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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-Q
 þ
    
    Quarterly report pursuant to Section 13 or
15(d) of the Securities Exchange Act of
1934
 For the quarterly period ended March 31, 2010
 o
    
    Transition report pursuant to Section 13
or 15(d) of the Securities Exchange Act of
1934
 For the transition period from _____________ to ______________
 Commission file number 333-135729
 
 ONE EARTH ENERGY, LLC
 
 (Exact name of registrant as specified in its charter)
 
 Illinois
    
    20-3852246(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification Number)
 202 N. Jordan Drive, Gibson City, Illinois
    
    60936(Address of principal executive offices)
    
    (Zip Code)
 (217) 784-5321
(Registrants telephone number, including area code)
 
 o þ
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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##### 



INDEX
 PagePART I. FINANCIAL INFORMATION
    
    
    3Item 1. Financial Statements
    
    
    3Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    18Item 4. Controls and Procedures
    
    
    19PART II. OTHER INFORMATION
    
    
    19Item 1. Legal Proceedings
    
    
    19Item 1A. Risk Factors
    
    
    19Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    19Item 3. Defaults Upon Senior Securities
    
    
    20Item 4. Removed and Reserved
    
    
    20Item 5. Other Information
    
    
    20Item 6. Exhibits
    
    
    20SIGNATURES
    
    
    20Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 ONE EARTH ENERGY, LLC
Condensed Balance Sheets
Unaudited
 March 31,
    
    
    December 31,2010
    
    
    2009(In Thousands)AssetsCurrent assets:Cash and cash equivalents
    
    $
    13,209
    
    
    $
    12,099Accounts receivable, net
    
    
    4,587
    
    
    
    5,457Inventory
    
    
    5,263
    
    
    
    6,290Prepaid expenses
    
    
    1,365
    
    
    
    1,579Other current assets
    
    
    1,428
    
    
    
    1,276Total current assets
    
    
    25,852
    
    
    
    26,701Property and equipment, net
    
    
    146,372
    
    
    
    148,709Deferred financing costs, net
    
    
    1,189
    
    
    
    1,259Restricted cash
    
    
    20
    
    
    
    20Other assets
    
    
    525
    
    
    
    595Total assets
    
    $
    173,958
    
    
    $
    177,284Liabilities and equity:Current liabilities:Accounts payable, trade
    
    $
    2,326
    
    
    $
    1,016Current portion of long-term debt
    
    
    8,520
    
    
    
    8,089Accrued real estate taxes
    
    
    2,170
    
    
    
    1,930Derivative financial instruments
    
    
    1,638
    
    
    
    1,413Other current liabilities
    
    
    1,344
    
    
    
    1,332Total current liabilities
    
    
    15,998
    
    
    
    13,780Long-term liabilities:Long-term debt
    
    
    77,727
    
    
    
    89,910Derivative financial instruments
    
    
    3,946
    
    
    
    3,818Total long-term liabilities
    
    
    81,673
    
    
    
    93,728Commitments and contingenciesMembers equity:Members capital (13,781 units issued and outstanding in
2010 and 2009)
    
    
    65,215
    
    
    
    65,215Retained earnings
    
    
    11,072
    
    
    
    4,561Total members equity
    
    
    76,287
    
    
    
    69,776Total liabilities and equity
    
    $
    173,958
    
    
    $
    177,284
   3




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ONE EARTH ENERGY, LLC
Condensed Statements Of Operations
Unaudited
 Three Months EndedMarch 31,2010
    
    
    2009(In Thousands, Except PerShare Amounts)Revenues
    
    $
    53,239
    
    
    $
    Cost of sales
    
    
    44,664
    
    
    
    134Gross profit
    
    
    8,575
    
    
    
    (134
    )Selling, general and administrative expenses
    
    
    (294
    )
    
    
    (107
    )Operating income (loss)
    
    
    8,281
    
    
    
    (241
    )Interest and other income
    
    
    20
    
    
    
    40Interest expense
    
    
    (721
    )
    
    
    Losses on derivative financial instruments, net
    
    
    (1,069
    )
    
    
    (153
    )Net income (loss)
    
    $
    6,511
    
    
    $
    (354
    )Weighted average units outstanding  basic and diluted
    
    
    14
    
    
    
