UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

For the Quarterly Period Ended ~~June 30, 2018~~March 31, 2019

Commission File Number 001-32924

Green Plains Inc.

(Exact name of registrant as specified in its charter)


Iowa	84-1652107
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1811 Aksarben Drive, Omaha, NE 68106	(402) 884-8700
(Address of principal executive offices, including zip code)	(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).

☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☒	Accelerated filer ☐

Non-accelerated filer ☐ ~~(Do not check if a smaller reporting company)~~

Smaller reporting company ☐	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ☒ No

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.001 per share	GPRE	The Nasdaq Stock Market LLC

The number of shares of common stock, par value $0.001 per share, outstanding as of ~~July 27, 2018,~~May 6, 2019, was ~~41,429,651~~41,386,278 shares.

Commonly Used Defined Terms

The abbreviations, acronyms and industry terminology used in this quarterly report are defined as follows:

Green Plains Inc., Subsidiaries, and Partners:


Green Plains; the company	Green Plains Inc. and its subsidiaries
BioProcess Algae	BioProcess Algae LLC
~~DKGP~~	~~DKGP Energy Terminals LLC~~
Fleischmann’s Vinegar	Fleischmann’s Vinegar Company, Inc.
Green Plains Cattle	Green Plains Cattle Company LLC
Green Plains Grain	Green Plains Grain Company LLC
Green Plains Partners; the partnership	Green Plains Partners LP
Green Plains Processing	Green Plains Processing LLC and its subsidiaries
Green Plains Trade	Green Plains Trade Group LLC
~~Green Plains Commodity Management~~	~~Green Plains Commodity Management LLC~~

Accounting Defined Terms:


~~AMT~~	~~Alternative minimum tax~~
ASC	Accounting Standards Codification
Bgy	Billion gallons per year
EBITDA	Earnings before interest, income taxes, depreciation and amortization
EPS	Earnings per share
Exchange Act	Securities Exchange Act of 1934, as amended
~~FASB~~	~~Financial Accounting Standards Board~~
GAAP	U.S. Generally Accepted Accounting Principles
LIBOR	London Interbank Offered Rate
LTIP	Long-Term Incentive Plan
~~R&D Credits~~	~~Research and development tax credits~~
SEC	Securities and Exchange Commission
VIE	Variable interest entity

~~Other~~Industry Defined Terms:


CAFE	Corporate Average Fuel Economy
D.C.	District of Columbia
E10	Gasoline blended with up to 10% ethanol by volume
E15	Gasoline blended with up to 15% ethanol by volume
E85	Gasoline blended with up to 85% ethanol by volume
EIA	U.S. Energy Information Administration
~~EISA~~	~~Energy Independence and Security Act of 2017, as amended~~
EPA	U.S. Environmental Protection Agency
MmBtu	Million British Thermal Units
Mmg	Million gallons
MTBE	Methyl tertiary-butyl ether
~~RBOB~~	~~Reformulated blendstock for oxygenate blending~~
RFS II	Renewable Fuels Standard II
RIN	Renewable identification number
RVO	Renewable volume obligation
U.S.	United States
USDA	U.S. Department of Agriculture

PART 1 – FINANCIAL INFORMATION

Item 1. Financial Statements.

GREEN PLAINS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)


	June 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018
	(unaudited)				(unaudited)
ASSETS	ASSETS				ASSETS
Current assets
Cash and cash equivalents	$	235,133	$	266,651	$	214,068	$	251,683
Restricted cash		15,863		45,709		59,174		66,512
Accounts receivable, net of allowances of $209 and $217, respectively		137,068		151,122
Accounts receivable, net of allowances of $204 and $194, respectively						66,566		100,361
Income taxes receivable		33,891		6,413		12,260		12,418
Inventories		625,302		711,878		707,025		734,883
Prepaid expenses and other		14,915		17,808		12,290		14,470
Derivative financial instruments		30,647		6,890		11,568		26,315
Total current assets		1,092,819		1,206,471		1,082,951		1,206,642
Property and equipment, net of accumulated depreciation and amortization of $564,395 and $514,585, respectively		1,139,249		1,176,707
Property and equipment, net of accumulated depreciation and amortization of $448,494 and $430,405, respectively						879,046		886,576
Operating lease right-of-use assets						56,516		-
Goodwill		182,879		182,879		34,689		34,689
Deferred income taxes						7,634		-
Other assets		170,826		218,593		86,744		88,525
Total assets	$	2,585,773	$	2,784,650	$	2,147,580	$	2,216,432

LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY				LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	121,573	$	205,479	$	103,729	$	156,901
Accrued and other liabilities		53,859		63,886		46,777		58,973
Derivative financial instruments		22,868		12,884		15,951		24,776
Income taxes payable		-		9,909
Operating lease current liabilities						17,219		-
Short-term notes payable and other borrowings		457,472		526,180		526,523		538,243
Current maturities of long-term debt		69,752		67,923		55,740		54,807
Total current liabilities		725,524		886,261		765,939		833,700
Long-term debt		768,111		767,396		301,033		298,190
Deferred income taxes		40,591		56,801		5,845		10,123
Operating lease long-term liabilities						42,419		-
Other liabilities		14,434		15,056		8,537		11,430
Total liabilities		1,548,660		1,725,514		1,123,773		1,153,443

Commitments and contingencies (Note 14)
Commitments and contingencies (Note 13)

Stockholders' equity
Common stock, $0.001 par value; 75,000,000 shares authorized; 46,760,696 and 46,410,405 shares issued, and 41,434,804 and 41,084,463 shares outstanding, respectively		47		46
Common stock, $0.001 par value; 75,000,000 shares authorized; 46,922,257 and 46,637,549 shares issued, and 41,386,683 and 41,101,975 shares outstanding, respectively						47		47
Additional paid-in capital		687,469		685,019		701,673		696,222
Retained earnings		293,405		325,411		277,082		324,728
Accumulated other comprehensive loss		(4,208)		(13,110)		(12,523)		(16,016)
Treasury stock, 5,325,892 and 5,325,942 shares, respectively		(55,183)		(55,184)
Treasury stock, 5,535,574 shares						(58,162)		(58,162)
Total Green Plains stockholders' equity		921,530		942,182		908,117		946,819
Noncontrolling interests		115,583		116,954		115,690		116,170
Total stockholders' equity		1,037,113		1,059,136		1,023,807		1,062,989
Total liabilities and stockholders' equity	$	2,585,773	$	2,784,650	$	2,147,580	$	2,216,432


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
	2018		2017		2018		2017		2019		2018
Revenues
Product revenues	$	985,217	$	884,712	$	2,028,876	$	1,770,924	$	640,010	$	1,043,659
Service revenues		1,620		1,551		3,248		3,023		2,305		1,628
Total revenues		986,837		886,263		2,032,124		1,773,947		642,315		1,045,287

Costs and expenses
Cost of goods sold (excluding depreciation and amortization expenses reflected below)		910,625		830,019		1,898,960		1,641,915		635,575		988,335
Operations and maintenance expenses		7,893		8,267		16,293		16,798		6,864		8,400
Selling, general and administrative expenses		29,731		25,575		55,734		49,357		20,646		26,003
Depreciation and amortization expenses		26,823		26,188		53,297		52,271		19,235		26,474
Total costs and expenses		975,072		890,049		2,024,284		1,760,341		682,320		1,049,212
Operating income (loss)		11,765		(3,786)		7,840		13,606
Operating loss										(40,005)		(3,925)

Other income (expense)
Interest income		709		314		1,346		678		1,263		637
Interest expense		(22,021)		(19,430)		(44,149)		(37,926)		(14,427)		(22,128)
Other, net		2,545		1,357		2,479		1,367		838		(66)
Total other expense		(18,767)		(17,759)		(40,324)		(35,881)		(12,326)		(21,557)
Loss before income taxes		(7,002)		(21,545)		(32,484)		(22,275)		(52,331)		(25,482)
Income tax benefit		10,753		9,749		16,780		12,130		14,460		6,027
Net income (loss)		3,751		(11,796)		(15,704)		(10,145)
Net loss										(37,871)		(19,455)
Net income attributable to noncontrolling interests		4,745		4,570		9,407		9,818		4,928		4,662
Net loss attributable to Green Plains	$	(994)	$	(16,366)	$	(25,111)	$	(19,963)	$	(42,799)	$	(24,117)

Earnings per share:
Net loss attributable to Green Plains - basic	$	(0.02)	$	(0.41)	$	(0.63)	$	(0.51)	$	(1.06)	$	(0.60)
Net loss attributable to Green Plains - diluted	$	(0.02)	$	(0.41)	$	(0.63)	$	(0.51)	$	(1.06)	$	(0.60)
Weighted average shares outstanding:
Basic		40,194		40,220		40,168		39,326		40,315		40,164
Diluted		40,194		40,220		40,168		39,326		40,315		40,164

Cash dividend declared per share	$	0.12	$	0.12	$	0.24	$	0.24	$	0.12	$	0.12


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
	2018		2017		2018		2017		2019		2018

Net income (loss)	$	3,751	$	(11,796)	$	(15,704)	$	(10,145)
Net loss									$	(37,871)	$	(19,455)
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on derivatives arising during the period, net of tax benefit (expense) of $1,145, $2,026, ($3,971) and $1,058, respectively		(4,277)		(3,418)		12,873		(1,776)
Reclassification of realized gains (losses) on derivatives, net of tax benefit of $185, $824, $365 and $2,672, respectively		(581)		(1,353)		(1,184)		(4,487)
Total other comprehensive income (loss), net of tax		(4,858)		(4,771)		11,689		(6,263)
Unrealized gains (losses) on derivatives arising during the period, net of tax benefit (expense) of $2,080 and ($5,116), respectively										(6,883)		17,150
Reclassification of realized losses (gains) on derivatives, net of tax benefit (expense) of ($3,140) and $180, respectively										10,376		(603)
Total other comprehensive income, net of tax										3,493		16,547
Comprehensive loss		(1,107)		(16,567)		(4,015)		(16,408)		(34,378)		(2,908)
Comprehensive income attributable to noncontrolling interests		4,745		4,570		9,407		9,818		4,928		4,662
Comprehensive loss attributable to Green Plains	$	(5,852)	$	(21,137)	$	(13,422)	$	(26,226)	$	(39,306)	$	(7,570)


	Six Months Ended June 30,				Three Months Ended March 31,
	2018		2017		2019		2018
Cash flows from operating activities:
Net loss	$	(15,704)	$	(10,145)	$	(37,871)	$	(19,455)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		53,297		52,271		19,235		26,474
Amortization of debt issuance costs and debt discount		7,515		7,925		3,570		3,604
Loss on exchange of 3.25% convertible notes due 2018		-		1,291
Gain on disposal of assets		(2,624)		(1,422)
Deferred income taxes		(23,061)		(12,896)		(12,927)		(12,020)
Stock-based compensation		5,435		5,497		2,485		2,439
Undistributed equity loss of affiliates		239		75		74		137
Other		-		19		(81)		-
Changes in operating assets and liabilities before effects of business combinations:
Changes in operating assets and liabilities before effects of business combinations and dispositions:
Accounts receivable		14,054		12,341		30,811		(814)
Inventories		88,450		(1,079)		28,272		54,103
Derivative financial instruments		1,513		(17,236)		10,474		7,472
Prepaid expenses and other assets		2,797		(9)		2,534		618
Accounts payable and accrued liabilities		(96,295)		(74,435)		(66,391)		(114,709)
Current income taxes		10,540		(1,262)		(1,564)		11,678
Other		(297)		1,322		596		(618)
Net cash provided by (used in) operating activities		45,859		(37,743)
Net cash used in operating activities						(20,783)		(41,091)

Cash flows from investing activities:
Purchases of property and equipment, net		(14,640)		(27,985)		(10,809)		(7,352)
Acquisition of a business, net of cash acquired		(1,629)		(61,727)
Proceeds from the sale of assets, net						3,155		-
Acquisition of businesses, net of cash acquired						-		(1,006)
Investments in unconsolidated subsidiaries		(2,253)		(8,849)		-		(14)
Other investing activities		7,500		-		-		7,500
Net cash used in investing activities		(11,022)		(98,561)		(7,654)		(872)

Cash flows from financing activities:
Proceeds from the issuance of long-term debt		42,300		33,800		30,600		24,400
Payments of principal on long-term debt		(43,370)		(66,339)		(29,781)		(23,630)
Proceeds from short-term borrowings		2,089,208		2,149,950		637,057		1,010,077
Payments on short-term borrowings		(2,158,274)		(2,099,929)		(648,779)		(1,002,664)
Cash payment for exchange of 3.25% convertible notes due 2018		-		(8,523)
Payments of cash dividends and distributions		(20,580)		(19,244)		(10,334)		(10,251)
Proceeds from disgorgement of shareholder short-swing profits						6,699		-
Payments of loan fees		(2,622)		(1,675)		-		(254)
Payments related to tax withholdings for stock-based compensation		(3,013)		(3,801)		(1,978)		(2,890)
Proceeds from exercise of stock options		150		50		-		50
Net cash used in financing activities		(96,201)		(15,711)		(16,516)		(5,162)

Net change in cash, cash equivalents and restricted cash		(61,364)		(152,015)		(44,953)		(47,125)
Cash, cash equivalents and restricted cash, beginning of period		312,360		406,791		318,195		312,360
Cash, cash equivalents and restricted cash, end of period	$	250,996	$	254,776	$	273,242	$	265,235

Continued on the following page

Continued from the previous page

Six Months Ended
June 30,

2018

2017
Reconciliation of total cash, cash equivalents and restricted cash:

Cash and cash equivalents
$
235,133

$
195,442
Restricted cash

15,863

59,334
Total cash, cash equivalents and restricted cash
$
250,996

$
254,776

Non-cash financing activity:

Exchange of 3.25% convertible notes due 2018 for shares of
common stock
$
-

$
47,743
Exchange of common stock held in treasury stock for 3.25%
convertible notes due 2018
$
1

$
27,356

Supplemental investing and financing activities:

Assets acquired in acquisitions and mergers, net of cash
$
1,629

$
62,209
Less: liabilities assumed

-

(482)
Net assets acquired
$
1,629

$
61,727

Supplemental disclosures of cash flow:

Cash paid (received) for income taxes
$
(3,163)

$
1,976
Cash paid for interest
$
36,923

$
30,314


Continued from the previous page
	Three Months Ended March 31,
	2019		2018
Reconciliation of total cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	214,068	$	240,964
Restricted cash		59,174		24,271
Total cash, cash equivalents and restricted cash	$	273,242	$	265,235

Supplemental disclosures of cash flow:
Cash paid (refunded) for income taxes	$	29	$	(4,592)
Cash paid for interest	$	11,923	$	19,499

1. BASIS OF PRESENTATION, DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

References to “Green Plains” or the “company” in the consolidated financial statements and in these notes to the consolidated financial statements refer to Green Plains Inc., an Iowa corporation, and its subsidiaries.

