 Source: National Biodiesel Board, http://www.biodiesel.org/buyingbiodiesel/producers_marketers/ProducersMap-Existing.pdf
  Competition from Other Fuel Sources and Additives
   16




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Research and Development
  Dependence on One or a Few Major Customers
 
 DESCRIPTION OF BUSINESS
 Competition RISK FACTORS
  17




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Costs and Effects of Compliance with Environmental Laws
    Employees
  JOB TITLE
    
    NUMBER EMPLOYEESProcess Operator
    
    
    16Accounting Manager
    
    
    1Maintenance Supervisor
    
    
    1Maintenance Technicians
    
    
    2Administrative / Accounting Assistant
    
    
    1Shipping/Receiving
    
    
    3Operations Supervisor
    
    
    1Quality Assurance Coordinator
    
    
    1Laboratory Coordinator
    
    
    1Compliance Coordinator
    
    
    1Total
    
    
    28
   18




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
    
    Implement and oversee our business plan;
 
    
    Direct, promote, and coordinate the staff, personnel, and plant;
 
    
    Work with our board to formulate our mission and goals;
 
    
    Assist with regulatory affairs monitoring and compliance;
 
    
    Represent us with industry associations of which we are a member;
 
    
    Manage our governmental relations, including USDAs biodiesel programs;
 
    
    Manage our duties and rights under agreements with third parties relating to
the plant; and
 
    
    Such other duties as may be agreed upon.
  
    
    Plan and schedule biodiesel production to meet our needs and marketing goals;
 
    
    Monitor and improve quality control;
 
    
    Oversee facility and equipment maintenance;
 
    
    Assist with budgeting and the monitoring of labor and other expenses in the
operation;
 
    
    Implement processing changes and new technologies as they evolve, and plan for
new projects relating to biodiesel production; and
 
    
    Such other duties as may be agreed upon.
 
 ITEM 1A. RISK FACTORS.
 You should carefully read and consider the risks and uncertainties below and the other information
contained in this report. The risks and uncertainties described below are not the only ones we may
face. The following risks, together with additional risks and uncertainties not currently known to
us or that we currently deem immaterial could impair our financial condition and results of
operations.
 Risks Related to Our Business
 Declines in the prices of biodiesel and glycerin will have a significant negative impact on
our financial performance.
   Our business is sensitive to feedstock costs. Changes in the prices and availability of our
feedstock may hinder our ability to generate revenue.
  19




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Increases in the price of natural gas could reduce our profitability.
 We are in competition with REG, our plant manager and product marketer, which could place us
at a competitive disadvantage and cause a conflict of interest for REG.
  20




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Our exclusive reliance on REG to manage our plant, procure our inputs and market our products
could damage our profitability if REG fails to perform its obligations under the MOSA.
   We have limited experience in the biodiesel industry, which increases the risk of our
inability to operate the biodiesel plant.
  We engage in hedging transactions which involve risks that can harm our business.
  21




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We compete with other biofuels plants for key management and other personnel who are critical
to our success.
 Our business is not diversified.
 Because of volatile soybean oil prices, we are attempting to use alternative feedstocks, such
as corn oil, to produce our biodiesel, which may have risks and disadvantages of which we are not
yet fully aware.
 If it is necessary to temporarily cease operating our biodiesel plant for sustained periods of
time for any reason, we might not be able to meet our current liabilities and may experience
losses.
  22




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We are at a disadvantage in marketing our glycerin because our plant does not produce
pharmaceutical grade glycerin, thereby decreasing the market for the glycerin we produce.
 Concerns about fuel quality may impact our ability to successfully market our biodiesel.
 Cold weather may cause biodiesel to gel, which could have an adverse impact on our ability to
successfully market our biodiesel.
   23




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Technological advances could significantly decrease the cost of producing biodiesel or result
in the production of higher-quality biodiesel, and if we are unable to adopt or incorporate
technological advances into our operations, our plant could become uncompetitive or obsolete.
 Risks Related to the Biodiesel Industry
 The recent downturn in the U.S. economy has caused demand for biodiesel to decline, which may
adversely affect our ability to generate revenues.
 The recent decline in crude oil and diesel prices may affect our ability to sell biodiesel at
profitable prices.
 The recent downturn in the U.S. economy may limit our customers ability to pay for our
biodiesel and co-products, which may adversely affect our ability to generate revenues.
  24




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The European Commission recently imposed anti-dumping and countervailing duties on biodiesel
imported into Europe, which could cause a significant decrease in our revenues.
 The EPAs delay in implementing the RFS requirement that 500 million gallons of biomass-based
diesel be blended into the national diesel pool in 2009 may hinder stimulation of demand for
biodiesel that may have otherwise been created by the 2007 amendments to the RFS program
 If demand for biodiesel fails to grow at the same rate as planned supply, the excess
production capacity will adversely impact our financial condition.
  25




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Excess production of glycerin, a co-product of the biodiesel production process, may cause the
price of glycerin to decline, thereby adversely affecting our ability to generate revenue from the
sale of glycerin.
 The biodiesel manufacturing industry is a feedstock limited industry. As more plants are
developed and go into production there may not be an adequate supply of feedstock to supply the
demands of the industry, which could threaten the viability of our plant.
 The biodiesel industry is becoming increasingly competitive and we compete with some larger,
better financed entities which could impact our ability to operate profitably.
   26




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If the production of biodiesel fuel increases there may not be an adequate supply of railroad
tank cars or trucks to distribute the biodiesel fuel produced by our plant .
 Competition from other sources of fuel may decrease the demand for our biodiesel.
 Asian soybean rust and other plant diseases may decrease our ability to obtain a sufficient
feedstock supply.
 Automobile manufacturers and other industry groups have expressed reservations regarding the
use of biodiesel, which could negatively impact our ability to market our biodiesel.
  Competition from other diesel fuel lubricity additives for ultra low sulfur diesel may be a
less expensive alternative to our biodiesel, which would cause us to lose market share and
adversely affect our ability to generate revenues.
  27