    14Basic and diluted net income (loss) per unit
    
    $
    465.07
    
    
    $
    (25.29
    )
   4




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One Earth Energy, LLC
Condensed Statements Of Cash Flows
Unaudited
 Three Months EndedMarch 31,2010
    
    
    2009(In Thousands)Cash flows from operating activities:Net income (loss)
    
    $
    6,511
    
    
    $
    (354
    )Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:Depreciation and amortization
    
    
    2,450
    
    
    
    12Derivative financial instruments
    
    
    353
    
    
    
    153Changes in assets and liabilities:Accounts receivable
    
    
    870
    
    
    
    (36
    )Inventory
    
    
    1,027
    
    
    
    Other assets
    
    
    132
    
    
    
    16Accounts payable, trade
    
    
    1,310
    
    
    
    32Other liabilities
    
    
    252
    
    
    
    15Net cash provided by (used in) operating activities
    
    
    12,905
    
    
    
    (162
    )Cash flows from investing activities:Capital expenditures
    
    
    (43
    )
    
    
    (15,141
    )Deposits of restricted cash
    
    
    
    
    
    
    (20
    )Net cash used in investing activities
    
    
    (43
    )
    
    
    (15,161
    )Cash flows from financing activities:Proceeds from long-term debt
    
    
    
    
    
    
    15,341Payments of long-term debt
    
    
    (11,752
    )
    
    
    Net cash (used in) provided by financing activities
    
    
    (11,752
    )
    
    
    15,341Net increase in cash and cash equivalents
    
    
    1,110
    
    
    
    18Cash and cash equivalents, beginning of period
    
    
    12,099
    
    
    
    16Cash and cash equivalents, end of period
    
    $
    13,209
    
    
    $
    34Non cash investing activities  Accrued capital expenditures
    
    $
    
    
    
    $
    10,194
   5




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ONE EARTH ENERGY, LLC
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
March 31, 2010
 Note 1. Condensed Financial Statements
   Note 2. Accounting Policies
  Revenue Recognition
  Quarter EndedMarch 31,2010Ethanol
    
    $
    44,398Dried distillers grains
    
    
    8,788Wet
distillers grains
    
    
    53Total
    
    $
    53,239
 Cost of Sales
   6




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ONE EARTH ENERGY, LLC
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
March 31, 2010
 Selling, General and Administrative Expenses
  Interest Cost
  Financial Instruments
 Derivatives and Hedging,
 Income Taxes
  Inventories
  March 31,
    
    
    December 31,2010
    
    
    2009Ethanol and other finished goods, net
    
    $
    2,072
    
    
    $
    1,558Work in process, net
    
    
    1,205
    
    
    
    1,235Grain and other raw materials
    
    
    1,986
    
    
    
    3,497Total
    
    $
    5,263
    
    
    $
    6,290
  7




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ONE EARTH ENERGY, LLC
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
March 31, 2010
 Property and Equipment
  Impairment or Disposal of Long-Lived Assets
 Deferred Financing Costs
  Years Ended December 31,
    
    AmortizationRemainder of 2010
    
    $
    2452011
    
    
    2862012
    
    
    2482013
    
    
    2132014
    
    
    197Total
    
    $
    1,189
 Comprehensive Income (Loss)
  Accounting Changes and Recently Issued Accounting Standards
   8




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ONE EARTH ENERGY, LLC
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
March 31, 2010
 Fair Value
Measurements and Disclosures
 Note 3. Members Equity
      9




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ONE EARTH ENERGY, LLC
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
March 31, 2010
 Note 4. Property and Equipment
  March 31,
    
    
    December 31,2010
    
    
    2009Land and improvements
    
    $
    14,318
    
    
    $
    14,318Machinery and equipment
    
    
    117,457
    
    
    
    117,442Buildings and improvements
    
    
    21,237
    
    
    
    21,237Furniture and fixtures
    
    
    570
    
    
    
    518Construction in progress
    
    
    
    
    
    
    24Property and equipment, gross
    
    
    153,582
    
    
    
    153,539Less: accumulated depreciation
    
    
    (7,210
    )
    