The consolidated financial statements include the company’s accounts and all significant intercompany balances and transactions are eliminated. Unconsolidated entities are included in the financial statements on an equity basis. T~~As of June 30, 2018, the~~he company owns a ~~62.5%~~49.1% limited partner interest and a 2.0% general partner interest in Green Plains Partners LP. Public investors own the remaining ~~35.5%~~48.9% limited partner interest in the partnership. The company determined that the limited partners in the partnership with equity at risk lack the power, through voting rights or similar rights, to direct the activities that most significantly impact partnership’s economic performance; therefore, the partnership is considered a variable interest entity. The company, through its ownership of the general partner interest in the partnership, has the power to direct the activities that most significantly affect economic performance and is obligated to absorb losses and has the right to receive benefits that could be significant to the partnership. Therefore, the company is considered the primary beneficiary and consolidates the partnership in the company’s financial statements. The assets of the partnership cannot be used by the company for general corporate purposes. The partnership’s consolidated total assets as of ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, excluding intercompany balances, ~~were $73.2~~are $102.8 million and ~~$74.9~~ $67.3million, respectively, and primarily ~~consisted~~consist of property and equipment, operating lease right-of-use assets and goodwill. The partnership’s consolidated total liabilities as of ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, excluding intercompany balances, ~~were $155.1~~are $194.3 million and ~~$153.0~~$152.9 million, respectively, which primarily ~~consisted~~consist of long-term debt as discussed in Note 98 – Debt.and operating lease liabilities. The liabilities recognized as a result of consolidating the partnership do not represent additional claims on our general assets. The company also owns a 90.0% interest in BioProcess Algae, a joint venture formed in 2008, and consolidates their results in its consolidated financial statements.

The accompanying unaudited consolidated financial statements are prepared in accordance with GAAP for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Because they do not include all of the information and notes required by GAAP, the consolidated financial statements should be read in conjunction with the company’s annual report on Form 10-K for the year ended December 31, ~~2017.~~2018, as filed with the SEC on February 20, 2019.

The unaudited financial information reflects adjustments, which are, in the opinion of management, necessary for a fair presentation of results of operations, financial position and cash flows for the periods presented. The adjustments are normal and recurring in nature, unless otherwise noted. Interim period results are not necessarily indicative of the results to be expected for the entire year.

Certain prior year amounts were reclassified to conform to the current year presentation. These reclassifications did not affect total revenues, costs and expenses, net ~~income (loss)~~loss or stockholders’ equity.

The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. The company bases its estimates on historical experience and assumptions it believes are proper and reasonable under the circumstances and regularly evaluates the appropriateness of its estimates and assumptions. Actual results could differ from those estimates. Key accounting policies, including but not limited to those relating to revenue recognition, depreciation of property and equipment, carrying value of intangible assets, operating leases, impairment of long-lived assets and goodwill, derivative financial instruments, ~~and~~ accounting for income taxes and assets acquired and

liabilities assumed in acquisitions, are impacted significantly by judgments, assumptions and estimates used in the preparation of the consolidated financial statements.

The company operates within four business segments: (1) ethanol production, which includes the production of ethanol, ~~and~~ distillers grains and ~~recovery of~~ corn oil, (2) agribusiness and energy services, which includes grain handling and storage, commodity marketing and merchant trading for company-produced and third-party ethanol, distillers grains, corn oil, natural gas and other commodities, (3) food and ingredients, which includes cattle feeding ~~vinegar production~~ and food-grade corn oil operations and included vinegar production until the sale of Fleischmann’s Vinegar during the fourth quarter of 2018 and (4) partnership, which includes fuel storage and transportation services.

Cash and cash equivalents includes bank deposits as well as short-term, highly liquid investments with original maturities of three months or less.

The company has restricted cash, which can only be used for funding letters of credit or for payment towards a revolving credit agreement. Restricted cash also includes cash margins and securities pledged to commodity exchange ~~clearinghouses.~~clearinghouses and at times, funds in escrow related to acquisition and disposition activities. To the degree these segregated balances are cash and cash equivalents, they are considered restricted cash on the consolidated statements of cash flows.

The company recognizes revenue atwhen obligations under the ~~point~~terms of a contract with a customer are satisfied. Generally this occurs with the transfer of control of products or services. Revenue is measured as the amount of consideration expected to be received in ~~time when~~exchange for transferring goods or providing services. Sales, value add, and other taxes the ~~product or service is transferred to the customer.~~company collects concurrent with revenue-producing activities are excluded from revenue.

Sales of ethanol, distillers grains, corn oil, natural gas and other commodities by the company’s marketing business are recognized when obligations under the terms of a contract with a customer are satisfied. Generally, this occurs with the transfer of control of products or services. Revenues related to marketing for third parties are presented on a gross basis as the company controls the product prior to the sale to the end customer, takes title of the product and has inventory risk. Unearned revenue is recorded for goods in transit when the company has received payment but control has not yet been transferred to the customer. Revenues for receiving, storing, transferring and transporting ethanol and other fuels are recognized when the product is delivered to the customer.

The company routinely enters into physical-delivery energy commodity purchase and sale agreements. At times, the company settles these transactions by transferring its obligations to other counterparties rather than delivering the physical commodity. Energy trading transactions are reported net as a component of revenue. ~~All other transactions are reported~~Revenues include net ~~as either a component of revenue~~gains or losses from derivatives related to products sold while cost of goods sold ~~depending on their position as a gain~~includes net gains or ~~loss.~~losses from derivatives related to commodities purchased. Revenues also include realized gains and losses on related derivative financial instruments and reclassifications of realized gains and losses on cash flow hedges from accumulated other comprehensive income or loss.

Sales of products, including agricultural commodities, cattle and vinegar, are recognized when control of the product is transferred to the customer, which depends on the agreed upon shipment or delivery terms. Revenues related to grain merchandising are presented gross and include shipping and handling, which is also a component of cost of goods sold. Revenues from grain storage are recognized when services are rendered.

A substantial portion of the partnership revenues are derived from fixed-fee commercial agreements for storage, terminal or transportation services. The partnership recognizes revenue upon transfer of control of product from its storage tanks and fuel terminals, when railcar volumetric capacity is provided, and as truck transportation services are performed. To the extent shortfalls associated with minimum volume commitments in the previous four quarters continue to exist, volumes in excess of the minimum volume commitment are applied to those shortfalls. Remaining excess volumes generating operating lease revenue are recognized as incurred.

~~We account~~The company accounts for shipping and handling activities related to contracts with customers as costs to fulfill ~~our~~its promise to transfer the associated products. Accordingly, ~~we record~~the company records customer payments associated with shipping and handling costs as a component of revenue, and ~~classify~~classifies such costs as a component of cost of goods sold.

Cost of goods sold includes direct labor, materials, shipping and plant overhead costs. Direct labor includes all compensation and related benefits of non-management personnel involved in ethanol production cattle feeding operations and vinegar production ~~and cattle feeding operations.~~until the sale of Fleischmann’s Vinegar during the fourth quarter of 2018. Grain purchasing and receiving costs, excluding labor costs for grain buyers and scale operators, are also included in cost of goods sold. Materials include the cost of corn feedstock, denaturant, process chemicals, cattle and

veterinary supplies. Corn feedstock costs include gains and losses on related derivative financial instruments not designated as cash flow hedges, inbound freight charges, inspection costs and transfer costs, as well as reclassifications of gains and losses on cash flow hedges from accumulated other comprehensive income or loss. Plant overhead consists primarily of plant and feedlot utilities, repairs and maintenance, ~~yard~~feedlot expenses and outbound freight charges. Shipping costs incurred by the company, including railcar costs, are also reflected in cost of goods sold.

The company uses exchange-traded futures and options contracts and forward purchase and sales contracts to attempt to minimize the effect of price changes on ethanol, grain, natural gas and cattle inventories. Exchange-traded futures and options contracts are valued at quoted market prices and settled predominantly in cash. The company is exposed to loss when counterparties default on forward purchase and sale contracts. Grain inventories held for sale and forward purchase and sale contracts are valued at market prices when available or other market quotes adjusted for differences, primarily in transportation, between the exchange-traded market and local market where the terms of the contract is based. Changes in forward purchase contracts and exchange-traded futures and options contracts are recognized as a component of cost of goods sold.

In the partnership segment, transportation expenses represent the primary component of operations and maintenance expenses. Transportation expenses include railcar leases, freight and shipping of the company’s ethanol and co-products, as well as costs incurred storing ethanol at destination terminals.

The company uses various derivative financial instruments, including exchange-traded futures and exchange-traded and over-the-counter options contracts, to attempt to minimize risk and the effect of commodity price changes including but not limited to, corn, ethanol, cattle, natural gas and crude oil. The company monitors and manages this exposure as part of its overall risk management policy to reduce the adverse effect market volatility may have on its operating results. The company may hedge these commodities as one way to mitigate risk; however, there may be situations when these hedging activities themselves result in losses.

By using derivatives to hedge exposures to changes in commodity prices, the company is exposed to credit and market risk. The company’s exposure to credit risk includes the counterparty’s failure to fulfill its performance obligations under the terms of the derivative contract. The company minimizes its credit risk by entering into transactions with high quality counterparties, limiting the amount of financial exposure it has with each counterparty and monitoring their financial condition. Market risk is the risk that the value of the financial instrument might be adversely affected by a change in commodity prices or interest rates. The company manages market risk by incorporating parameters to monitor exposure within its risk management strategy, which limits the types of derivative instruments and strategies the company can use and the degree of market risk it can take using derivative instruments.

The company evaluates its physical delivery contracts to determine if they qualify for normal purchase or sale exemptions which are expected to be used or sold over a reasonable period in the normal course of business. Contracts that do not meet the normal purchase or sale criteria are recorded at fair value. Changes in fair value are recorded in operating income unless the contracts qualify for, and the company elects, cash flow hedge accounting treatment.

Certain qualifying derivatives related to ethanol production, agribusiness and energy services, and food and ingredients segments are designated as cash flow hedges. The company evaluates the derivative instrument to ascertain its effectiveness

prior to entering into cash flow hedges. Unrealized gains and losses are reflected in accumulated other comprehensive income or loss until the gain or loss from the underlying hedged transaction is realized. When it becomes probable a forecasted transaction will not occur, the cash flow hedge treatment is discontinued, which affects earnings. These derivative financial instruments are recognized in current assets or other current liabilities at fair value.

At times, the company hedges its exposure to changes in inventory values and designates qualifying derivatives as fair value hedges. The carrying amount of the hedged inventory is adjusted in the current period for changes in fair value. Ineffectiveness of the hedges is recognized in the current period to the extent the change in fair value of the inventory is not offset by the change in fair value of the derivative.

~~Effective January 1, 2018, the company adopted the amended guidance in ASC Topic 606,~~ ~~Revenue from Contracts with Customers.~~ ~~Please refer to~~ ~~Note 2 – Revenue~~ ~~for further details.~~

~~Effective January 1, 2018, the company adopted the amended guidance in ASC Topic 230,~~ ~~Statement of Cash Flows: Restricted Cash~~, which requires amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amended guidance was applied retrospectively. As a result, net cash used in operating activities for the six months ended June 30, 2017 was adjusted to exclude the change in restricted cash and decreased the previously reported balance by $25.2 million. Net cash provided by financing activities for the six months ended June 30, 2017 was adjusted to exclude the change in restricted cash and decreased the previously reported balance by $18.1 million.

~~Effective January 1, 2018, the company adopted the amended guidance in ASC Topic 740,~~ ~~Income Taxes: Intra-Entity Transfers of Assets other than Inventory~~, which requires the recognition of current and deferred income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The amended guidance is required on a modified retrospective basis, with a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. The adoption of the guidance did not have an impact to the financial statements.

~~Effective January 1, 2018, the company adopted the amended guidance in ASC Topic 805,~~ ~~Business Combinations: Clarifying the Definition of a Business~~, which clarifies the definition of a business and provides guidance to assist companies and other reporting organizations evaluate whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The amended guidance will be applied prospectively.

~~Effective January 1, 2018, the company early adopted the amended guidance in ASC Topic 350,~~ ~~Intangibles – Goodwill and Other: Simplifying the Test for Goodwill Impairment~~, which simplifies the measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The annual goodwill impairment test will be performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge equal to the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to that reporting unit, would be recognized. The amended guidance will be applied prospectively, and used when the annual impairment test is performed in the current year. The company does not believe the new guidance will have a material impact on the consolidated financial statements.

~~Effective January 1, 2018, the company early adopted the amended guidance in ASC Topic 220,~~ ~~Income Statement – Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,~~ which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The amendment eliminates the stranded tax effects resulting from the Tax Cuts and Jobs Act and is intended to improve the usefulness of information reported. As a result, the company recorded a $2.8 million reclassification from accumulated other comprehensive income to retained earnings during the first quarter of 2018. It is the company’s policy to release income tax effects from accumulated other comprehensive income using the portfolio approach.

Effective January 1, 2019, the company ~~will adopt the amended guidance in ASC Topic 842,~~ ~~Leases~~, which aims to make leasing activities more transparent and comparable, requiring substantially all leases to be recognized by lessees on the balance sheet as a right-of-use asset and corresponding lease liability, including leases currently accounted for as operating leases. The new standard is effective for fiscal years and interim periods within those years, beginning after December 15, 2018. The standard requires a modified retrospective transition approach and allows for early adoption. In July 2018, the FASB issued Accounting Standards Update, ~~Leases (Topic 842): Targeted Improvements~~, which provides an option to apply the transition provisions of the new standard at adoption date instead of the earliest comparative period presented in the financial statements. The company will elect to use this optional transition method.

The company has established an implementation team which continues to review current accounting policies, internal controls, processes, and disclosures that will change as a result of adopting the new standard. The company has gathered information on existing leases to obtain a complete population of leases upon adoption. The company is also working with a third-party vendor to implement a lease accounting system, which will assist in delivering the required accounting changes and disclosures. The new standard will significantly increase right-of-use assets and lease liabilities on the company’s consolidated balance sheet, primarily due to operating leases that are currently not recognized on the balance sheet. In addition, it will also require expanded disclosures in the company’s consolidated financial statements. The company expects to complete its assessment of the impact of the new guidance on its consolidated financial statements in the second half of 2018.

~~On January 1, 2018, the company~~ adopted the amended guidance in ASC ~~Topic 606,~~842, ~~Revenue from Contracts with Customers~~Leases., Please refer to Note 13 – Commitments and all related amendments (“new revenue standard”) and applied it to all contracts using the modified retrospective transition method. There were no adjustments to the consolidated January 1, 2018 balance sheets Contingencies for the adoption of the new revenue standard. As such, comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. In addition, there was no impact of adoption on the consolidated statements of operations or balance sheets for the six months ended June 30, 2018.further details.

Revenue is recognized when obligations under the terms of a contract with a customer are satisfied. Generally this occurs with the transfer of control of products or services. Revenue is measured as the amount of consideration expected to be received in exchange for transferring goods or providing services. Sales, value add, and other taxes the company collects concurrent with revenue-producing activities are excluded from revenue.