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Several biofuels companies throughout the country have recently filed for Chapter 1l
bankruptcy due to industry and economic conditions.
 Risks Related to Regulation and Governmental Action
 Loss of or ineligibility for favorable tax benefits for biodiesel production could hinder our
ability to operate at a profit and reduce the value of our units.
 A change in environmental regulations or violations thereof could be expensive and increase
our costs.
 Risks Related to Conflicts of Interest
 We may have conflicts of interest with REG, which may cause difficulty in enforcing claims
against REG.
  Risks Related to Tax Issues in a Limited Liability Company
 We expect to continue to be taxed as a partnership, however, if we are taxed as a corporation
we would be subject to corporate level taxes which would decrease our net income and decrease the
amount of cash available to distribute to our members.
  28




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We may be unable to make any distributions to our members to satisfy tax obligations unless we
obtain the approval of our lender.
 Members may be allocated a share of our taxable income that exceeds any cash distributions
received, therefore members may have to pay this tax liability using their personal funds.
 If we are audited by the IRS resulting in adjustments to our tax returns, this could cause the
IRS to audit members tax returns, which could lead to additional tax liability for our members.
 Even if we operate profitably, our lender may not approve future distributions of profits to our
members.
 
 ITEM 2. PROPERTIES.
   
    
    Principal office building
    
    Processing building
    
    Pretreatment building
    
    Loading/receiving building
    
    Storage warehouse
    
    Storage tank farm
    
    Iron treatment facility
 MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  Liquidity and Capital
Resources.
  29




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ITEM 3. LEGAL PROCEEDINGS.
   
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
  
 PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES.
 Unit Trading
    # ofQuarter
    
    Low Price
    
    
    High Price
    
    
    Average Price
    
    
    Units Traded2007 1st
    
    $
    1,900
    
    
    $
    1,900
    
    
    $
    1,900
    
    
    
    502007 2nd
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    02007 3rd
    
    $
    1,100
    
    
    $
    1,200
    
    
    $
    1,150
    
    
    
    202007 4th
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    02008 1st
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    02008 2nd
    
    $
    750
    
    
    $
    750
    
    
    $
    750
    
    
    
    202008 3rd
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    02008 4th
    
    $
    950
    
    
    $
    950
    
    
    $
    950
    
    
    
    10
  30




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# ofSellers Quarter
    
    Low Price
    
    
    High Price
    
    
    Average Price
    
    
    Units Listed2007 1st
    
    $
    1,800
    
    
    $
    2,500
    
    
    $
    2,050
    
    
    
    2192007 2nd
    
    $
    1,200
    
    
    $
    1,950
    
    
    $
    1,558
    
    
    
    1472007 3rd
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    02007 4th
    
    $
    1,100
    
    
    $
    1,200
    
    
    $
    1,150
    
    
    
    402008 1st
    
    $
    750
    
    
    $
    1,050
    
    
    $
    900
    
    
    
    312008 2nd
    
    $
    1,000
    
    
    $
    1,100
    
    
    $
    1,050
    
    
    
    452008 3rd
    
    $
    1,000
    
    
    $
    1,250
    
    
    $
    1,125
    
    
    
    302008 4th
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    0
 # ofBuyers Quarter
    
    Low Price
    
    
    High Price
    
    
    Average Price
    
    
    Units Listed2007 1st
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    02007 2nd
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    02007 3rd
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    02007 4th
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    02008 1st
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    02008 2nd
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    02008 3rd
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    02008 4th
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    0
  Distributions
  Item 7Managements Discussion and Analysis of Financial Condition and Results of
OperationsIndebtedness.
  31




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2008 Distributions
  2007 Distributions
  Performance Graph
  
   32




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ITEM 6. SELECTED FINANCIAL DATA.
  Statement of OperationsData:
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Revenues
    
    $
    79,782,833
    
    
    $
    78,676,998
    
    
    $
    31,991,876
    
    
    $
    Cost of Goods Sold
    
    $
    75,431,492
    
    
    $
    78,253,820
    
    
    $
    23,715,252
    
    
    $
    Gross Profit
    
    $
    4,351,341
    
    
    $
    423,178
    
    
    $
    8,276,624
    
    
    $
    Operating Expenses
    
    $
    1,915,675
    
    
    $
    1,750,886
    
    
    $
    1,606,516
    
    
    $
    282,249Other Income (Expense)
    
    $
    (592,957
    )
    
    $
    (1,278,545
    )
    
    $
    (337,583
    )
    
    $
    324,427Net Income (Loss)
    
    $
    1,842,709
    
    
    $
    (2,606,253
    )
    
    $
    6,332,525
    
    
    $
    42,178Weighted Average Units Outstanding
    
    
    26,447
    
    
    
    26,447
    
    
    
    25,674
    
    
    
    15,405Net Income (Loss) Per Unit
    
    $
    69.68
    
    
    $
    (98.55
    )
    
    $
    246.65
    
    
    $
    2.74Cash Distributions per Unit
    
    $
    
    
    
    $
    80.21
    
    
    $
    
    
    
    $
    
 Balance Sheet Data:
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Total Assets
    
    $
    37,478,401
    
    
    $
    49,080,864
    
    
    $
    48,831,373
    
    
    $
    26,530,635Long-Term Debt, less current maturities
    
    $
    6,725,056
    
    
    $
    12,366,667
    
    
    $
    12,851,239
    
    
    $
    10,432Members Equity
    
    $
    26,928,710
    
    
    $
    25,086,001
    
    
    $
    29,813,568
    
    
    $
    22,481,043Units Outstanding at End of Year
    
    
    26,447
    
    
    
    26,447
    
    
    
    25,674
    
    
    
    15,405Book Value Per Capital Unit
    
    $
    1,018.21
    
    
    $
    948.54
    
    
    $
    1,161.24
    
    
    $
    1,459.33
 
 ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
 Overview
    33




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34




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Results of Operations
 Comparison of Fiscal Years Ended December 31, 2008 and December 31, 2007
  Fiscal Year Ended
    