    
    (4,830
    )Property and equipment, net
    
    $
    146,372
    
    
    $
    148,709
 Note 5. Long-Term Debt
      Years Ended December 31,
    
    MaturitiesRemainder of 2010
    
    $
    7,5252011
    
    
    9,6392012
    
    
    10,7912013
    
    
    11,2292014
    
    
    47,063Total
    
    $
    86,247
  10




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ONE EARTH ENERGY, LLC
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
March 31, 2010
  Note 6. Fair Value
 Fair Value Measurements and
Disclosures
      11




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ONE EARTH ENERGY, LLC
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
March 31, 2010
  Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Fair ValueDerivative liabilities
    
    $
    
    
    
    $
    5,584
    
    
    $
    
    
    
    $
    5,584
  Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Fair ValueDerivative liabilities
    
    $
    
    
    
    $
    5,231
    
    
    $
    
    
    
    $
    5,231
 Note 7. Financial Instruments
     Notional
    
    
    Fair ValueAmount
    
    
    LiabilityInterest rate swaps
    
    $
    72,177
    
    
    $
    5,584
     12




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ONE EARTH ENERGY, LLC
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
March 31, 2010
  Note 8. Related-Party Transactions
    Note 9. Commitments and Contingencies
   13




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Forward-Looking Statements
  Critical Accounting Policies and Estimates
  Overview
      14




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Results of Operations
 Comparison of Three Months Ended March 31, 2010 and 2009
  Three Months EndedMarch 31,2010
    
    
    2009Average selling price per gallon of ethanol
    
    $
    1.71
    
    
    $
    Average selling price per ton of dried distiller
grains
    
    $
    121.03
    
    
    $
    Average selling price per ton of wet distiller
grains
    
    $
    24.71
    
    
    $
    Average cost per bushel of grain
    
    $
    3.61
    
    
    $
    Average cost of natural gas (per mmbtu)
    
    $
    5.46
    
    
    $
    
  Three Months EndedMarch 31,2010
    
    
    2009Ethanol
    
    $
    44,398
    
    
    $
    Dried distiller grains
    
    
    8,788
    
    
    
    Wet distiller grains
    
    
    53
    
    
    
    Total
    
    $
    53,239
    
    
    $
    
     15




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Trends and Uncertainties Impacting the Ethanol Industry and Our Operations
  Economic Downturn
  Corn Prices
   16




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Ethanol Industry Competition
  Distillers Grains Marketing
  Technology Developments
   Government Legislation and Regulations
  Liquidity and Capital Resources
   17




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Item 3. Quantitative and Qualitative Disclosures About Market Risk
  Interest Rate Risk
   Commodity Price Risk
   18




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Hypothetical
    
    
    ApproximateAdverse Change
    
    
    AdverseVolume for the quarter
    
    
    
    
    
    
    in
    
    
    Change toended March 31, 2010
    
    
    Unit of Measure
    
    
    Price
    
    
    IncomeNatural Gas
    
    
    764,760
    
    
    MMBtu
    
    
    10
    %
    
    $
    418,000Ethanol
    
    
    25,946,639
    
    
    Gallons
    
    
    10
    %
    
    $
    4,444,000Corn
    
    
    9,382,627
    
    
    Bushels
    
    
    10
    %
    
    $
    3,383,000
 
 Item 4. Controls and Procedures
  
 
  
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Dividend Policy
   19




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Item 3. Defaults Upon Senior Securities
  
 Item 4. Removed and Reserved
 
 Item 5. Other Information
  
 Item 6. Exhibits
  31.1
    
    
    Certificate Pursuant to 17 CFR 240.13a-14(a)
    
    *31.2
    
    
    Certificate Pursuant to 17 CFR 240.13a-14(a)
    
    *32.1
    
    
    Certificate Pursuant to 18 U.S.C. § 1350
    
    *32.2
    
    
    Certificate Pursuant to 18 U.S.C. § 1350.
    
    *
 
 (*)
    
    Filed herewith. 
 SIGNATURES
  ONE EARTH ENERGY, LLCDate:  November 15, 2010

/s/ Steven KellySteven KellyPresident (Principal Executive Officer)Date:  November 15, 2010
    /s/ Larry BreesLarry BreesChief Financial Officer (Principal Financial and
Accounting Officer)  20