The following table disaggregates revenue by major source for the three ~~and six~~ months ended ~~June 30,~~March 31, 2019 and 2018 (in thousands):

Three Months Ended June 30, 2018

Ethanol Production

Agribusiness & Energy Services

Food & Ingredients

Partnership

Eliminations

Total
Revenues:

Revenues from contracts with customers under ASC Topic 606:

Ethanol
$
634

$
-

$
-

$
-

$
-

$
634
Distillers grains

62,657

-

-

-

-

62,657
Cattle and vinegar

-

-

222,059

-

-

222,059
Service revenues

-

-

-

1,229

-

1,229
Other

1,201

806

-

-

-

2,007
Intersegment revenues

875

-

38

-

(913)

-
Total revenues from contracts with customers

65,367

806

222,097

1,229

(913)

288,586
Revenues from contracts accounted for as derivatives under ASC Topic 815 (1):

Ethanol

451,083

106,117

-

-

-

557,200
Distillers grains

49,940

32,706

-

-

-

82,646
Corn oil

19,132

3,488

5,350

-

-

27,970
Grain

337

22,843

-

-

-

23,180
Cattle and vinegar

-

-

(1,522)

-

-

(1,522)
Other

4,272

4,114

-

-

-

8,386
Intersegment revenues

3,344

14,128

-

2,517

(19,989)

-
Total revenues from contracts accounted for as derivatives

528,108

183,396

3,828

2,517

(19,989)

697,860
Leasing revenues under ASC Topic 840 (2)

-

-

-

22,094

(21,703)

391
Total Revenues
$
593,475

$
184,202

$
225,925

$
25,840

$
(42,605)

$
986,837


	Six Months Ended June 30, 2018												Three Months Ended March 31, 2019
	Ethanol Production		Agribusiness & Energy Services		Food & Ingredients		Partnership		Eliminations		Total		Ethanol Production		Agribusiness & Energy Services		Food & Ingredients		Partnership		Eliminations		Total
Revenues:
Revenues from contracts with customers under ASC 606:
Ethanol	$	3,100	$	-	$	-	$	-	$	-	$	3,100	$	620	$	-	$	-	$	-	$	-	$	620
Distillers grains		119,902		-		-		-		-		119,902		17,678		-		-		-		-		17,678
Cattle and vinegar		-		-		489,475		-		-		489,475
Cattle														-		-		222,904		-		-		222,904
Service revenues		-		-		-		2,447		-		2,447		-		-		-		2,083		-		2,083
Other		1,332		1,483		-		-		-		2,815		235		178		-		-		-		413
Intersegment revenues		1,537		-		80		-		(1,617)		-		28		-		38		1,392		(1,458)		-
Total revenues from contracts with customers		125,871		1,483		489,555		2,447		(1,617)		617,739		18,561		178		222,942		3,475		(1,458)		243,698
Revenues from contracts accounted for as derivatives under ASC Topic 815 (1):
Revenues from contracts accounted for as derivatives under ASC 815 (1):
Ethanol		893,656		228,658		-		-		-		1,122,314		201,158		77,077		-		-		-		278,235
Distillers grains		90,401		53,918		-		-		-		144,319		34,646		15,409		-		-		-		50,055
Corn oil		35,602		12,158		7,637		-		-		55,397		8,614		6,971		1,451		-		-		17,036
Grain		470		37,129		-		-		-		37,599		-		20,749		-		-		-		20,749
Cattle and vinegar		-		-		6,884		-		-		6,884
Cattle														-		-		(15,856)		-		-		(15,856)
Other		8,556		38,515		-		-		-		47,071		5,765		42,411		-		-		-		48,176
Intersegment revenues		4,635		25,557		-		4,689		(34,881)		-		2,089		6,413		-		-		(8,502)		-
Total revenues from contracts accounted for as derivatives		1,033,320		395,935		14,521		4,689		(34,881)		1,413,584		252,272		169,030		(14,405)		-		(8,502)		398,395
Leasing revenues under ASC 840 (2)		-		-		-		44,589		(43,788)		801
Leasing revenues under ASC 842 (2):														-		-		-		17,612		(17,390)		222
Total Revenues	$	1,159,191	$	397,418	$	504,076	$	51,725	$	(80,286)	$	2,032,124	$	270,833	$	169,208	$	208,537	$	21,087	$	(27,350)	$	642,315

	Three Months Ended March 31, 2018
	Ethanol Production		Agribusiness & Energy Services		Food & Ingredients		Partnership		Eliminations		Total
Revenues:
Revenues from contracts with customers under ASC 606:
Ethanol	$	2,466	$	-	$	-	$	-	$	-	$	2,466
Distillers grains		29,997		-		-		-		-		29,997
Cattle and vinegar		-		-		267,416		-		-		267,416
Service revenues		-		-		-		1,218		-		1,218
Other		131		677		-		-		-		808
Intersegment revenues		662		-		42		-		(704)		-
Total revenues from contracts with customers		33,256		677		267,458		1,218		(704)		301,905
Revenues from contracts accounted for as derivatives under ASC 815 (1):
Ethanol		442,573		122,541		-		-		-		565,114
Distillers grains		67,709		21,212		-		-		-		88,921
Corn oil		16,470		8,670		2,287		-		-		27,427
Grain		133		14,286		-		-		-		14,419
Cattle and vinegar		-		-		8,406		-		-		8,406
Other		4,284		34,401		-		-		-		38,685
Intersegment revenues		1,291		11,429		-		2,172		(14,892)		-
Total revenues from contracts accounted for as derivatives		532,460		212,539		10,693		2,172		(14,892)		742,972
Leasing revenues under ASC 840 (2):		-		-		-		22,495		(22,085)		410
Total Revenues	$	565,716	$	213,216	$	278,151	$	25,885	$	(37,681)	$	1,045,287

The company has standard payment terms, which vary depending upon the nature of the services provided, with the majority falling within 10 to 30 days after transfer of control or completion of services. In instances where the timing of revenue recognition differs from the timing of invoicing, the company has determined that contracts generally do not include a significant financing component.

The company records unearned revenue when consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of service and lease agreements. Unearned revenue from service agreements, which represents a contract liability, is recorded for fees that have been charged to the customer prior to the completion of performance ~~obligations, and~~obligations. Unearned revenue is generally recognized in the subsequent ~~quarter.~~quarter and is not material to the company. The company expects to recognize all of the unearned revenue associated with service agreements as of ~~June 30, 2018~~March 31, 2019, in the subsequent quarter when the inventory is withdrawn from the partnership’s tank storage.

Under the new revenue standard, companies may elect various practical expedients upon adoption. As a result, the company elected to recognize the cost for shipping and handling activities that occur after the customer obtains control of the promised goods as fulfillment activities and not when performance obligations are met. The company also elected to exclude sales taxes from transaction prices.

On ~~May 16, 2017,~~August 1, 2018, the company acquired two cattle-feeding operations from ~~Cargill~~Bartlett Cattle ~~Feeders, LLC~~Company, L.P. for ~~$59.3~~$16.2 million, ~~including certain~~plus working capital ~~adjustments.~~of approximately $106.6 million primarily consisting of work-in-process inventory. The transaction included the feed yards located in ~~Leoti,~~Sublette, Kansas and ~~Eckley, Colorado,~~Tulia, Texas, which added combined feedlot capacity of ~~155,000~~97,000 head of cattle to the company’s operations. The transaction was financed using cash on ~~hand.~~hand and proceeds from the Green Plains Cattle senior secured asset-based revolving credit facility. There were no material acquisition costs recorded for the acquisition.

As part of the transaction, the company also entered into a long-term cattle supply agreement with Cargill Meat Solutions Corporation. Under the cattle supply agreement, all cattle placed in the Leoti and Eckley feedlots are sold exclusively to Cargill Meat Solutions under an agreed upon pricing arrangement.

The following is a summary of the assets acquired and liabilities assumed (in thousands):

The amounts above reflect the final purchase price allocation, which included working capital true-up payments by the company of ~~$1.6~~$0.9 million made during the ~~first half~~third quarter of 2018.

On November 27, 2018, the company and Green Plains II LLC, an indirect wholly-owned subsidiary of the company, completed the sale of Fleischmann’s Vinegar Company, Inc. to Kerry Holding Co. (“Kerry”). The company received as net consideration from Kerry $353.7 million in cash and restricted cash, including net working capital adjustments. The divested assets were reported within the company’s food and ingredients segment. The company recorded a pre-tax gain on the sale of Fleischmann’s Vinegar of $58.2 million, including offsetting related transaction costs of $7.4 million within the corporate segment.

The assets and liabilities of Fleischmann’s Vinegar at closing on November 27, 2018 were as follows (in thousands):

The amounts above reflect the preliminary working capital true-up payments made to and received from Kerry.

On November 15, 2018, the company completed the sale of three ethanol plants located in Bluffton, Indiana, Lakota, Iowa, and Riga, Michigan, and certain related assets from subsidiaries, to Valero Renewable Fuels Company, LLC (“Valero”) for the sale price of $323.2 million, including net working capital and other adjustments. Correspondingly, the partnership’s storage assets located adjacent to such plants were sold to Green Plains Inc. for $120.9 million. The company received as consideration from Valero approximately $323.2 million, while the partnership received as consideration from the company 8.7 million partnership units and a portion of the general partner interest equating to 0.2 million equivalent limited partner units to maintain the general partner’s 2% interest. In addition, the partnership also received additional consideration of approximately $2.7 million from Valero for the assignment of certain railcar operating leases. The divested assets were reported within the company’s ethanol production, agribusiness and energy services and partnership segments. The company recorded a pre-tax gain on the sale of the three ethanol plants of $92.2 million, of which $89.5 million was recorded within the corporate segment and $2.7 million was recorded within the partnership segment, including offsetting transaction costs of $4.2 million, of which $3.7 million were recorded within the corporate segment and $0.5 million were recorded within the partnership segment.

The assets and liabilities of the Bluffton, Lakota and Riga ethanol plants are as follows (in thousands):

The amounts above reflect the final working capital true-up payments by Valero of $3.4 million received during the first quarter of 2019.

The following methods, assumptions and valuation techniques were used in estimating the fair value of the company’s financial instruments:

Level 1 – unadjusted quoted prices in active markets for identical assets or liabilities the company can access at the measurement date.

Level 2 – directly or indirectly observable inputs such as quoted prices for similar assets or liabilities in active markets other than quoted prices included within Level 1, quoted prices for identical or similar assets in markets that are not active, and other inputs that are observable or can be substantially corroborated by observable market data through correlation or other means. Grain inventories held for sale in the agribusiness and energy services segment are valued at nearby futures values, plus or minus nearby basis.

Level 3 – unobservable inputs that are supported by little or no market activity and comprise a significant component of the fair value of the assets or liabilities. The company currently does not have any recurring Level 3 financial instruments.

Derivative contracts include exchange-traded commodity futures and options contracts and forward commodity purchase and sale contracts. Exchange-traded futures and options contracts are valued based on unadjusted quoted prices in active markets and are classified in Level 1. The majority of the company’s exchange-traded futures and options contracts are cash-settled on a daily basis.

There have been no changes in valuation techniques and inputs used in measuring fair value. The company’s assets and liabilities by level are as follows (in thousands):


	Fair Value Measurements at June 30, 2018						Fair Value Measurements at March 31, 2019
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs				Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs
	(Level 1)		(Level 2)		Total		(Level 1)		(Level 2)		Total
Assets:
Cash and cash equivalents	$	235,133	$	-	$	235,133	$	214,068	$	-	$	214,068
Restricted cash		15,863		-		15,863		59,174		-		59,174
Inventories carried at market		-		58,710		58,710		-		65,340		65,340
Unrealized gains on derivatives		-		18,969		18,969		-		7,428		7,428
Other assets		114		-		114		113		-		113
Total assets measured at fair value	$	251,110	$	77,679	$	328,789	$	273,355	$	72,768	$	346,123

Liabilities:
Accounts payable (1)	$	-	$	9,961	$	9,961	$	-	$	20,619	$	20,619
Unrealized losses on derivatives		-		22,868		22,868		-		8,117		8,117
Other		-		84		84
Total liabilities measured at fair value	$	-	$	32,913	$	32,913	$	-	$	28,736	$	28,736


	Fair Value Measurements at December 31, 2017						Fair Value Measurements at December 31, 2018
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs				Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs
	(Level 1)		(Level 2)		Total		(Level 1)		(Level 2)		Total
Assets:
Cash and cash equivalents	$	266,651	$	-	$	266,651	$	251,683	$	-	$	251,683
Restricted cash		45,709		-		45,709		66,512		-		66,512
Inventories carried at market		-		26,834		26,834		-		111,960		111,960
Unrealized gains on derivatives		-		12,045		12,045		-		9,976		9,976
Other assets		115		-		115		114		1		115
Total assets measured at fair value	$	312,475	$	38,879	$	351,354	$	318,309	$	121,937	$	440,246

Liabilities:
Accounts payable (1)	$	-	$	37,401	$	37,401	$	-	$	16,573	$	16,573
Unrealized losses on derivatives		-		12,884		12,884		-		7,852		7,852
Other liabilities		-		92		92		-		2		2
Total liabilities measured at fair value	$	-	$	50,377	$	50,377	$	-	$	24,427	$	24,427

The company believes the fair value of its debt approximated book value, which was ~~$1.3 billion~~$883.3 million at ~~June 30, 2018~~March 31, 2019 and ~~$1.4 billion~~$891.2 million at December 31, ~~2017.~~2018. The company estimated the fair value of its outstanding debt using Level 2 inputs. The company believes the fair ~~value~~values of its accounts receivable approximated book value, which was ~~$137.1~~$66.6 million and ~~$151.1~~$100.4 million at ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, respectively.

Although the company currently does not have any recurring Level 3 financial measurements, the fair values of tangible assets and goodwill acquired and the equity component of convertible debt ~~issued~~ represent Level 3 measurements which were derived using a combination of the income approach, market approach and cost approach for the specific assets or liabilities being valued.

The company reports the financial and operating performance for the following four operating segments: (1) ethanol production, which includes the production of ethanol, ~~and~~ distillers grains and ~~recovery of~~ corn oil, (2) agribusiness and energy services, which includes grain handling and storage, commodity marketing and merchant trading for company-produced and third-party ethanol, distillers grains, corn oil ~~natural gas~~ and other commodities, (3) food and ingredients, which includes cattle feeding ~~vinegar production~~ and food-grade corn oil operations and included vinegar production until the sale of Fleischmann’s Vinegar during the fourth quarter of 2018 and (4) partnership, which includes fuel storage and transportation services.

During the normal course of business, the operating segments conduct business with each other. For example, the agribusiness and energy services segment procures grain and natural gas and sells products, including ethanol, distillers grains and corn oil for the ethanol production segment. The partnership segment provides fuel storage and transportation services for the ethanol production segment. These intersegment activities are treated like third-party transactions with origination, marketing and storage fees charged at estimated market values. Consequently, these transactions affect segment performance; however, they do not impact the company’s consolidated results since the revenues and corresponding costs are eliminated.