    
    Fiscal Year EndedIncome Statement Data
    
    December 31, 2008
    
    
    December 31, 2007Revenues
    
    $
    79,782,833
    
    
    
    100.00
    %
    
    $
    78,676,998
    
    
    
    100.00
    %Cost of Goods Sold
    
    $
    75,431,492
    
    
    
    94.55
    %
    
    $
    78,253,820
    
    
    
    99.46
    %Gross Profit (Loss)
    
    $
    4,351,341
    
    
    
    5.45
    %
    
    $
    423,178
    
    
    
    0.54
    %Operating Expenses
    
    $
    1,915,675
    
    
    
    2.40
    %
    
    $
    1,750,886
    
    
    
    2.23
    %Operating (Loss)
    
    $
    2,435,666
    
    
    
    3.05
    %
    
    $
    (1,327,708
    )
    
    
    (1.69
    )%Other Income (Expense)
    
    $
    (592,957
    )
    
    
    (0.74
    )%
    
    $
    (1,278,545
    )
    
    
    (1.63
    )%Net Income (Loss)
    
    $
    1,842,709
    
    
    
    2.31
    %
    
    $
    (2,606,253
    )
    
    
    (3.31
    )%
 Revenues
  Fiscal Year Ended
December 31, 2008
    
    
    Fiscal Year Ended
December 31, 2007Revenue Source
    
    Amount
    
    
    % of Revenues
    
    
    Amount
    
    
    % of RevenuesBiodiesel Sales
    
    $
    76,970,163
    
    
    
    96.5
    %
    
    $
    77,195,818
    
    
    
    98.1
    %Glycerin Sales
    
    $
    2,812,670
    
    
    
    3.5
    %
    
    $
    1,481,180
    
    
    
    1.9
    %Total Revenues
    
    $
    79,782,833
    
    
    
    100
    %
    
    $
    78,676,998
    
    
    
    100
    %
     35




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36




---



##### Table of Contents



Cost of Goods Sold
        37




---



##### Table of Contents



Operating Expenses
   38




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##### Table of Contents



Other Income (Expenses)
  Comparison of Fiscal Years Ended December 31, 2007 and 2006.
  Fiscal Year Ended
    
    
    Fiscal Year EndedDecember 31, 2007
    
    
    December 31, 2006Income Statement Data
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    PercentRevenues
    
    $
    78,676,998
    
    
    
    100.0
    %
    
    $
    31,991,876
    
    
    
    100.0
    %Cost of Sales
    
    $
    78,253,820
    
    
    
    99.46
    %
    
    $
    23,715,252
    
    
    
    74.12
    %Gross Profit
    
    $
    423,178
    
    
    
    0.54
    %
    
    $
    8,276,624
    
    
    
    25.88
    %Operating Expenses
    
    $
    1,750,886
    
    
    
    2.22
    %
    
    $
    1,606,516
    
    
    
    5.02
    %Other Income (Expense)
    
    $
    (1,278,545
    )
    
    
    (1.63)
    %
    
    $
    (337,583
    )
    
    
    (1.05)
    %Net Income (Loss)
    
    $
    (2,606,253
    )
    
    
    (3.31)
    %
    
    $
    6,332,525
    
    
    
    19.80
    %
 Revenues
  Fiscal Year Ended
December 31, 2007
    
    
    Fiscal Year Ended
December 31, 2006Revenue Source
    
    Amount
    
    
    % of Revenues
    
    
    Amount
    
    
    % of RevenuesBiodiesel Sales
    
    $
    77,195,818
    
    
    
    98.1
    %
    
    $
    31,791,047
    
    
    
    99.4
    %Glycerin Sales
    
    $
    1,481,180
    
    
    
    1.9
    %
    
    $
    200,829
    
    
    
    0.6
    %Total Revenues
    
    $
    78,676,998
    
    
    
    100
    %
    
    $
    31,991,876
    
    
    
    100
    %
   39




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##### Table of Contents



Cost of Sales
  Operating Expenses
  Other Income (Expenses)
  Changes in Financial Condition for Fiscal Years Ended December 31, 2008 and 2007
  December 31, 2008
    
    
    December 31, 2007Current Assets
    
    $
    7,049,998
    
    
    $
    16,885,286Current Liabilities
    
    $
    3,824,635
    
    
    $
    11,628,196Members Equity
    
    $
    26,928,710
    
    
    $
    25,086,001
 Current Assets
  Current Liabilities
   40




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##### Table of Contents



Members Equity
  Liquidity and Capital Resources
 Comparison of Cash Flows for Fiscal Years Ended December 31, 2008 and December 31, 2007
 2008
    
    
    2007Net cash provided by operating activities
    
    $
    9,050,603
    
    
    $
    973,435Net cash used in investing activities
    
    $
    (394,028
    )
    
    $
    (686,756
    )Net cash used in financing activities
    
    $
    (8,622,223
    )
    
    $
    (282,953
    )Net increase (decrease) in cash and equivalents
    
    $
    34,352
    
    
    $
    3,726
 Operating Cash Flows
  Investing Cash Flows
  Financing Cash Flows
  Comparison of Cash Flows for Fiscal Years Ended December 31, 2007 and December 31, 2006
 2007
    
    
    2006Net cash provided by (used in) operating activities
    
    $
    9,050,603
    
    
    $
    (4,928,399
    )Net cash used in investing activities
    
    $
    (394,028
    )
    
    $
    (16,194,920
    )Net cash provided by (used in) financing activities
    
    $
    (8,622,223
    )
    
    $
    16,215,946Net increase (decrease) in cash and equivalents
    
    $
    34,352
    
    
    $
    (4,907,373
    )
 Operating Cash Flows
  Investing Cash Flows
   41




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##### Table of Contents



Financing Cash Flows
  Indebtedness
 Short-Term Debt Sources
 3 4 1 2
 3 4 1 2
  Long-Term Debt Sources
    
    
    During the 2007 fiscal year, we could not expend, in the aggregate, more than
$2,600,000 for the acquisition of fixed or capital assets. In each subsequent year, we
cannot expend, in the aggregate, more than $500,000 for the acquisition of fixed or
capital assets;
 
    
    We cannot declare or pay any dividends or make any distribution of assets to the
members or acquire for value any of our membership units, except that in any fiscal
year we can make a distribution to the Companys members of up to 40% of the net profit
for each fiscal year.
  42




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##### Table of Contents




    
    We cannot enter into any lease as lessee if the lease should be capitalized in
accordance with GAAP for the rental or hire of any real or personal property, except
leases which do not require the Company to make scheduled payments to the lessors in
any fiscal year in excess of $100,000, in the aggregate.
 
    
    We must maintain working capital, defined as an excess of current assets over
current liabilities, of not less than $6,000,000 at the end of each period for which
financial statements are required to be furnished under the MLA.
 
    
    We must maintain a net worth, defined as an excess of total assets over total
liabilities, of not less than $26,000,000 at the end of each period for which financial
statements are required to be furnished under the MLA.
        43




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##### Table of Contents



Contractual Obligations
  Payments Due by PeriodTotal
    
    
    2009
    
    
    2010-2011
    
    
    2012-2013
    
    
    After 2013Long-Term Debt Obligations
    
    $
    9,454,166
    
    
    $
    2,360,567
    
    
    $
    2,123,599
    
    
    $
    914,444
    
    
    $
    4,055,556Capital Lease ObligationsOperating Lease Obligations
    
    $
    89,067
    
    
    $
    35,627
    
    
    $
    53,440
    
    
    $
    -0-
    
    
    $
    -0-Purchase ObligationsOther Long-Term
Liabilities Recorded on
the Balance SheetTotal
    
    $
    9,543,233
    
    
    $
    2,396,194
    
    
    $
    2,177,039
    
    
    $
    914,444
    
    
    $
    4,055,556
 Application of Critical Accounting Estimates
  Inventories .
 Long-Lived Assets .
  Off-Balance Sheet Arrangements
   44




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##### Table of Contents



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
 Accounting for Derivative
Instruments and Hedging Activities
  Interest Rate Risk
 Item 7  MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 
Liquidity and Capital Resources, Indebtedness.
  Outstanding Variable
    
    Interest Rate at
    
    
    Adverse 10% Change
    
    
    Annual Adverse ChangeRate Debt at 12/31/08
    
    12/31/08
    
    
    in Interest Rates
    
    
    to Income$4,150,000
    
    
    4.0
    %
    
    
    4.4
    %
    
    $
    16,600$4,350,000
    
    
    4.0
    %
    
    
    4.4
    %
    
    $
    17,400
 Commodity Price Risk
     45




---



##### Table of Contents



Effect ofHypotheticalAdverse ChangeFair Value
    
    
    Market RiskDecember 31, 2008
    
    $
    61,360
    
    
    $
    6,136December 31, 2007
    
    $
    (1,936,375
    )
    
    $
    193,638
 
 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PAGEREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    
    
    F-1FINANCIAL STATEMENTSBalance Sheets
    
    
    F-2Statements of Operations
    
    
    F-3Statements of Changes in Members Equity
    
    
    F-4Statements of Cash Flows
    
    
    F-5Notes to Financial Statements
    
    
    F-6
  46




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 Western Iowa Energy, LLC
     
  F-1




---



##### Table of Contents



WESTERN IOWA ENERGY, LLC
BALANCE SHEETS
December 31, 2008 and 2007
 
ASSETS
 2008
    
    
    2007CURRENT ASSETSCash and cash equivalents
    
    $
    66,400
    
    
    $
    32,048Margin deposits
    
    
    285,295
    
    
    
    1,427,218Derivative instruments
    
    
    61,360
    
    
    
    Trade accounts receivable  related party
    
    
    1,428,521
    
    
    
    5,816,085Other receivables
    
    
    163,470
    
    
    
    5,997Incentive receivables
    
    
    312,019
    
    
    
    317,225Inventory
    
    
    4,510,457
    
    
    
    9,098,351Prepaid expenses
    
    
    222,476
    
    
    
    188,362Total current assets
    
    
    7,049,998
    
    
    
    16,885,286PROPERTY, PLANT AND EQUIPMENTLand and land improvements
    
    
    1,364,842
    
    
    
    1,364,842Office building and equipment
    
    
    645,542
    
    
    
    643,705Plant and process equipment
    
    
    33,683,185
    
    
    
    33,308,507Construction in progress
    
    
    17,513
    
    
    
    Total, at cost
    
    
    35,711,082
    
    
    
    35,317,054Less accumulated depreciation
    
    
    5,451,621
    
    
    
    3,261,429Total property, plant and equipment
    
    
    30,259,461
    
    
    
    32,055,625OTHER ASSETSLand options
    
    
    596
    
    
    
    596Other investments
    
    
    80,895
    
    
    
    33,810Loan origination fees, net of amortization
    
    
    87,451
    
    
    
    105,547Total other assets
    
    
    168,942
    
    
    
    139,953TOTAL ASSETS
    
    $
    37,478,401
    
    
    $
    49,080,864LIABILITIES AND MEMBERS EQUITYCURRENT LIABILITIESAccounts payable:Trade
    
    $
    794,345
    
    
    $
    1,747,007Related party
    
    
    28,480
    
    
    
    2,061,742Revolving line of credit
    
    
    
    
    
    
    3,800,000Current portion of long-term debt
    
    
    2,729,110
    
    
    
    1,909,722Derivative instruments
    
    
    
    
    
    
    1,936,375Accrued interest
    
    
    33,372
    
    
    
    100,542Accrued wages and benefits
    
    
    71,570
    
    
    
    56,689Accrued payroll taxes
    
    
    4,059
    
    
    
    3,255Accrued expenses  related party
    
    
    117,620
    
    
    
    Other current liabilities
    
    
    46,079
    
    
    
    12,864Total current liabilities
    
    
    3,824,635
    
    
    