The following tables set forth certain financial data for the company’s operating segments (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
	2018		2017		2018		2017		2019		2018
Revenues:
Ethanol production:
Revenues from external customers	$	589,256	$	617,297	$	1,153,019	$	1,237,176	$	268,716	$	563,763
Intersegment revenues		4,219		1,549		6,172		3,045		2,117		1,953
Total segment revenues		593,475		618,846		1,159,191		1,240,221		270,833		565,716
Agribusiness and energy services:
Revenues from external customers		170,074		150,755		371,861		319,066		162,795		201,787
Intersegment revenues		14,128		9,781		25,557		19,273		6,413		11,429
Total segment revenues		184,202		160,536		397,418		338,339		169,208		213,216
Food and ingredients:
Revenues from external customers		225,887		116,660		503,996		214,682		208,499		278,109
Intersegment revenues		38		37		80		75		38		42
Total segment revenues		225,925		116,697		504,076		214,757		208,537		278,151
Partnership:
Revenues from external customers		1,620		1,551		3,248		3,023		2,305		1,628
Intersegment revenues		24,220		23,514		48,477		49,271		18,782		24,257
Total segment revenues		25,840		25,065		51,725		52,294		21,087		25,885
Revenues including intersegment activity		1,029,442		921,144		2,112,410		1,845,611		669,665		1,082,968
Intersegment eliminations		(42,605)		(34,881)		(80,286)		(71,664)		(27,350)		(37,681)
Revenues as reported	$	986,837	$	886,263	$	2,032,124	$	1,773,947	$	642,315	$	1,045,287

Refer to Note 2 - Revenue, for further disaggregation of revenue by operating segment.


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
	2018		2017		2018		2017		2019		2018
Operating income (loss):
Ethanol production	$	(17,214)	$	(22,459)	$	(44,743)	$	(29,057)	$	(44,192)	$	(27,529)
Agribusiness and energy services		12,166		3,083		19,230		9,452		5,304		7,064
Food and ingredients		12,981		10,714		25,566		20,340		(1,432)		12,585
Partnership		16,129		14,798		31,489		31,417		12,551		15,360
Intersegment eliminations		144		(80)		212		(155)		(3,677)		68
Corporate activities		(12,441)		(9,842)		(23,914)		(18,391)		(8,559)		(11,473)
	$	11,765	$	(3,786)	$	7,840	$	13,606	$	(40,005)	$	(3,925)


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
	2018		2017		2018		2017		2019		2018
Depreciation and amortization:
EBITDA:
Ethanol production	$	20,559	$	20,142	$	40,995	$	40,484	$	(28,503)	$	(7,095)
Agribusiness and energy services		618		659		1,248		1,319		5,862		7,702
Food and ingredients		3,444		3,240		6,848		6,120		257		15,997
Partnership		1,105		1,247		2,286		2,501		13,771		16,623
Intersegment eliminations										(3,677)		68
Corporate activities		1,097		900		1,920		1,847		(6,379)		(10,175)
	$	26,823	$	26,188	$	53,297	$	52,271	$	(18,669)	$	23,120

The following table reconciles net ~~income (loss)~~loss to EBITDA (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
	2018		2017		2018		2017		2019		2018
Net income (loss)	$	3,751	$	(11,796)	$	(15,704)	$	(10,145)
Net loss									$	(37,871)	$	(19,455)
Interest expense		22,021		19,430		44,149		37,926		14,427		22,128
Income tax benefit		(10,753)		(9,749)		(16,780)		(12,130)		(14,460)		(6,027)
Depreciation and amortization(1)		26,823		26,188		53,297		52,271		19,235		26,474
EBITDA	$	41,842	$	24,073	$	64,962	$	67,922	$	(18,669)	$	23,120

The following table sets forth total assets by operating segment (in thousands):


	June 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Total assets (1):
Ethanol production	$	1,090,323	$	1,144,459	$	876,306	$	872,845
Agribusiness and energy services		438,139		554,981		325,226		399,633
Food and ingredients		704,624		725,232		550,700		552,459
Partnership		73,255		74,935		102,805		67,297
Corporate assets		290,902		295,217		306,617		334,236
Intersegment eliminations		(11,470)		(10,174)		(14,074)		(10,038)
	$	2,585,773	$	2,784,650	$	2,147,580	$	2,216,432

Inventories are carried at the lower of cost or net realizable value, except grain held for sale and fair-value hedged inventories. Commodities held for sale are reported at market value. As of March 31, 2019, the company recorded a $3.3 million lower of cost or market inventory adjustment reflected in cost of goods sold within the ethanol production segment.


	June 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Finished goods	$	143,665	$	146,269	$	111,900	$	99,765
Commodities held for sale		42,639		65,693		27,222		62,980
Raw materials		104,119		144,520		98,250		119,014
Work-in-process		298,738		320,664		439,917		423,840
Supplies and parts		36,141		34,732		29,736		29,284
	$	625,302	$	711,878	$	707,025	$	734,883

The company did not have any changes in the carrying amount of goodwill, which was $182.9 million at June 30, 2018, and December 31, 2017. Goodwill of $30.3 million, $142.0 million and $10.6 million are attributable to the ethanol production segment, food and ingredients segment and the partnership segment, respectively.

As of June 30, 2018, the company’s customer relationship intangible asset recognized in connection with the Fleischmann Vinegar’s acquisition is $70.7 million, net of $9.3 million of accumulated amortization, and has a remaining 13.3-year weighted-average amortization period. As of June 30, 2018, the company also has an indefinite-lived trade name intangible asset of $10.5 million. The company recognized $1.4 million and $2.7 million of amortization expense associated with the amortizing customer relationship intangible asset during the three and six months ended June 30, 2018, respectively, and $1.4 million and $2.8 million during the three and six months ended June 30, 2017, respectively, and expects estimated amortization expense for the next five years of $5.3 million per annum. The company’s intangible assets are recorded within other assets on the consolidated balance sheets.

At ~~June 30, 2018,~~March 31, 2019, the company’s consolidated balance sheet reflected unrealized losses of ~~$4.2~~$12.5 million, net of tax, in accumulated other comprehensive income. The company expects these losses will be reclassified toas operating income over the next 12 months as a result of hedged transactions that are forecasted to occur. The amount realized in operating income will differ as commodity prices change.

The fair values of the company’s derivative financial instruments and the line items on the consolidated balance sheets where they are reported are as follows (in thousands):

~~(1)~~ ~~At June 30, 2018, derivative~~ ~~financial instruments, as reflected on the balance sheet, include net unrealized gains on exchange traded futures and options contracts of $11.7 million, which included $1.1 million of net~~ ~~unrealized gains on~~ derivative financial instruments designated as cash flow hedging instruments. At December 31, 2017, derivative financial instruments, as reflected on the balance sheet, includes net unrealized gains on exchange traded futures and options contracts of $8.5 million, which included $0.3 million of net ~~unrealized gains on~~ ~~derivative financial instruments designated as cash flow hedging instruments.~~

Refer to Note 4 - Fair Value Disclosures, which contains fair value information related to derivative financial instruments.

Effect of Derivative Instruments on Consolidated Balance Sheets, Consolidated Statements of Operations and Consolidated Statements of Comprehensive Income

The gains or losses recognized in income and other comprehensive income related to the company’s derivative financial instruments and the line items on the consolidated financial statements where they are reported are as follows (in thousands):


		Amount of Gain or (Loss)										Amount of Gain or (Loss)
		Recognized in Income on Derivatives									Location of Gain or	Recognized in Income on Derivatives
Derivatives Not Designated	Location of Gain or (Loss) Recognized in	Three Months Ended June 30,				Six Months Ended June 30,					(Loss) Recognized in	Three Months Ended March 31,
as Hedging Instruments	Income on Derivatives	2018		2017		2018		2017			Income on Derivatives	2019		2018
Commodity contracts	Revenues	$	7,027	$	(5,215)	$	7,963	$	(10,263)		Revenues	$	(15,321)	$	936
Commodity contracts	Costs of goods sold		7,121		3,284		123		15,220		Costs of goods sold		166		(6,998)
		$	14,148	$	(1,931)	$	8,086	$	4,957
Net loss recognized in loss before tax										Net loss recognized in loss before tax		$	(15,155)	$	(6,062)

~~As of June 30, 2018, the~~The following amounts were recorded on the consolidated balance sheets related to cumulative basis adjustments for the fair value hedged items (in thousands):


					March 31, 2019				December 31, 2018
Line Item in the Consolidated Balance Sheet in Which the Hedged Item is Included	Carrying Amount of the Hedged Assets		Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets		Carrying Amount of the Hedged Assets		Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets		Carrying Amount of the Hedged Assets		Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets
Inventories	$	46,561	$	3,714	$	45,139	$	378	$	89,188	$	2,430

~~As of December 31, 2017, no amounts were recorded on the consolidated balance sheets related to cumulative basis adjustments for the fair value hedged items.~~

Effect of Cash Flow and Fair Value Hedge Accounting on the ~~Statement~~Statements of ~~Financial Performance~~Operations

The effect of cash flow and fair value hedges and the line items on the consolidated statements of operations where they are reported are as follows (in thousands):

Location and Amount of Gain or (Loss) Recognized in

Income on Cash Flow and Fair Value Hedging Relationships

for the Three Months Ended June 30,

2018

2017

Revenue

Cost of
Goods Sold

Revenue

Cost of
Goods Sold
Gain (loss) on cash flow hedging relationships:

Commodity contracts:

Amount of gain (loss) reclassified from accumulated other comprehensive income into income
$
(313)

$
1,079

$
2,825

$
(648)

Gain (loss) on fair value hedging relationships:

Commodity contracts:

Hedged item

-

1,103

(31)

(2,526)
Derivatives designated as hedging instruments

-

(446)

(578)

2,406

Total amounts of income and expense line items presented in the statement of operations in which the effects of cash flow or fair value hedges are recorded
$
(313)

$
1,736

$
2,216

$
(768)

Location and Amount of Gain or (Loss) Recognized in

Income on Cash Flow and Fair Value Hedging Relationships

for the Six Months Ended June 30,

2018

2017

Revenue

Cost of
Goods Sold

Revenue

Cost of
Goods Sold
Gain on cash flow hedging relationships:

Commodity contracts:

Amount of gain reclassified from accumulated other comprehensive income into income
$
1,448

$
101

$
6,977

$
182

Gain (loss) on fair value hedging relationships:

Commodity contracts:

Hedged item

-

10,496

1,390

(4,454)
Derivatives designated as hedging instruments

-

(8,878)

(1,673)

5,445

Total amounts of income and expense line items presented in the statement of operations in which the effects of cash flow or fair value hedges are recorded
$
1,448

$
1,719

$
6,694

$
1,173


	Location and Amount of Gain or (Loss) Recognized in
	Income on Cash Flow and Fair Value Hedging Relationships
	for the Three Months Ended March 31,
		2019				2018
		Revenue		Cost of Goods Sold		Revenue		Cost of Goods Sold
Gain (loss) on cash flow hedging relationships:

Commodity contracts:
Amount of gain (loss) reclassified from accumulated other comprehensive income into income	$	(13,359)	$	(157)	$	1,761	$	(978)

Gain (loss) on fair value hedging relationships:

Commodity contracts:
Hedged item		-		(1,553)		-		9,393
Derivatives designated as hedging instruments		-		3,859		-		(8,432)

Total amounts of income and expense line items presented in the statement of operations in which the effects of cash flow or fair value hedges are recorded	$	(13,359)	$	2,149	$	1,761	$	(17)

There were no gains or losses from discontinuing cash flow or fair value hedge treatment during the three ~~and six~~ months ended ~~June 30, 2018~~March 31, 2019 and ~~2017.~~ 2018.

The open commodity derivative positions as of ~~June 30, 2018,~~March 31, 2019, are as follows (in thousands):

June 30, 2018

Exchange Traded

Non-Exchange Traded

Exchange Traded (1)

Non-Exchange Traded (2)

Derivative
Instruments

Net Long &
(Short) (1)

Long (2)

(Short) (2)

Unit of
Measure

Commodity

Net Long &
(Short)

Long

(Short)

Unit of
Measure

Commodity

Futures

(52,345)

Bushels

Corn, Soybeans and Wheat

Futures

500

(3)

Bushels

Corn

Futures

(4,750)

(4)

Bushels

Corn

Futures

(36,313)

Gallons

Ethanol

Futures

(18,270)

(3)

Gallons

Ethanol

Futures

10,050

MmBTU

Natural Gas

(26,290)

Bushels

Corn and Soybeans

Futures

(9,765)

(4)

MmBTU

Natural Gas

(11,140)

(4)

Bushels

Corn

Futures

(18,390)

Pounds

Livestock

(43,031)

Gallons

Ethanol

Futures

(292,280)

(3)

Pounds

Cattle

(800)

MmBTU

Natural Gas

Futures

(11)

Barrels

Crude Oil

(2,778)

(4)

MmBTU

Natural Gas

Futures

(43)

(4)

Barrels

Crude Oil

20,400

Pounds

Cattle

Futures

2,814

(3)

Gallons

Natural Gasoline

(354,800)

(3)

Pounds

Cattle

Options

5,304

Bushels

Corn, Soybeans and Wheat

20,567

Bushels

Corn and Soybeans

Options

9,467

Gallons

Ethanol

19,443

Gallons

Ethanol

Options

(1,898)

MmBTU

Natural Gas

579

MmBTU

Natural Gas

Options

(3,732)

Pounds

Livestock

(60,702)

Pounds

Cattle

Options

Barrels

Crude Oil

Forwards

50,708

(555)

Bushels

Corn and Soybeans

26,158

(1,789)

Bushels

Corn and Soybeans

Forwards

32,986

(289,259)

Gallons

Ethanol

21,851

(315,435)

Gallons

Ethanol

Forwards

368

(638)

Tons

DDG

(345)

Tons

DDG

Forwards

23,463

(122,826)

Pounds

Corn Oil

19,502

(60,570)

Pounds

Corn Oil

Forwards

17,086

(1,931)

MmBTU

Natural Gas

16,480

(5,230)

MmBTU

Natural Gas

Forwards

(44)

Barrels

Crude Oil

Energy trading contracts that do not involve physical delivery are presented net in revenues on the consolidated statements of operations. Included in revenues are net gains on energy trading contracts of ~~$4.1~~$8.5 million and ~~$10.8~~$6.7 million for the three ~~and six~~ months ended ~~June 30,~~March 31, 2019 and 2018, ~~respectively, and net gains of $6.8 million and $15.1 million for the three and six months ended June 30, 2017,~~ respectively.