    11,628,196LONG-TERM LIABILITIESLong-term debt, less current portion above
    
    
    6,725,056
    
    
    
    12,366,667Total liabilities
    
    
    10,549,691
    
    
    
    23,994,863MEMBERS EQUITYContributed capital
    
    
    23,516,376
    
    
    
    23,516,376Retained earnings
    
    
    3,412,334
    
    
    
    1,569,625Total members equity
    
    
    26,928,710
    
    
    
    25,086,001TOTAL LIABILITIES AND MEMBERS EQUITY
    
    $
    37,478,401
    
    
    $
    49,080,864
   F-2




---



##### Table of Contents



WESTERN IOWA ENERGY, LLC
STATEMENTS OF OPERATIONS
Years Ended December 31, 2008, 2007 and 2006
 2008
    
    
    2007
    
    
    2006REVENUESRelated parties
    
    $
    69,714,221
    
    
    $
    68,595,272
    
    
    $
    26,178,438Incentive funds
    
    
    10,068,612
    
    
    
    10,081,726
    
    
    
    5,813,438Total revenues
    
    
    79,782,833
    
    
    
    78,676,998
    
    
    
    31,991,876COST OF SALES
    
    
    75,431,492
    
    
    
    78,253,820
    
    
    
    23,715,252Gross profit
    
    
    4,351,341
    
    
    
    423,178
    
    
    
    8,276,624OPERATING EXPENSESConsulting and professional fees
    
    
    289,544
    
    
    
    302,503
    
    
    
    252,929Office and administrative expenses
    
    
    1,626,131
    
    
    
    1,448,383
    
    
    
    1,353,587Total operating expenses
    
    
    1,915,675
    
    
    
    1,750,886
    
    
    
    1,606,516OTHER INCOME (EXPENSE)Interest income
    
    
    9,882
    
    
    
    16,310
    
    
    
    50,379Interest expense
    
    
    (759,243
    )
    
    
    (1,400,721
    )
    
    
    (406,062
    )Patronage dividends
    
    
    156,404
    
    
    
    105,866
    
    
    
    Gain on sale of asset
    
    
    
    
    
    
    
    
    
    
    2,800Other income
    
    
    
    
    
    
    
    
    
    
    15,300Total other expense
    
    
    (592,957
    )
    
    
    (1,278,545
    )
    
    
    (337,583
    )NET INCOME (LOSS)
    
    $
    1,842,709
    
    
    $
    (2,606,253
    )
    
    $
    6,332,525BASIC AND DILUTED EARNINGS (LOSS) PER UNIT
    
    $
    69.68
    
    
    $
    (98.55
    )
    
    $
    246.65WEIGHTED AVERAGE UNITS OUTSTANDING,
BASIC AND DILUTED
    
    
    26,447
    
    
    
    26,447
    
    
    
    25,674
   F-3




---



##### Table of Contents



WESTERN IOWA ENERGY, LLC
STATEMENTS OF CHANGES IN MEMBERS EQUITY
Years Ended December 31, 2008, 2007 and 2006
 RetainedEarningsContributed
    
    
    (AccumulatedUnits
    
    
    Capital
    
    
    Deficit)
    
    
    TotalBALANCE, DECEMBER 31, 2005
    
    
    25,447
    
    
    $
    22,516,376
    
    
    $
    (35,333
    )
    
    $
    22,481,043Units issued in exchange for reduction in construction
payable, 1,000 units at $1,000 per unit (See Note 6)
    
    
    1,000
    
    
    
    1,000,000
    
    
    
    
    
    
    
    1,000,000Net loss for the year ended December 31, 2006
    
    
    
    
    
    
    
    
    
    
    6,332,525
    
    
    
    6,332,525BALANCE, DECEMBER 31, 2006
    
    
    26,447
    
    
    
    23,516,376
    
    
    
    6,297,192
    
    
    
    29,813,568Distributions to members
    
    
    
    
    
    
    
    
    
    
    (2,121,314
    )
    
    
    (2,121,314
    )Net loss for the year ended December 31, 2007
    
    
    
    
    
    
    
    
    
    
    (2,606,253
    )
    
    
    (2,606,253
    )BALANCE, DECEMBER 31, 2007
    
    
    26,447
    
    
    
    23,516,376
    
    
    
    1,569,625
    
    
    
    25,086,001Net income for the year ended December 31, 2008
    
    
    
    
    
    
    
    
    
    
    1,842,709
    
    
    
    1,842,709BALANCE, DECEMBER 31, 2008
    
    
    26,447
    
    
    $
    23,516,376
    
    
    $
    3,412,334
    
    
    $
    26,928,710
   F-4




---



##### Table of Contents



WESTERN IOWA ENERGY, LLC
STATEMENTS OF CASH FLOWS
Years Ended December 31, 2008, 2007 and 2006
 2008
    
    
    2007
    
    
    2006CASH FLOWS FROM OPERATING ACTIVITIESNet income (loss)
    
    $
    1,842,709
    
    
    $
    (2,606,253
    )
    
    $
    6,332,525Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activitiesDepreciation and amortization
    
    
    2,208,288
    
    
    
    2,183,988
    
    
    
    1,105,452Non cash portion of patronage dividends
    
    
    (47,085
    )
    
    
    (31,810
    )
    
    
    (2,800
    )Effects of changes in operating assets and liabilitiesMargin deposits
    
    
    1,141,923
    
    
    
    (1,159,958
    )
    
    
    (267,260
    )Trade accounts receivable  related party
    
    
    4,387,564
    
    
    
    (1,484,736
    )
    
    
    (4,331,349
    )Other receivables
    
    
    (157,473
    )
    
    
    (5,997
    )
    
    
    Incentive receivables
    
    
    5,206
    
    
    
    280,653
    
    
    
    (597,878
    )Inventory
    
    
    4,587,894
    
    
    
    (1,302,168
    )
    
    
    (7,796,183
    )Derivative instruments
    
    
    (1,997,735
    )
    
    
    3,204,124
    
    
    
    (1,267,749
    )Prepaid expenses and other assets
    
    
    (34,114
    )
    
    
    (155,155
    )
    
    
    (33,207
    )Accounts payable
    
    
    (2,985,924
    )
    
    
    2,466,093
    
    
    
    1,342,394Accrued interest
    
    
    (67,170
    )
    
    
    (15,422
    )
    
    
    115,964Accrued wages and benefits
    
    
    14,881
    
    
    
    10,128
    
    
    
    46,561Accrued payroll taxes
    
    
    804
    
    
    
    (30,264
    )
    
    
    32,480Accrued expenses  related party
    
    
    117,620
    
    
    
    (379,788
    )
    
    
    392,651Other current liabilities
    
    
    33,215
    
    
    
    
    
    
    
    Net cash provided by (used in) operating activities
    
    
    9,050,603
    
    
    
    973,435
    
    
    
    (4,928,399
    )CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant and equipment, including
construction in progress
    
    
    (394,028
    )
    
    
    (1,130,291
    )
    
    
    (16,228,520
    )Sales tax refund received on plant construction costs
    
    
    
    
    
    
    443,535
    
    
    
    Proceeds from sale of asset
    
    
    
    
    
    
    
    
    
    
    33,600Net cash used in investing activities
    
    
    (394,028
    )
    
    
    (686,756
    )
    
    
    (16,194,920
    )CASH FLOWS FROM FINANCING ACTIVITIESLoan origination fees
    
    
    
    
    
    
    
    
    
    
    (2,307
    )Net borrowings (payments) on revolving line of credit
    
    
    (3,800,000
    )
    
    
    3,800,000
    
    
    
    Proceeds from long-term debt
    
    
    8,082,566
    
    
    
    10,109,472
    
    
    
    18,640,528Payments on long-term debt
    
    
    (12,904,789
    )
    
    
    (12,071,111
    )
    
    
    (2,422,275
    )Distribution to members
    
    
    
    
    
    
    (2,121,314
    )
    
    
    Net cash provided by (used in) financing activities
    
    
    (8,622,223
    )
    
    
    (282,953
    )
    
    
    16,215,946NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    34,352
    
    
    
    3,726
    
    
    
    (4,907,373
    )CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    32,048
    
    
    
    28,322
    
    
    
    4,935,695CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    66,400
    
    
    $
    32,048
    
    
    $
    28,322
   F-5




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WESTERN IOWA ENERGY, LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2008 and 2007
 
 NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Use of Estimates in Preparing Financial Statements
  Basis of Accounting
  Revenue Recognition
  Cash and Cash Equivalents
   Accounts Receivable
   F-6




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WESTERN IOWA ENERGY, LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2008 and 2007
 NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Accounts Receivable
  Derivative Instruments and Hedging Activities
     Inventories
   F-7




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WESTERN IOWA ENERGY, LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2008 and 2007
 NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Property, Plant, and Equipment
   YearsLand improvements
    
    
    20-40Office building
    
    
    5-40Office equipment
    
    
    5-20Plant and process equipment
    
    
    10-40
   Loan Origination Fees
   Other Investments
   F-8




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##### Table of Contents



WESTERN IOWA ENERGY, LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2008 and 2007
 NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Other Income
  Income Taxes
  Earnings Per Unit
  Cost of Sales
  Shipping and Handling Costs
  Environmental Liabilities
   F-9




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##### Table of Contents



WESTERN IOWA ENERGY, LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2008 and 2007
 NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Fair Value of Financial Instruments
  New Accounting Standards
 Fair Value Measurements
 Disclosures about Derivative Instruments and Hedging
Activities (SFAS No. 161)
 NOTE 2  INCENTIVE PAYMENTS AND RECEIVABLE
   F-10




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##### Table of Contents



WESTERN IOWA ENERGY, LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2008 and 2007
 NOTE 3  INVENTORY
  2008
    
    
    2007Raw material
    
    $
    496,028
    
    
    $
    2,168,644Work in process
    
    
    541,530
    
    
    
    1,382,679Finished goods
    
    
    3,472,899
    
    
    
    5,547,028Total
    
    $
    4,510,457
    
    
    $
    9,098,351
 NOTE 4  LAND OPTION
  NOTE 5  DEBT AND FINANCING
 Revolving Line of Credit
   F-11




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##### Table of Contents



WESTERN IOWA ENERGY, LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2008 and 2007
 NOTE 5  DEBT AND FINANCING
 Long-Term Debt
  2008
    
    
    2007Note payable to Farm Credit Services of America and
CoBank under term note agreement  see details
below.
    
    $
    4,150,000
    
    
    $
    5,950,000Note payable to Farm Credit Services of America and
CoBank under reducing revolving credit note  see
details below.
    
    
    4,350,000
    
    
    
    7,260,000Note payable to the Iowa Department of Economic
Development  see details below.
    
    
    337,500
    
    
    
    367,500Note payable to Glidden Rural Electric Cooperative
 see details below
    
    
    616,666
    
    
    
    698,889Total
    
    
    9,454,166
    
    
    
    14,276,389Less current portion
    
    
    2,729,110
    
    
    
    1,909,722Long-term portion
    
    $
    6,725,056
    
    
    $
    12,366,667
  2009
    
    $
    2,729,1102010
    
    
    1,642,8342011
    
    
    112,2222012
    
    
    832,2222013
    
    
    1,882,222Thereafter
    
    
    2,255,556Total
    
    $
    9,454,166
  F-12




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WESTERN IOWA ENERGY, LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2008 and 2007
 NOTE 5  DEBT AND FINANCING
    F-13




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WESTERN IOWA ENERGY, LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2008 and 2007
 NOTE 5  DEBT AND FINANCING
   NOTE 6  MEMBERS EQUITY
     F-14




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##### Table of Contents



WESTERN IOWA ENERGY, LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2008 and 2007
 NOTE 7  INCOME TAXES
    NOTE 8  CASH FLOW DISCLOSURES
  2008
    