	June 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Corporate:
$500.0 million term loan	$	496,250	$	498,750
$120.0 million convertible notes due 2018		62,953		61,442
$170.0 million convertible notes due 2022		139,654		136,739
3.25% convertible notes due 2019					$	54,551	$	53,457
4.125% convertible notes due 2022						144,288		142,708
Green Plains Partners:
$235.0 million revolving credit facility		128,900		126,900
$200.0 million revolving credit facility						135,000		134,000
Other		27,129		27,744		25,818		26,022
Total face value of long-term debt		854,886		851,575		359,657		356,187
Unamortized debt issuance costs		(17,023)		(16,256)		(2,884)		(3,190)
Less: current portion of long-term debt		(69,752)		(67,923)		(55,740)		(54,807)
Total long-term debt	$	768,111	$	767,396	$	301,033	$	298,190

~~On August 29, 2017,~~During the three months ended September 30, 2018, the company entered into a $500.0 million term loan agreement, which matures on August 29, 2023, to refinance approximately $405.0 million of total debt outstanding issued by Green Plains Processing and Fleischmann’s Vinegar, pay associated fees and expenses and for general corporate purposes. The term loan is guaranteed by the company and substantially all of its subsidiaries, except for Green Plains Partners andexchange agreements with certain ~~other entities, and secured by substantially all~~beneficial owners of the assets of the company, including 17 ethanol production facilities, vinegar production facilities and a second priority lien on the assets secured under the revolving credit facilities at Green Plains Trade, Green Plains Cattle and Green Plains Grain.

The credit agreement contains certain customary representations and warranties, affirmative covenants, negative covenants, financial covenants and events of default. The negative covenants include restrictions on the ability to incur additional indebtedness, acquire and sell assets, create liens, make investments, pay distributions and enter into transactions with affiliates. At the end of each fiscal quarter, the covenants of the credit agreement require the company to maintain a maximum term debt to total term capitalization of 55% and a minimum interest coverage ratio of 1.25 to 1.00, as defined in the credit agreement. Beginning in 2018, the credit facility also has a provision requiring the company to make special annual payments of 50% or 75% of its available free cash flow, subject to certain limitations. Voluntary term loan prepayments are subject to prepayment fees of 1.0% if prepaid before the eighteen-month anniversary of the credit agreement. Scheduled principal payments are $1.25 million each quarter until maturity. The term loan bears interest at a floating rate of a base rate plus a margin of 4.50% or LIBOR plus a margin of 5.50%.

~~In September 2013, the company issued $120.0 million of~~company’s outstanding 3.25% convertible senior notes due 2018 or(the “Old Notes”), pursuant to which such investors exchanged $56.8 million in aggregate principal amount of the ~~3.25% notes.~~ Old Notes for $56.8 million in aggregate principal amount of notes due 2019 (the “New Notes”).

The ~~3.25% notes~~New Notes are the senior, unsecured obligations of the company ~~with~~and bear interest at a rate of 3.25% per annum, payable semi-annually in arrears on April 1 and October 1 of each ~~year. The company may settle~~year, beginning on October 1, 2018. Interest on the ~~3.25% notes in cash, common stock or a combination of cash~~New Notes accrued from, and ~~common stock. Prior to~~including, April 1, ~~2018,~~2018. The New Notes will mature on October 1, 2019, unless earlier converted. Holders of New Notes may convert their New Notes, at their option, in integral multiples of $1,000 principal amount, at any time prior to the ~~3.25% notes were not convertible unless certain conditions are satisfied.~~close of business on the scheduled trading day immediately preceding the maturity date of the New Notes. The conversion rate isfor the New Notes was initially 50.6481 shares of the company’s common stock per $1,000 principal amount of New Notes, which corresponded to an initial conversion price of approximately $19.74 per share of the company’s common stock. The conversion rate will be subject to adjustment upon the occurrence of certain ~~events, including when~~events. Upon conversion of the ~~quarterly cash dividend exceeds $0.04 per share. The~~

convertible notes, the company will settle its conversion obligation by delivering shares of its common stock at the applicable conversion rate, was recently adjusted as of June 30, 2018 to 50.6481 shares of common stock per $1,000 of principal, which is equal to a conversion price of approximately $19.74 per share. For all conversions of notes which occur on or after April 1, 2018, the company has elected to convert for whole shares of common stock with any fractional share being settledtogether with cash in ~~lieu.~~

~~During fiscal year 2017, approximately $56.3 million in aggregate principal~~lieu of the 3.25% notes were exchanged for cash and 2,783,725 shares of the company’s common stock. During the three months ended June 30, 2018, an additional 50 shares of the company’s common stock were exchanged for approximately $1 thousand in aggregate principal amount of the 3.25% notes. Following the closing of these agreements, $63.7 million aggregate principal of the 3.25% notes remain outstanding.any fractional share.

The company ~~may~~does not have the right to redeem ~~all~~the New Notes at its election before their maturity. The New Notes are subject to customary provisions providing for the acceleration of their principal and interest upon the ~~3.25% notes at any time on or after October 1, 2016, if~~occurrence of events that constitute an “event of default.” Events of default include, among other events, certain payment defaults, defaults in settling conversions, certain defaults under the company’s ~~common stock equals or exceeds 140% of the applicable conversion price for a specified time period ending on the trading day immediately prior to the date~~other indebtedness and certain insolvency-related events. Upon maturity, the company ~~delivers notice of~~will settle the ~~redemption. The redemption price will equal 100% of the principal plus any accrued and unpaid interest. Holders of the 3.25% notes have the option to require the company to repurchase the 3.25% notes~~New Notes in cash at a price equal to 100% of the principal plus accrued and unpaid interest when there is a fundamental change, such as change in control. If an event of default occurs, it could result in the 3.25% notes being declared due and payable. cash.

In August 2016, the company issued $170.0 million of 4.125% convertible senior notes due in 2022, or the 4.125% notes. The 4.125% notes are senior, unsecured obligations of the company, with interest payable on March 1 and September 1 of each year. The company may settle the 4.125% notes in cash, common stock or a combination of cash and common stock.

Prior to March 1, 2022, the 4.125% notes are not convertible unless certain conditions are satisfied. The conversion rate is subject to adjustment upon the occurrence of certain events, including when the quarterly cash dividend exceeds $0.12 per share and upon redemption of the 4.125% notes. The initial conversion rate is 35.7143 shares of common stock per $1,000 of principal, which is equal to a conversion price of approximately $28.00 per share.

The company may redeem all, but not less than all, of the 4.125% notes at any time on or after September 1, 2020, if the company’s common stock equals or exceeds 140% of the applicable conversion price for a specified time period ending on the trading day immediately prior to the date the company delivers notice of the redemption. The redemption price will equal 100% of the principal plus any accrued and unpaid interest. Holders of the 4.125% notes have the option to require the company to repurchase the 4.125% notes in cash at a price equal to 100% of the principal plus accrued and unpaid interest when there is a fundamental change, such as change in control. If an event of default occurs, it could result in the 4.125% notes being declared due and payable.

We have small equipment financing loans, ~~capital~~finance leases on equipment or facilities, and other forms of debt financing.

Green Plains Grain has a $125.0 million senior secured asset-based revolving credit facility, to finance working capital up to the maximum commitment based on eligible collateral equal to the sum of percentages of eligible cash, receivables and inventories, less miscellaneous adjustments. The credit facility matures on July 26, 2019. Advances are subject to an interest rate equal to LIBOR plus 3.00% or the lenders’ base rate plus 2.00%. The credit facility also includes an accordion feature that enables the facility to be increased by up to $75.0 million with agent approval. The credit facility can also be increased by up to $50.0 million for seasonal borrowings. Total commitments outstanding cannot exceed $250.0 million. The total unused portion of the $125.0 million revolving credit facility is also subject to a commitment fee ranging from 0.375% to 0.50% per annum depending on utilization.

Lenders receive a first priority lien on certain cash, inventory, accounts receivable and other assets owned by Green Plains ~~Grain and a second priority lien on substantially all of the assets of the company, including 17 ethanol production facilities and vinegar production facilities as security on the credit facility.~~Grain. The terms impose affirmative and negative covenants for Green Plains Grain, including maintaining minimum working capital of ~~$22.0~~$22.4 million and tangible net worth of ~~$27.0~~$27.7 million. Capital expenditures are limited to $8.0 million per year under the credit facility, plus equity contributions from the company and unused amounts of up to $8.0 million from the previous year. In addition, the credit facility requires the company to maintain a minimum fixed charge coverage ratio of 1.25 to 1.00 and a maximum annual leverage ratio of

6.00 to 1.00 at the end of each quarter. The fixed charge coverage ratio and long-term capitalization ratio apply only if the company has long-term indebtedness on the date of calculation. As of ~~June 30, 2018,~~March 31, 2019, Green Plains Grain had no long-term indebtedness. The credit facility also contains restrictions on distributions related to capital stock, with exceptions for distributions up to 50% of net profit before tax, subject to certain conditions.

Green Plains Trade has a $300.0 million senior secured asset-based revolving credit facility to finance working capital for marketing and distribution activities based on eligible collateral equal to the sum of percentages of eligible receivables and inventories, less miscellaneous adjustments. The credit facility matures on July 28, 2022 and consists of a $285 million credit facility and a $15 million first-in-last-out (FILO) credit facility, and includes an accordion feature that enables the credit facility to be increased by up to $70.0 million with agent approval. Advances are subject to variable interest rates equal to daily LIBOR plus 2.25% on the credit facility and daily LIBOR plus 3.25% on the FILO credit facility. The total unused portion of the revolving credit facility is also subject to a commitment fee of 0.375% per annum.

The terms impose affirmative and negative covenants for Green Plains Trade, including maintaining a minimum fixed charge coverage ratio of 1.15 to 1.00. Capital expenditures are limited to $1.5 million per year under the credit facility. The credit facility also restricts distributions related to capital stock, with an exception for distributions up to 50% of net income if, on a pro forma basis, (a) availability has been greater than $10.0 million for the last 30 days and (b) the borrower would be in compliance with the fixed charge coverage ratio on the distribution date.

Green Plains Grain has entered into short-term inventory financing agreements with a financial institution. The company has accounted for the agreements as short-term notes, rather than sales, and has elected the fair value option to offset fluctuations in market prices of the inventory. The company had no short-term notes payable related to these inventory financing agreements as of March 31, 2019.

Green Plains Cattle has a ~~$425.0~~$500.0 million senior secured asset-based revolving credit facility, which matures on April 30, 2020, to finance working capital for the cattle feeding operations up to the maximum commitment based on eligible collateral equal to the sum of percentages of eligible receivables, inventories and other current assets, less miscellaneous adjustments. Advances, as amended, are subject to variable interest rates equal to LIBOR plus 2.00% to 3.00%, or the base rate plus 1.00% to 2.00%, depending upon the preceding three months’ excess borrowing availability. The amended credit facility also includes an accordion feature that enables the credit facility to be increased by up to $75.0 million with agent approval. The unused portion of the credit facility is also subject to a commitment fee of 0.20% to 0.30% per annum, depending on the preceding three months’ excess borrowing availability.

Lenders receive a first priority lien on certain cash, inventory, accounts receivable, property and equipment and other assets owned by Green Plains Cattle~~and a second priority lien on substantially all of the assets of the company, including 17 ethanol production facilities and vinegar production facilities~~ ~~as security on the credit facility~~. The amended terms impose affirmative and negative covenants, including maintaining a minimum working capital of 15% of the commitment amount, minimum tangible net worth of 20% of the commitment amount, plus 50% of net profit from the previous year, and a maximum total debt to tangible net worth ratio of 3.50 to 1.00. Capital expenditures are limited to $10.0 million per year under the credit facility, plus $10.0 million per year if funded by a contribution from parent, plus any unused amounts from the previous year.

Green Plains Partners, through a wholly owned subsidiary, has a ~~$235.0~~$200.0 million revolving credit facility, ~~as amended,~~ which matures on July 1, 2020, to fund working capital, acquisitions, distributions, capital expenditures and other general partnership purposes. On February 20, 2018, the partnership accessed an additional $40.0 million to increase the revolving credit facility from $195.0 million to $235.0 million. The credit facility can be increased by an additional $20.0 million without the consent of the lenders. Advances under the credit facility are subject to a floating interest rate based on the preceding fiscal quarter’s consolidated leverage ratio at a base rate plus 1.25% to 2.00% or LIBOR plus 2.25% to 3.00%. The credit facility can be increased by an additional $20.0 million without the consent of the lenders. The unused portion of the credit facility is also subject to a commitment fee of 0.35% to 0.50%, depending on the preceding fiscal quarter’s consolidated leverage ratio.

The partnership’s obligations under the credit facility are secured by a first priority lien on (i) the capital stock of the partnership’s present and future subsidiaries, (ii) all of the partnership’s present and future personal property, such as investment property, general intangibles and contract rights, including rights under agreements with Green Plains Trade, and (iii) all proceeds and products of the equity interests of the partnership’s present and future subsidiaries and its personal property. The terms impose affirmative and negative covenants including restricting the partnership’s ability to incur

additional debt, acquire and sell assets, create liens, invest capital, pay distributions and materially amend the partnership’s commercial agreements with Green Plains Trade. The credit facility also requires the partnership to maintain a maximum consolidated net leverage ratio of ~~3.50 to 1.00,~~no more than 3.50x and a minimum consolidated interest coverage ratio of ~~2.75 to 1.00,~~no less than 2.75x, each of which is calculated on a pro forma basis with respect to acquisitions and divestitures occurring during the applicable period. The consolidated leverage ratio is calculated by dividing total funded indebtedness minus the lesser of cash in excess of $5.0 million or $30.0 million by the sum of the four preceding fiscal quarters’ consolidated EBITDA. The consolidated interest coverage ratio is calculated by dividing the sum of the four preceding fiscal quarters’ consolidated EBITDA by the sum of the four preceding fiscal quarters’ interest charges.

The company was in compliance with its debt covenants as of ~~June 30, 2018.~~March 31, 2019.

At ~~June 30, 2018,~~March 31, 2019, there were approximately ~~$166.0~~$143.6 million of net assets at the company’s subsidiaries that could not be transferred to the parent company in the form of dividends, loans or advances due to restrictions contained in the credit facilities of these subsidiaries.

The company has an equity incentive plan that reserves 4,110,000 shares of common stock for issuance to its directors and employees. The plan provides for shares, including options to purchase shares of common stock, stock appreciation rights tied to the value of common stock, restricted stock, performance shares, and restricted and deferred stock unit awards, to be granted to eligible employees, non-employee directors and consultants. The company measures stock-based compensation at fair value on the grant date, with no adjustments for estimated forfeitures. The company records noncash compensation expense related to equity awards in its consolidated financial statements over the requisite period on a straight-line basis.

~~The activity related to the~~There remains 128,750 exercisable stock options ~~for the six months ended June 30, 2018,~~outstanding at March 31, 2019, with a weighted-average exercise price of $12.72. The average intrinsic value of outstanding stock options is ~~as follows:~~approximately $512 thousand with a weighted-average remaining contractual term of 0.7 years. At March 31, 2019, outstanding stock options include 118,750 exercisable options which are in-the-money at a weighted-average exercise price of $12.36.

Option awards allow employees to exercise options through cash payment for the shares of common stock or simultaneous broker-assisted transactions in which the employee authorizes the exercise and immediate sale of the shares in the open market. The company uses newly issued shares of common stock to satisfy its stock-based payment obligations.