    
    2007
    
    
    2006Cash paid for interest
    
    $
    826,413
    
    
    $
    1,416,143
    
    
    $
    289,534
  2008
    
    
    2007
    
    
    2006Units issued in exchange for reduction in
construction payable
    
    $
    
    
    
    $
    
    
    
    $
    1,000,000Construction in progress in accounts
payable
    
    
    
    
    
    
    
    
    
    
    848,426
 NOTE 9  RELATED PARTY TRANSACTIONS
   F-15




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WESTERN IOWA ENERGY, LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2008 and 2007
 NOTE 9  RELATED PARTY TRANSACTIONS
   NOTE 10  LEASE COMMITMENTS
  2009
    
    $
    35,6272010
    
    
    35,6272011
    
    
    17,813Total
    
    $
    89,067
  NOTE 11  RETIREMENT AND SAVINGS PLAN
  NOTE 12  FAIR VALUE OF FINANCIAL INSTRUMENTS
   F-16




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WESTERN IOWA ENERGY, LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2008 and 2007
 NOTE 12  FAIR VALUE OF FINANCIAL INSTRUMENTS
 
    
    Level 1Unadjusted quoted prices for identical assets and liabilities in active markets;
    
    Level 2Quoted prices for similar assets and liabilities in active markets (other
than those included in Level 1) which are observable for the asset or liability, either
directly or indirectly; and
    
    Level 3Valuations derived from valuation techniques in which one or more
significant inputs or significant value drivers are unobservable.
  SignificantQuoted Prices in
    
    
    Other
    
    
    SignificantActive Markets for
    
    
    Observable
    
    
    UnobservableDecember 31,
    
    
    Identical Assets
    
    
    Inputs
    
    
    Inputs2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Financial assets:Cash equivalents
    
    $
    289,155
    
    
    $
    289,155
    
    
    $
    
    
    
    $
    Commodity derivatives
    
    $
    61,360
    
    
    $
    2,538
    
    
    $
    58,822
    
    
    $
    
  NOTE 13  UNCERTAINTIES
   F-17




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WESTERN IOWA ENERGY, LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2008 and 2007
 NOTE 13  UNCERTAINTIES
      F-18




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WESTERN IOWA ENERGY, LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2008 and 2007
 NOTE 13  UNCERTAINTIES
   NOTE 14  QUARTERLY FINANCIAL DATA
   First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterRevenues
    
    $
    18,029,542
    
    
    $
    27,601,282
    
    
    $
    26,238,615
    
    
    $
    7,913,394Gross profit (loss)
    
    
    1,784,314
    
    
    
    2,467,747
    
    
    
    2,093,569
    
    
    
    (1,993,289
    )Operating income (loss)
    
    
    1,246,255
    
    
    
    1,896,946
    
    
    
    1,515,203
    
    
    
    (2,222,738
    )Net income (loss)
    
    
    1,127,993
    
    
    
    1,675,218
    
    
    
    1,377,779
    
    
    
    (2,338,281
    )Basic and diluted
earnings (loss) per unit
    
    
    42.65
    
    
    
    63.34
    
    
    
    52.10
    
    
    
    (88.41
    )
  F-19




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##### Table of Contents



WESTERN IOWA ENERGY, LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2008 and 2007
 NOTE 14  QUARTERLY FINANCIAL DATA
  Revenues
    
    $
    14,254,980
    
    
    $
    24,800,210
    
    
    $
    21,262,859
    
    
    $
    18,358,949Gross profit (loss)
    
    
    566,299
    
    
    
    2,565,826
    
    
    
    (734,715
    )
    
    
    (1,974,232
    )Operating income (loss)
    
    
    128,304
    
    
    
    1,990,272
    
    
    
    (1,099,711
    )
    
    
    (2,346,573
    )Net income (loss)
    
    
    (142,559
    )
    
    
    1,629,537
    
    
    
    (1,436,064
    )
    
    
    (2,657,167
    )Basic and diluted
earnings (loss) per unit
    
    
    (5.39
    )
    
    
    61.62
    
    
    
    (54.30
    )
    
    
    (100.48
    )
  Revenues
    
    $
    
    
    
    $
    633,585
    
    
    $
    18,008,235
    
    
    $
    13,350,056Gross profit (loss)
    
    
    
    
    
    
    142,004
    
    
    
    4,780,877
    
    
    
    3,353,743Operating income (loss)
    
    
    (155,042
    )
    
    
    (33,463
    )
    
    
    4,063,937
    
    
    
    2,794,676Net income (loss)
    
    
    (109,233
    )
    
    
    (21,858
    )
    
    
    3,952,089
    
    
    
    2,511,527Basic and diluted
earnings (loss) per unit
    
    
    (4.29
    )
    
    
    (.86
    )
    
    
    152.89
    
    
    
    97.82
  NOTE 15  GAIN CONTINGENCY
   F-20




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ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
  
 ITEM 9A(T). CONTROLS AND PROCEDURES.
 Disclosure Controls and Procedures
  Managements Report on Internal Control over Financial Reporting
  
    
    Pertain to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of the Company;
 
    
    Provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with Generally Accepted Accounting
Principles, and that receipts and expenditures of the Company are being made only in
accordance with authorizations of management and directors of the Company; and
 
    
    Provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Companys assets that could have a
material effect on the financial statements.
     47




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##### Table of Contents



Changes in Internal Control Over Financial Reporting
  
 ITEM 9B. OTHER INFORMATION.
  
 PART III
 
 ITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CORPORATE GOVERNANCE; COMPLIANCE WITH
SECTION 16(A) OF THE EXCHANGE ACT.
  
 ITEM 11. EXECUTIVE COMPENSATION.
  
 ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED MEMBER
MATTERS.
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.
  
 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
   48




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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
  Exhibit

    
    
    
    Method ofNo.

    
    Description
    
    Filing3.1
    
    
    Articles of Organization of Western Iowa Energy, LLC.
    