The non-vested stock award and deferred stock unit activity for the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019, is as follows:


	Non-Vested Shares and Deferred Stock Units	Weighted- Average Grant- Date Fair Value		Weighted-Average Remaining Vesting Term (in years)	Non-Vested Shares and Deferred Stock Units	Weighted- Average Grant- Date Fair Value		Weighted-Average Remaining Vesting Term (in years)
Non-Vested at December 31, 2017	1,068,947	$	20.41
Non-Vested at December 31, 2018					882,288	$	19.12
Granted	660,509		18.20		427,548		15.27
Forfeited	(7,741)		20.17		(14,833)		18.65
Vested	(501,621)		20.62		(382,607)		18.13
Non-Vested at June 30, 2018	1,220,094	$	19.12	2.1
Non-Vested at March 31, 2019					912,396	$	17.75	2.2

On February 19, 2019 and March 19, 2018, the board of directors granted ~~153,030~~ performance shares to be awarded in the form of common stock to certain participants of the plan. Performance shares vest based on the ~~company's~~company’s average return on net assets (RONA) and the company’s total shareholder return (TSR), as further described herein. The performance shares vest on ~~March 19, 2021,~~the third anniversary of the grant, if the RONA and TSR criteria are achieved and the participant is then employed by the company. Fifty percent of the performance shares vest based upon the company’s ability to achieve a predetermined RONA during the three year performance period. The remaining fifty percent of the performance shares vest based upon the company’s total TSR during the three year performance period relative to that of the company’s performance peer group.

The performance shares were granted at a target of 100%, but each performance share will ~~increase~~reduce or ~~decrease~~increase depending on results for the performance period for the company's RONA, and the company’s TSR relative to that of the performance peer group. If the company’s RONA and TSR achieve the maximum goals, the maximum amount of shares available to be issued pursuant to ~~this award is 229,545~~the 2018 and 2019 awards are 526,088 performance shares or 150% of the ~~153,030~~350,725 performance shares ~~granted on March 19, 2018.~~which remain outstanding. The actual number of performance shares that will ultimately vest is based on the actual percentile ranking of the company’s RONA, and the company’s TSR compared to the peer performance at the end of the performance period.

The company used the Monte Carlo valuation model to estimate the fair value of the performance shares on the date of the grant. The weighted average assumptions used by the company in applying the Monte Carlo valuation model for performance share grants during the ~~six~~three months ended ~~June 30,~~March 31, 2019 and 2018 are illustrated in the following table:

The ~~Monte Carlo valuation also estimated~~non-vested performance share award activity for the ~~number of performance shares that would be awarded which~~three months ended March 31, 2019, is reflected in the fair value on the grant date. The Monte Carlo valuation assumed 97.39% of the performance shares granted on March 19, 2018 would be awarded on March 19, 2021 based upon the estimated company’s total shareholder return relative to peer performance. The company’s closing stock price was $18.15 on the date of the grant.as follows:

At June 30, 2018 unrecognized stock compensation expense of $2.5 million, excluding any potential forfeitures, will be recognized over the vesting period of these performance share awards on a straight-line basis.

Green Plains Partners adopted the LTIP, an incentive plan intended to promote the interests of the partnership, its general partner and affiliates by providing incentive compensation based on units to employees, consultants and directors to encourage superior performance. The incentive plan reserves 2,500,000 common units for issuance in the form of options, restricted units, phantom units, distributable equivalent rights, substitute awards, unit appreciation rights, unit awards, profits interest units or other unit-based awards. The partnership measures unit-based compensation related to equity awards in its consolidated financial statements over the requisite service period on a straight-line basis.

~~The~~There was no change in the number of non-vested unit-based awards ~~activity for~~during the ~~six~~three months ended ~~June 30, 2018, is as follows:~~March 31, 2019.

Compensation costs for stock-based and unit-based payment plans ~~during~~were approximately $2.5 million and $2.4 million for the three ~~and six~~ months ended ~~June 30,~~March 31, 2019 and 2018, ~~were approximately $3.0 million and $5.4 million, respectively, and $3.0 million and $5.5 million during the three and six months ended June 30, 2017,~~ respectively. At ~~June 30, 2018,~~March 31, 2019, there was ~~$17.0~~$18.8 million of unrecognized compensation costs from stock-based and unit-based compensation related to non-vested ~~awards, excluding performance shares noted above.~~awards. This compensation is expected to be recognized over a weighted-average period of approximately ~~2.1~~2.2 years. The potential tax benefit related to stock-based payment is approximately ~~24.4%~~25.0% of these expenses.

Basic earnings per share, or EPS, is calculated by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period.

The company computed diluted EPS by dividing net income on an if-converted basis, adjusted to add back net interest expense related to the convertible debt instruments, by the weighted average number of common shares outstanding during the period, adjusted to include the shares that would be issued if the convertible debt instruments were converted to common shares and the effect of any outstanding dilutive securities.


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
	2018		2017		2018		2017		2019		2018
Basic EPS:
Net loss attributable to Green Plains	$	(994)	$	(16,366)	$	(25,111)	$	(19,963)	$	(42,799)	$	(24,117)
Weighted average shares outstanding - basic		40,194		40,220		40,168		39,326		40,315		40,164
EPS - basic	$	(0.02)	$	(0.41)	$	(0.63)	$	(0.51)	$	(1.06)	$	(0.60)

Diluted EPS:
Net loss attributable to Green Plains	$	(994)	$	(16,366)	$	(25,111)	$	(19,963)
Weighted average shares outstanding - diluted		40,194		40,220		40,168		39,326
EPS - diluted	$	(0.02)	$	(0.41)	$	(0.63)	$	(0.51)	$	(1.06)	$	(0.60)

~~Excluded from the computation~~The anti-dilutive effect of ~~diluted EPS were 10.2 million and 10.1~~9.9 million shares related to the ~~effect of the~~company’s convertible debt and stock-based compensation awards have been excluded from diluted EPS for both the three months ended March 31, 2019 and 2018.

Components of stockholders’ equity for the three ~~and six~~ months ended ~~June 30,~~March 31, 2019 and 2018 ~~respectively, and 10.7 million shares and 11.3 million shares for the three and six months ended June 30, 2017,~~are as ~~the inclusion of these shares would have been antidilutive.~~follows (in thousands):



								Accum.					Total
				Additional				Other					Green Plains		Non-		Total
	Common Stock			Paid-in		Retained		Comp.		Treasury Stock			Stockholders'		Controlling		Stockholders'
	Shares	Amount		Capital		Earnings		Income		Shares	Amount		Equity		Interests		Equity

Balance, January 1, 2019	46,638	$	47	$	696,222	$	324,728	$	(16,016)	5,536	$	(58,162)	$	946,819	$	116,170	$	1,062,989
Net income (loss)	-		-		-		(42,799)		-	-		-		(42,799)		4,928		(37,871)
Cash dividends and distributions declared	-		-		-		(4,847)		-	-		-		(4,847)		(5,487)		(10,334)
Other comprehensive loss before reclassification	-		-		-		-		(6,883)	-		-		(6,883)		-		(6,883)
Amounts reclassified from accumulated other comprehensive loss	-		-		-		-		10,376	-		-		10,376		-		10,376
Other comprehensive income, net of tax	-		-		-		-		3,493	-		-		3,493		-		3,493
Proceeds from disgorgement of shareholders short-swing profits, net (1)	-		-		5,023		-		-	-		-		5,023		-		5,023
Stock-based compensation	284		-		428		-		-	-		-		428		79		507
Balance, March 31, 2019	46,922	$	47	$	701,673	$	277,082	$	(12,523)	5,536	$	(58,162)	$	908,117	$	115,690	$	1,023,807


								Accum.					Total
				Additional				Other					Green Plains		Non-		Total
	Common Stock			Paid-in		Retained		Comp.		Treasury Stock			Stockholders'		Controlling		Stockholders'
	Shares	Amount		Capital		Earnings		Income		Shares	Amount		Equity		Interests		Equity

Balance, December 31, 2017	46,410	$	46	$	685,019	$	325,411	$	(13,110)	5,326	$	(55,184)	$	942,182	$	116,954	$	1,059,136
Reclassification of certain tax effects from other comprehensive loss(2)	-		-		-		2,787		(2,787)	-		-		-		-		-
Balance, January 1, 2018	46,410		46		685,019		328,198		(15,897)	5,326		(55,184)		942,182		116,954		1,059,136
Net income (loss)	-		-		-		(24,117)		-	-		-		(24,117)		4,662		(19,455)
Cash dividends and distributions declared	-		-		-		(4,831)		-	-		-		(4,831)		(5,420)		(10,251)
Other comprehensive income before reclassification	-		-		-		-		17,150	-		-		17,150		-		17,150
Amounts reclassified from accumulated other comprehensive	-		-		-		-		(603)	-		-		(603)		-		(603)
Other comprehensive income net of tax	-		-		-		-		16,547	-		-		16,547		-		16,547
Stock-based compensation	284		1		(512)		-		-	-		-		(511)		60		(451)
Stock options exercised	5		-		50		-		-	-		-		50		-		50
Balance, March 31, 2018	46,699	$	47	$	684,557	$	299,250	$	650	5,326	$	(55,184)	$	929,320	$	116,256	$	1,045,576

Accum.

Total

Additional

Other

Green Plains
Non-
Total

Common Stock
Paid-in
Retained
Comp.
Treasury Stock
Stockholders'
Controlling
Stockholders'

Shares
Amount
Capital
Earnings
Income
Shares
Amount
Equity
Interests
Equity

Balance, December 31, 2017
46,410
$
46
$
685,019
$
325,411
$
(13,110) 5,326
$
(55,184)
$
942,182
$
116,954
$
1,059,136
Reclassification of certain
tax effects from other
comprehensive loss (Note 1)
-

-

-

2,787

(2,787)
-

-

-

-

-
Balance, January 1, 2018
46,410

46

685,019

328,198

(15,897) 5,326

(55,184)

942,182

116,954

1,059,136
Net income (loss)
-

-

-

(25,111)

-
-

-

(25,111)

9,407

(15,704)
Cash dividends and
distributions declared
-

-

-

(9,682)

-
-

-

(9,682)

(10,898)

(20,580)
Other comprehensive income
before reclassification
-

-

-

-

12,873
-

-

12,873

-

12,873
Amounts reclassified from
accumulated other
comprehensive income
-

-

-

-

(1,184)
-

-

(1,184)

-

(1,184)
Other comprehensive income,
net of tax
-

-

-

-

11,689
-

-

11,689

-

11,689
Exchange of 3.25% convertible
notes due 2018
-

-

-

-

-
-

1

1

-

1
Stock-based compensation
336

1

2,300

-

-
-

-

2,301

120

2,421
Stock options exercised
15

-

150

-

-
-

-

150

-

150
Balance, June 30, 2018
46,761
$
47
$
687,469
$
293,405
$
(4,208) 5,326
$
(55,183)
$
921,530
$
115,583
$
1,037,113

Amounts reclassified from accumulated other comprehensive income are as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,				Statements of Operations	Three Months Ended March 31,				Statements of Operations
	2018		2017		2018		2017		Classification	2019		2018		Classification
Gains on cash flow hedges:
Gains (losses) on cash flow hedges:
Commodity derivatives	$	(313)	$	2,825	$	1,448	$	6,977	Revenues	$	(13,359)	$	1,761	Revenues
Commodity derivatives		1,079		(648)		101		182	Cost of goods sold		(157)		(978)	Cost of goods sold
Total		766		2,177		1,549		7,159	Loss before income taxes		(13,516)		783	Loss before income taxes
Income tax benefit		185		824		365		2,672	Income tax benefit
Amounts reclassified from accumulated other comprehensive income	$	581	$	1,353	$	1,184	$	4,487
Income tax expense (benefit)											(3,140)		180	Income tax benefit
Amounts reclassified from accumulated other comprehensive income (loss)										$	(10,376)	$	603

The company records actual income tax expense or benefit during interim periods rather than on an annual effective tax rate method. Certain items are given discrete period treatment and the tax effect of those items are reported in full in the relevant interim period. Green Plains Partners is a limited partnership, which is treated as a flow-through entity for federal income tax purposes and is not subject to federal income taxes. As a result, the consolidated financial statements do not reflect income taxes on pre-tax income or loss attributable to the noncontrolling interest in the partnership.

The Tax Cuts and Jobs Act was enacted on December 22, 2017 and is effective January 1, 2018. The Act reduced the federal tax rate to 21%. Due to the significance of the legislation, the SEC issued Staff Accounting Bulletin 118 (SAB 118), which provides a measurement period to complete the accounting for certain elements of the tax reform. The company is still analyzing certain other provisions of the legislation and its impact to future income taxes, including interest expense limitation to 30% of adjusted taxable income, use of AMT credit carryforwards, limitation of net operating loss carryforwards to 80% of taxable income, and deducibility of officer compensation. Any subsequent adjustments will be recorded as tax expense during the period in which the analysis is complete.

The company recorded income tax benefit of ~~$10.8 million and $16.8~~$14.5 million for the three ~~and six~~ months ended ~~June 30, 2018, respectively,~~March 31, 2019, compared with ~~$9.7 million and $12.1~~$6.0 million for the same ~~periods~~period in ~~2017. The increase in income~~

~~tax benefit was due primarily to the~~ ~~company’s recognition of tax benefits of $8.3 million during the three months ended June 30, 2018 for federal and state R&D Credits relating to current and prior periods.~~

The amount of unrecognized tax benefits for uncertain tax positions was ~~$47.9~~$51.6 million as of ~~June 30, 2018,~~March 31, 2019 and ~~$26.0 million as of~~ December 31, ~~2017. Recognition of these benefits would have a favorable impact on the company’~~2018.~~s effective tax rate.~~

The ~~2018~~2019 effective tax rate can be affected by variances in the estimates and amounts of taxable income among the various states, entities and activity types, realization of tax credits, adjustments from resolution of tax matters under review, valuation allowances and the company’s assessment of its liability for uncertain tax positions.

On January 1, 2019, the company adopted the amended guidance in ASC 842, Leases, and all related amendments (“new lease standard”) and applied it to all leases using the optional transition method which requires the amended guidance to be applied at the date of adoption. The standard does not require the guidance to be applied to the earliest comparative period presented in the financial statements. As such, comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The new lease standard had a material impact on the company’s consolidated balance sheets, increasing total assets and total liabilities by $60.9 million upon adoption. It did not have an impact on the consolidated statement of operations for the three months ended March 31, 2019.

The impact on the consolidated balance sheet as of December 31, 2018 for the adoption of the new lease standard was as follows (in thousands):

The company’s leases do not specify an implicit interest rate. Therefore, the incremental borrowing rate was used based on information available at commencement date to determine the present value of future payments.

Under the new lease standard, companies may elect various practical expedients upon adoption. The company elected the package of practical expedients related to transition, which states that an entity need not reassess initial direct costs for existing leases, the lease classification for any expired or existing leases, and whether any expired or existing contracts are or contain leases.

The company elected to utilize a portfolio approach for lease classification, which allows for an entity to group together leases with similar characteristics provided that its application does not create a material difference when compared to accounting for the leases at a contract level. For railcar leases, the company elected to combine the railcars within each rider and account for each rider as an individual lease.

The company also elected the practical expedient for lessees to include both the lease and non-lease components as a single component and account for them as a lease. Certain of the company’s railcar agreements provide for maintenance costs to be the responsibility of the company as incurred or charged by the lessor. This maintenance cost is a non-lease component that the company elected to combine with the monthly rental payment and account for the total cost as operating lease expense. In addition, the company has a land lease that contains a non-lease component for the handling and unloading services the landlord provides. The company elected to combine the cost of services with the land lease cost and account for the total as operating lease expense.

A lessee may elect not to apply the recognition requirements in the new lease standard for short-term leases. Instead, the lease payments may be recognized into profit or loss on a straight-line basis over the lease term. The company has elected to use this short-term lease exemption, and therefore will not record a lease liability or right-of-use asset for leases with a term of one year or less. The company did not incur any short-term lease expense for the three months ended March 31, 2019.

The company leases certain facilities, ~~equipment and~~ parcels of land, ~~under agreements that expire at various dates. For accounting purposes, rent expense is based~~and equipment, with remaining terms ranging from less than one year to 17.6 years. The land and facility leases include renewal options. The renewal options are included in the lease term only for those sites or locations in which they are reasonably certain to be renewed. Equipment renewals are not considered reasonably certain to be exercised as they typically renew with significantly different underlying terms.

The company may sublease certain of its railcars to third parties on a short-term basis. The subleases are classified as operating leases, with the associated sublease income being recognized on a straight-line ~~amortization of the total payments required~~basis over the ~~lease.~~ lease term.

The company ~~incurred~~has additional railcar operating leases that will commence in the second quarter of 2019 to replace expiring leases, with estimated future minimum lease ~~expenses~~commitments of ~~$10.0 million and~~ ~~$20.7 million during the three and six months ended June 30, 2018, respectively, and $11.9~~approximately of $6.7 million and ~~$22.2 million during~~lease terms of five years. The undiscounted amounts are not included in the ~~three and six months ended June 30, 2017, respectively.~~tables above.

Supplemental cash flow information related to operating leases is as follows (in thousands):

Supplemental balance sheet information related to operating leases is as follows:

Aggregate minimum lease payments under ~~these~~the operating lease agreements for the remainder of ~~2018~~2019 and in future years are as follows (in thousands):


Year Ending December 31,	Amount		Amount
2018	$	17,128
2019		24,298	$	15,624
2020		17,939		17,049
2021		9,985		9,156
2022		6,240		7,130
2023				3,402
Thereafter		24,502		20,859
Total	$	100,092		73,220
Less: Present value discount				(13,582)
Lease liabilities			$	59,638

Aggregate minimum lease payments remaining under the operating lease agreements under ASC 840, Leases as of December 31, 2018 are as follows (in thousands):

As described in Note 2 – Revenue, the majority of the partnership’s segment revenue is generated though their storage and throughput services and rail transportation services agreements with Green Plains Trade and are accounted for as lease revenue. Leasing revenues do not represent revenues recognized from contracts with customers under ASC 606, and are accounted for under ASC 842, Leases. Lease revenue associated with agreements with Green Plains Trade are eliminated upon consolidation. The remaining lease revenue is not material to the company.

As of ~~June 30, 2018,~~March 31, 2019, the company had contracted future purchases of grain, corn oil, natural gas, crude oil, ethanol, distillers grains and cattle, valued at approximately ~~$481.3~~$356.9 million.

In November 2013, the company acquired two ethanol plants located in Fairmont, Minnesota and Wood River, Nebraska. There is ongoing litigation related to the consideration for this acquisition. On August 19, 2016, the Delaware Superior Court granted Green Plains’ motion for summary judgment in part and held that the seller’s attempt to disclaim liability for certain shortfall amounts through the use of a disclaimer provision was ineffective. Based on the court order, the company determined that previously accrued contingent liabilities of approximately $6.3 million no longer represented probable losses. These accruals were reversed as a reduction of cost of goods sold during the year ended December 31, 2016, because the adjustment relates to a reduction in the cost of inventory purchased in the acquisitions. Per the court’s direction, the company and the seller retained an independent accounting firm to determine if a shortfall exists and the precise shortfall due to Green Plains. The accounting firm has concluded that a shortfall does exist consistent with the company’s calculations, and the matter is now back in the hands of the Court to review and enter its order. The company believes the remaining amount due to Green Plains is approximately $5.5 million; however, the seller has the right to dispute the details of the calculation and appeal the underlying Superior Court order. Accordingly, the total amount Green Plains may receive is yet to be determined. The remaining amount due to the company represents a gain contingency which will not be recorded until all contingencies are resolved.

~~In addition to the above-described proceeding, the~~ company is currently involved in litigation that has arisen induring the ordinary course of business, but does not believe any pending litigation will have a material adverse effect on its financial position, results of operations or cash flows.

In March 2014, a subsidiary of the company entered into $1.4 million of new equipment financing agreements with Amur Equipment Finance. Gordon Glade, a member of the company’s board of directors, is a shareholder of Amur Equipment Finance. Balances of $0.5 million and $0.6 million related to these financing arrangements were included in debt at June 30, 2018, and December 31, 2017, respectively. Payments, including principal and interest, totaled $69 thousand and $138 thousand during each of the ~~three and six months ended June 30, 2018 and 2017, respectively. The weighted average interest rate for the financing agreements with Amur Equipment Finance was 6.8%.~~

Effective January 1, 2015, the company entered into two agreements with an entity controlled by Wayne Hoovestol for the lease of two aircrafts. Mr. Hoovestol is chairman of the company’s board of directors. The company agreed to pay $9,766 per month for the combined use of up to 125 hours per year of the aircrafts. Flight time in excess of 125 hours per year will incur additional hourly charges. Payments related to these leases totaled ~~$30~~$34 thousand and ~~$87~~$57 thousand during the three ~~and six~~ months ended ~~June 30,~~March 31, 2019 and 2018, ~~respectively, and $41 thousand and $102 thousand during the three and six months ended June 30, 2017,~~ respectively. The company had ~~no outstanding payables related to these agreements as of June 30, 2018 and~~ $2 thousand in outstanding payables related to these agreements as of March 31, 2019 and no outstanding payables related to these agreements as of December 31, ~~2017.~~2018.

~~On July 27, 2018, the company entered into an asset purchase agreement to acquire two feeding operations from Bartlett Cattle Company, L.P. for $16.2 million,~~ ~~plus working capital of approximately $108.9 million.~~ ~~The transaction includes two feed yards located in Sublette, Kansas and Tulia, Texas and will add combined feedlot capacity of 97,000 head of cattle to the company’s operations.~~ The transaction will be financed using cash on hand and proceeds from the Green Plains Cattle senior secured asset-based revolving credit facility. The transaction closed on August 1, 2018 following receipt of regulatory approval.

~~On July 31, 2018, the company~~ entered into an amendment of its Green Plains Cattle senior secured asset-based revolving credit facility with a group of lenders led by Bank of the West and ING Capital LLC, increasing the maximum commitment from $425.0 million to $500.0 million. The amendment was completed to fund the additional working capital requirements related to the acquisition of the ~~Sublette, Kansas and Tulia, Texas~~ cattle feeding operations. The amended credit facility also includes an accordion feature that enables the credit facility to be increased by up to $100.0 million with agent approval. All other terms and conditions of the credit facility remain the same.

On August 1, 2018, DKGP Energy Terminals LLC, the 50/50 joint venture between Delek Logistics Partners LP and Green Plains Partners LP, notified AMID Merger LP of its termination of the membership interest purchase agreement (MIPA), dated as of February 16, 2018, to acquire all of the membership interests of AMID Refined Products LLC. The MIPA was terminated due to regulatory obstacles. The termination was made pursuant to Section 8.1 of the MIPA, without any liability, obligation or penalty incurred by either party.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis provides information we believe is relevant to understand our consolidated financial condition and results of operations. This discussion should be read in conjunction with the consolidated financial statements and notes to the consolidated financial statements contained in this report ~~and other quarterly reports filed with the SEC after December 31, 2017,~~ together with our annual report on Form 10-K for the year ended December 31, ~~2017.~~2018.

Forward-looking statements are made in accordance with safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations that involve a number of risks and uncertainties and do not relate strictly to historical or current facts, but rather to plans and objectives for future operations. These statements may be identified by words such as “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “outlook,” “plan,” “predict,” “may,” “could,” “should,” “will” and similar expressions, as well as statements regarding future operating or financial performance or guidance, business strategy, environment, key trends and benefits of actual or planned acquisitions.

Factors that could cause actual results to differ from those expressed or implied in the forward-looking statements include, but are not limited to, those discussed in Part I, Item 1A – Risk Factors of our annual report on Form 10-K for the year ended December 31, ~~2017, in Part II – Risk Factors of this report,~~2018, or incorporated by reference. Specifically, we may experience ~~significant~~ fluctuations in future operating results due to a number of economic conditions, including: competition in the ethanol industry and other industries in which we operate; commodity market risks, including those that may result from weather conditions; financial market risks; counterparty risks; risks associated with changes to government policy or regulation, including changes to tax laws; risks related to ~~acquisitions~~acquisition and disposition activities and achieving anticipated results; risks associated with merchant trading, cattle feeding operations ~~vinegar production; risks related to our portfolio optimization strategy~~ and other ~~risk~~ factors detailed in reports filed with the SEC. Additional risks related to Green Plains Partners LP include compliance with commercial contractual obligations, potential tax consequences related to our investment in the partnership and risks disclosed in the partnership’s SEC filings associated with the operation of the partnership as a separate, publicly traded entity.

We believe our expectations regarding future events are based on reasonable assumptions; however, these assumptions may not be accurate or account for all risks and uncertainties. Consequently, forward-looking statements are not guaranteed. Actual results may vary materially from those expressed or implied in our forward-looking statements. In addition, we are not obligated ~~nor~~and do wenot intend to update our forward-looking statements as a result of new information unless it is required by applicable securities laws. We caution investors not to place undue reliance on forward-looking statements, which represent management’s views as of the date of this report or documents incorporated by reference.

Green Plains is a diversified commodity-processing business with operations related to ethanol production, grain handling and storage, cattle feedlots, food ingredients, and commodity marketing and logistics services. We are focused on generating stable operating margins through our diversified business segments and risk management strategy. Green Plains Partners LP is our primary downstream logistics provider, storing and delivering the ethanol we produce. ~~As of June 30, 2018, we~~We own a ~~62.5%~~49.1% limited partner interest, a 2.0% general partner interest and all of the partnership’s incentive distribution rights. The public owns the remaining ~~35.5%~~48.9% limited partner interest. The partnership is consolidated in our financial statements.

During the fourth quarter of 2017, commercial development of the JGP Energy Partners intermodal import and export fuels terminal in Beaumont, Texas was completed, with storage capacity of 550 thousand barrels to support various export and domestic grades of ethanol. On December 4, 2017, the first ethanol shipment departed from the terminal. Green Plains formed the 50/50 joint venture to construct the terminal in June 2016 with Jefferson Ethanol Holdings LLC, a subsidiary of Fortress Transportation and Infrastructure Investors LLC. Per the omnibus agreement between Green Plains and the partnership, Green Plains is required to offer its interest in the joint venture to the partnership no later than six months after the completion of construction; however, the partnership and Green Plains have agreed to extend the offer period until no later than October 15, 2018.

On February 16, 2018, the partnership and Delek Logistics Partners LP formed DKGP Energy Terminals LLC, a 50/50 joint venture, to acquire and manage light products terminal assets in Texas and Arkansas. In conjunction with the formation of the joint venture, DKGP executed a membership interest purchase agreement with AMID Merger LP, to acquire all of the membership interests of AMID Refined Products LLC (“AMID”) for approximately $138.5 million. Due to regulatory obstacles, on August 1, 2018, DKGP Energy Terminals LLC notified AMID Merger LP of its termination of the membership interest purchase agreement.

~~On July 27, 2018, the company entered into an asset purchase agreement to acquire two feeding operations from Bartlett Cattle Company, L.P. for $16.2 million,~~ ~~plus working capital of approximately $108.9 million. The transaction includes two feed yards located in Sublette, Kansas and Tulia, Texas and will add combined feedlot capacity of 97,000 head of cattle to the company’s operations.~~ The transaction will be financed using cash on hand and proceeds from the Green Plains Cattle senior secured asset-based revolving credit facility. The transaction closed on August 1, 2018 following receipt of regulatory approval.

~~On July 31, 2018, the company~~ entered into an amendment of its Green Plains Cattle senior secured asset-based revolving credit facility with a group of lenders led by Bank of the West and ING Capital LLC, increasing the maximum commitment from $425.0 million to $500.0 million. The amendment was completed to fund the additional working capital requirements related to the acquisition of the ~~Sublette, Kansas and Tulia, Texas~~ ~~cattle feeding operations. The amended credit facility also includes an accordion feature that enables the credit facility to be increased by up to $100.0 million with agent approval.~~

During the ~~second~~first quarter of ~~2018,~~2019, we continued to ~~run several of~~adjust our ethanol ~~plants below capacity due~~production in response to ~~scheduled downtime and continued oversupply of domestic ethanol. Our~~the weaker margin environment. As a result, we maintained an average utilization rate ~~was~~of approximately ~~80.0~~%56.0% of capacity, resulting in ethanol production of ~~296.3~~155.0 mmg for the ~~second~~first quarter of ~~2018,~~2019, compared with ~~275.5~~280.4 mmg, or ~~74.7%~~76.5% of capacity, for the same quarter last year. Additionally, overall performance at our ethanol plants and cattle feeding operations were negatively impacted by severe weather and associated flooding in areas where we have plants or transport products, with the largest impact on our ability to transport products during the first quarter of 2019.

According to the EIA, domestic ethanol production averaged ~~1.04~~1.01 million barrels per day during the ~~second~~first quarter of ~~2018, maintaining the same rate of production as the previous quarter but 3.8% higher~~2019, which was 3% lower than the ~~same~~1.04 million barrels for the first quarter of last year. ~~Year-to-date, production volumes are up 1.8% in 2018 compared with the same period in 2017.~~ Refiner and blender input volume ~~decreased slightly~~

increased 1% to ~~930~~886 thousand barrels per day for the ~~second~~first quarter of ~~2018~~2019, compared with ~~934~~875 thousand barrels per day for the same quarter last ~~year despite a 2.0% increase in consumer gasoline~~year. Gasoline demand ~~due~~for the first quarter of 2019 decreased 62 thousand barrels per day, or 1% compared to ~~seasonal demand and growing numbers~~the same quarter last year. U.S. domestic ethanol ending stocks increased by approximately 1.6 million barrels, or 7%, to 24.0 million barrels for the first quarter of ~~retail stations offering higher blends.~~2019. As of ~~June 30, 2018,~~May 1, 2019, there were approximately ~~1,431~~1,780 retail stations selling E15 in 2931 states, up from ~~1,210~~1,700 at the beginning of the year, according to Growth Energy. ~~Ethanol futures traded at an average discount of $0.66 to RBOB during the second quarter of 2018 related to weaker ethanol demand.~~ ~~U.S. domestic ethanol ending stocks~~ ~~increased slightly by approximately 400 thousand barrels to 22.0 million barrels on June 30, 2018, year over year.~~

According to the USDA Foreign Agriculture Service, ~~year-to-date~~ domestic ethanol exports ~~through May 31,~~for 2018 were ~~776.2 mmg,~~approximately 1.70 bgy, up ~~31%,~~25% from ~~594.0~~1.37 ~~mmg~~bgy for ~~the comparable period in~~ 2017. Brazil remained the largest export destination for U.S. ethanol, which accounted for ~~40%~~30% of domestic ethanol export volume despite the 20% tariff on U.S. ethanol imports in excess of 150 million liters, or 39.6 million gallons per quarter, imposed in September 2017 by Brazil’s Chamber of Foreign Trade, or CAMEX. Canada, ~~China,~~ India and South Korea accounted for ~~16%~~20%, ~~7%, 6%~~9% and 5%, respectively, of U.S. ethanol exports.