    
    13.2
    
    
    Amended and Restated Operating Agreement of Western Iowa Energy, LLC
    
    
    13.3
    
    
    First Amendment to Amended and Restated Operating Agreement of
Western Iowa Energy, LLC
    
    
    610.1
    
    
    Water Supply and Storage Agreement between the Incorporated City of
Wall Lake, Iowa and Western Iowa Energy, LLC.
    
    
    110.2
    
    
    Master Loan Agreement between Farm Credit Services of America and
Western Iowa Energy, LLC.
    
    
    110.3
    
    
    Construction and Term Loan Supplement between Farm Credit Services
of America and Western Iowa Energy, LLC.
    
    
    110.4
    
    
    Construction and Revolving Term Loan Supplement between Farm Credit
Services of America and Western Iowa Energy, LLC.
    
    
    110.5
    
    
    Administrative Agency Agreement between Farm Credit Services of
America and Western Iowa Energy, LLC.
    
    
    110.6
    
    
    Design/Build Agreement between Renewable Energy Group and Western
Iowa Energy.
    
    
    110.7
    
    
    Management and Operational Services Agreement between West Central
Cooperative and Western Iowa Energy, LLC.
    
    
    110.8
    
    
    Letter from CoBank regarding term extension for the Construction
and Term Loan Supplement (exhibit 10.3) between Farm Credit
Services of America and Western Iowa Energy, LLC.
    
    
    110.9
    
    
    Iowa Department of Economic Development VAAPFAP Loan/Forgivable
Loan Agreement and Promissory Note.
    
    
    110.10
    
    
    Statused Revolving Credit Supplement Agreement between Farm Credit
Services, FLCA and Western Iowa Energy, LLC dated August 3, 2006.
    
    
    210.11
    
    
    Industry Track Agreement between Chicago Central and Pacific
Railroad Company and Western Iowa Energy, LLC dated June 5, 2006.
    
    
    210.12
    
    
    Assignment and Pledge Agreement
    
    
    210.13
    
    
    Letter Agreement between Renewable Energy Group, LLC and Western
Iowa Energy, LLC regarding the issuance of 1,000 membership units to Renewable Energy Group, LLC
    
    
    210.14
    
    
    Rural Development Loan Agreement between Glidden Rural Electric
Cooperative and Western Iowa Energy, LLC.
    
    
    310.15
    
    

Amendment
to Management and Operational Services Agreement between Renewable
Energy Group, Inc. and Western Iowa Energy, LLC.
    
    
    410.16
    
    
    Amendment to Master Loan Agreement between Farm Credit Services of
America, FLCA and Western Iowa Energy, LLC, dated June 21, 2007.
    
    
    5
  49




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Exhibit

    
    
    
    Method ofNo.

    
    Description
    
    Filing10.17
    
    
    Amendment to Construction and Term Loan Supplement between Farm
Credit Services of America, FLCA and Western Iowa Energy, LLC,
dated June 21, 2007.
    
    
    510.18
    
    
    Statused Revolving Credit Supplement between Farm Credit Services
of America, FLCA and Western Iowa Energy, LLC, dated June 21, 2007.
    
    
    510.19
    
    
    Amendment to Master Loan Agreement between Farm Credit Services of
America and Western Iowa Energy, LLC dated June 5, 2008.
    
    
    714.1
    
    
    Code of Ethics
    
    
    431.1
    
    
    Certificate Pursuant to 17 CFR 240 15d-14(a)
    
    
    *31.2
    
    
    Certificate Pursuant to 17 CFR 240 15d-14(a)
    
    
    *32.1
    
    
    Certificate Pursuant to 18 U.S.C. Section 1350
    
    
    *32.2
    
    
    Certificate Pursuant to 18 U.S.C. Section 1350
    
    
    *
 
 (1)
    
    Incorporated by reference as filed on our Registration Statement on Form 10-SB, No.
000-51965, originally filed on May 2, 2006.(2)
    
    Incorporated by reference as filed on our Quarterly Report on Form 10-QSB filed on August 18,
2006.(3)
    
    Incorporated by reference as filed on our Quarterly Report on Form 10-QSB filed on November 14,
2006.(4)
    
    Incorporated by reference as filed on our Annual Report on Form 10-KSB filed on March 9, 2007.(5)
    
    Incorporated by reference as filed on our Quarterly Report on Form 10-QSB filed on August 14,
2007.(6)
    
    Incorporated by reference as filed on our Quarterly Report on Form 10-Q filed on May 15,
2008.(7)
    
    Incorporated by reference as filed on our Form 8-K filed on February 12, 2009.(*)
    
    Filed herewith.  50




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SIGNATURES
  WESTERN IOWA ENERGY, LLCDate:      March 30, 2009
    /s/ William J. HoranWilliam J. HoranChairman, President and Director
(Principal Executive Officer) Date:      March 30, 2009
    /s/ Denny MauserDenny MauserTreasurer and Director
(Principal Financial and Accounting Officer)  Date: March 30, 2009
    /s/ William J. HoranWilliam J. Horan, Chairman, President,Director (Principal Executive Officer)Date:  March 30, 2009
    /s/ Denny MauserDenny Mauser, Treasurer, Director(Principal Financial and Accounting Officer)Date: March 30, 2009
    /s/ Kevin J. RossKevin J. Ross, Secretary and DirectorDate: March 30, 2009
    /s/ John GeakeJohn Geake, Vice-Chairman and DirectorDate: March 30, 2009
    /s/ Warren L. BushWarren L. Bush, DirectorDate: March 30, 2009
    /s/ Wayne SeamanWayne Seaman, DirectorDate: March 30, 2009
    /s/ Nile RamsbottomNile Ramsbottom, Director  51




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EXHIBIT INDEX
 ExhibitIndex
    
    
    Description31.1
    
    
    Certificate Pursuant to 17 CFR 240 15d-14(a)31.2
    
    
    Certificate Pursuant to 17 CFR 240 15d-14(a)32.1
    
    
    Certificate Pursuant to 18 U.S.C. Section 135032.2
    
    
    Certificate Pursuant to 18 U.S.C. Section 1350
  52