~~U.S. corn-based ethanol continues to have a price advantage, including the current tariff in Brazil, over Brazilian ethanol due to the price of corn relative to sugar cane as a feedstock.~~On On April 1, 2018, China announced it would add aan additional 15% tariff to the existing 30% tariff it had earlier imposed on ethanol imports from the United States and Brazil. China later raised the tariff further to 70% as the trade war escalated. In April 2019, the Trump administration announced a potential meeting with Chinese President Xi in May of 2019 to complete the trade agreement between the U.S. and China.

The cost to produce the equivalent amount of starch found in sugar from $3.50-per-bushel corn is 7 cents per pound. The average price of sugar ~~was~~remained at approximately 1213 cents per pound during the ~~second~~first quarter of ~~2018, compared with an average of 16 cents per pound for 2017.~~2019. We currently estimate that net ethanol exports will reach between 1.6 billion gallons and ~~1.8~~1.7 billion gallons in ~~2018~~2019 based on historical demand from a variety of countries and certain countries who seek to improve their air quality and eliminate MTBE from their own fuel supplies.

During the ~~second~~first quarter of ~~2018,~~2019, the market sentiment for cattle ~~continued to be optimistic due to anticipated lower cost of~~feeding improved as forward margins expanded, feeder supplies remain robust, and feed ~~higher~~costs remain stable with a large domestic ~~beef consumption and increased export demand for beef. July corn futures were down 17% from May 2018 highs,~~feed grain balance sheet. Corn prices traded near three year lows, according to the Chicago Mercantile Exchange. Domestic beef consumption per capita in ~~2018~~2019 is projected to increase ~~1.0 pound~~0.4 pounds to ~~57.9~~57.6 pounds ~~per person~~ compared with ~~2017.~~2018. Export demand for beef is forecasted to increase approximately 7%3.1% in ~~2018~~2019 compared with ~~2017~~2018 according to the USDA.

Cow-calf operations continue to be profitable, which has supported a period of expansion. ~~Since~~Flooding in the ~~fourth quarter~~northern plains and Midwest regions of ~~2017,~~ the ~~lack~~U.S. have resulted in some herd losses, but the extent of precipitation threatened to force the liquidation of breeding stock on many ranches throughout the south and southwestern United States. Timely rains throughout the second quarter of 2018 minimized herd liquidation, keeping the expansion intact for the time being.these losses is not well known at this time. Year-to-date domestic cattle on feed increased ~~4.3%~~2% to ~~11.3~~12.0 million head through ~~June 30, 2018,~~April 1, 2019, compared to the same period last year.

Packer demand was driven by strong ~~domestic and international beef demand.~~margins during the first quarter of 2019. Total steer and heifer slaughter through the ~~first half~~end of ~~2018~~March of 2019 increased ~~2.5%~~1.7% compared with the first ~~half~~three months of ~~2017.~~2018. Slaughter capacity constraints, primarily due to labor shortages, have limited the ~~packer’s~~packers’ ability to increase slaughter rates at the same pace as cattle on feed inventories, resulting in higher packer margins. ~~Increased~~However, these higher margins should incentivize the packers to increase slaughter capacity, which will be crucial for cattle feeding margins ~~from a demand perspective.~~moving forward.

The U.S. looks poised to grow its global market share for animal protein while Australia continues to struggle with drought conditions, and ~~food safety scandals plague South America.~~African Swine Fever (“ASF”) issues in China should result in larger world export demand for animal protein from the U.S.

Year-to-date U.S. distillers grains exports through ~~May~~December 31, 2018, were ~~4.6~~11.9 million metric tons, or ~~less than a half of a percent lower~~7.3% higher than the same period last year, according to the USDA Foreign Agriculture Service. Shipments of distillers grains to Southeast Asia increased ~~95%~~69% year over year due to growing demand for protein, which helped keep export volumes in line with last year. Mexico, Vietnam, South Korea, ~~Vietnam,~~ Thailand, Turkey ~~Canada~~ and Indonesia, accounted for approximately ~~68%~~61% of total U.S. distillers export volumes.

While ASF may have a positive impact on animal protein demand from the U.S., it may have a negative impact on distillers grains exports and domestic usage. ASF may depress soybean meal demand in China which could make the animal feed more price competitive to distillers grains and allow for substitution of high-protein soybean meal worldwide.

We are sensitive to government programs and policies that affect the supply and demand for ethanol and other fuels, which in turn may impact the volume of ethanol and other fuels we handle. This Congress may ~~also~~ consider legislation that would impact the RFS. ~~Bills~~Various bills have been ~~introduced~~discussed in the House and Senate which would ~~sunset~~eliminate the RFS entirely, oreliminate the corn based ethanol portion of the ~~mandate.~~mandate, or make it more difficult to sell fuel blends with higher levels of ethanol. However, we believe it is unlikely these bills will be passed in a divided Congress.

Federal mandates supporting the use of renewable fuels are a significant driver of ethanol demand in the U.S. Ethanol policies are influenced by environmental concerns, diversifying our fuel supply, and an interest in reducing the country’s dependence on foreign oil. Consumer acceptance of flex-fuel vehicles and higher ethanol blends of ethanol in non-flex-fuel vehicles may be necessary before ethanol can achieve significant growth in U.S. market share. CAFE, which was first enacted by Congress in 1975 to reduce energy consumption by increasing the fuel economy of cars and light trucks, provides a 54% efficiency bonus to flexible-fuel vehicles running on E85. Another important factor is a waiver in the Clean Air Act, known as the One-Pound Waiver, which allows ~~only~~ E10 to be sold year-round, even though it exceeds the Reid ~~vapor pressure~~Vapor Pressure limitation of nine pounds per square inch. ~~The~~In proposed rule-making, the EPA has proposed to extend the One-Pound Waiver ~~does not apply~~ to E15 ~~or higher blends, even though it has similar physical properties to E10,~~ so its sale ~~is limited to~~can expand beyond flex-fuel vehicles ~~only~~ during the June 1 to September 15 summer driving season.

The EPA accepted comments on its proposed rule until April 29, 2019, and is working to finalize the rule consistent with the U.S. President’s stated goal of having a final rule out before the start of summer driving season on June 1, 2019. Any final rule from the agency is susceptible to legal challenges. The proposed rule also contains certain RIN reform changes that could reduce RIN values and subsequently reduce incentives for higher ethanol blends, including E15.

When the RFS II was passed in 2007 and rulemaking finalized in October 2010, the required volume of conventional renewable fuel to be blended with gasoline was to increase each year until it reached 15.0 billion gallons in 2015. In November ~~2017,~~2018, the EPA announced it would maintain the 15.0 billion gallon mandate for conventional ethanol in ~~2018. In June 2018, the EPA proposed to maintain 15.0 billion gallons for 2019, and plans to finalize the rule by November 30, 2018.~~2019.

The EPA has the authority to waive the mandates in whole or in part if there is inadequate domestic renewable fuel supply or the requirement severely harms the economy or environment. According to the RFS II, if mandatory renewable fuel volumes are reduced by at least 20% for two consecutive years, the EPA is required to modify, or reset, statutory volumes through 2022. While conventional ethanol maintained 15 billion gallons, ~~2018~~2019 is the ~~first~~second year that the total proposed RVOs are more than 20% below statutory volumes levels. Thus, the EPA Administrator has directed his staff to initiate ~~the required technical analysis to perform any future~~a reset ~~consistent with the reset rules. The reset will be triggered if the final 2019~~

~~RVOs continue to be more than 20% below the statutory levels as expected, and~~rulemaking, wherein the EPA will ~~be required to~~ modify statutory volumes through 2022, ~~within one year of the trigger event,~~ based on the same factors used to set the RVOs post-2022.These factors include environmental impact, domestic energy security, expected production, infrastructure impact, consumer costs, job creation, price of agricultural commodities, food prices, and rural economic development.

The EPA assigns individual refiners, blenders, and importers the volume of renewable fuels they are obligated to use based on their percentage of total domestic transportation fuel sales. Obligated parties use RINs to show compliance with RFS-mandated volumes. RINs are attached to renewable fuels by ethanol producers and detached when the renewable fuel is blended with transportation fuel or traded in the open market. The market price of detached RINs affects the price of ethanol in certain markets and influences the purchasing decisions by obligated parties.

The EPA can, in consultation with the Department of Energy, waive the obligation for individual refineries that are suffering “disproportionate economic hardship” due to compliance with the RFS. To qualify, the refineries must be under total throughput of 75,000 barrels per day and state their case for an exemption in an application to the EPA each year.

The ~~current~~Trump administration ~~has been granting these at a much higher rate than the previous one, waiving~~waived the obligation for 19 of 20 applicants for compliance year 2016, totaling 790 million gallons, and 2935 of 3337 for compliance year 2017, totaling ~~1.46~~1.82 billion gallons. This effectively reduces the annual RVO by that amount, since the waived gallons are not reallocated to other obligated parties at this time. The resulting surplus of RINs in the market has brought values down significantly ~~from the mid $0.80 range early in the year~~ to ~~the low $0.20s.~~under $0.20. Since ~~the~~higher RIN ~~value helps~~values help to make higher blends of ethanol more cost effective, lower RIN values could negatively impact retailer and consumer adoption of E15 and higher blends. There are 39 waiver applications pending for compliance year 2018.

~~On April 12, 2018, following~~Biofuels groups have filed a ~~series~~lawsuit in the U.S. Federal District Court for the D.C. Circuit, challenging the 2019 RVO rule over the EPA’s failure to address small refinery exemptions in the rulemaking. This is the first RFS rulemaking since the expanded use of ~~meetings involving President Trump, Senators, key federal agency leaders and~~ the ~~industry, President Trump indicated that~~exemptions came to light, however the EPA ~~would be moving forward~~has refused to ~~authorize year-round sales~~cap the number of ~~E15~~waivers it grants or how it accounts for the retroactive waivers in its percentage standard calculations. The EPA has a statutory mandate to ensure the volume requirements are met, which are achieved by ~~rulemaking designed~~setting the percentage standards for obligated parties. The current approach accomplishes the opposite. Even if all the obligated parties comply with their respective percentage obligations for

2019, the nation’s overall supply of renewable fuel will not meet the total volume requirements set by the EPA. We believe this undermines Congressional intent of demand pressure creation and an increased consumption of renewable fuels. Biofuels groups argue the EPA must therefore adjust its percentage standard calculations to ~~address~~make up for past retroactive waivers and adjust the ~~One-Pound RVP Waiver that currently inhibits sales of E15~~standards to account for any waivers it reasonably expects to grant in certain markets during summer driving months. President Trump later planned to pair this move with a directive to allow ethanol gallons to retain RIN credits when they are exported, in an effort to keep RIN costs low for refiners. To date, nothing definitive has materialized from these efforts with respect to year-round sales of E15.the future.

In ~~November 2017, the EPA denied a petition to change the point of obligation under RFS II to the parties that own the gasoline before it is sold.~~

Onanother case, on July 28, 2017, the U.S. Federal District Court for the D.C. Circuit ruled in favor of the Americans for Clean Energy and its petitioners against the EPA related to its decision to lower the 2016 volume requirements. The Court concluded the EPA erred in how it interpreted the “inadequate domestic supply” waiver provision of RFS II, which authorizes the EPA to consider supply-side factors affecting the volume of renewable fuel available to refiners, blenders and importers to meet statutory volume requirements. The waiver provision does not allow the EPA to consider the volume of renewable fuel available to consumers or the demand-side constraints that affect the consumption of renewable fuel by consumers. As a result, the Court vacated the EPA’s decision to reduce the total renewable fuel volume requirements for 2016 through its waiver authority, which the EPA is expected to address. We believe this decision to confine the EPA’s waiver analysis to supply considerations benefits the industry overall and expect the primary impact will be on the RINs market.

~~Valero Energy and refining trade group American Fuel and Petrochemical Manufacturers (AFPM) have challenged~~ The EPA has not yet accounted for the ~~EPA’s handling of~~500 million gallons that the ~~U.S. biofuel mandate in separate actions on January 26, 2018. AFPM is asking the D.C. U.S.~~ Court of Appeals to review the EPA’s November 2017 decision to reject proposed changes to the structure of the RFS, including moving the point of obligation from refiners and importers of fuel to fuel blenders. Valero filed two petitions with the same court, one seeking review of the annual RVO rule set by the EPA for 2018 and 2019, which dictates the volumes of renewable fuels to be blended in the ~~coming years, and a second arguing against~~Americans for Clean Energy case directed, though they have indicated they will include it in the ~~EPA’s December 2017 assertion that~~reset rulemaking or the ~~agency has fulfilled its duty to periodically review the RFS as directed by statute.~~2020 RVOs.

Government actions abroad can significantly impact the demand for U.S. ethanol. In September 2017, China’s National Development and Reform Commission, the National Energy Board and 15 other state departments issued a joint plan to expand the use and production of biofuels containing up to 10% ethanol by 2020. China, the number three importer of U.S. ethanol in 2016, imported negligible volumes during ~~the~~fiscal year 2018 due to a 30% tariff, which increased to 70% in early 2018, imposed on the U.S. ~~and Brazil fuel ethanol, which took effect in January 2017.~~ There is no assurance ~~the recently issued~~that China’s joint plan will lead to increased imports of U.S. ~~ethanol, and recent trade tensions have caused China to raise their tariff on ethanol to 45% and then to 70%.~~ethanol. Our exports also face ~~tariff~~tariffs, rate quotas, countervailing duties, and other hurdles in Brazil, the European Union, India, Peru, and elsewhere, which limits our ability to compete in some markets.

In ~~Mexico, CAMEX~~Brazil, the Secretary of Foreign Trade issued an official written resolution, imposing a 20% tariff on U.S. ethanol imports in excess of 150 million liters, or 39.6 million gallons per quarter in September 2017. The ruling is valid for two ~~years.~~years, and is set to expire at the end of August 2019. In June 2017, the Energy Regulatory Commission of Mexico (CRE) approved the use of 10% ethanol blends, which was challenged by 14

nine lawsuits. ~~Eight~~Four cases were dismissed. The ~~six~~five remaining cases follow one of two tracks: 1) to determine the constitutionality of the CRE regulation, or 2) to determine the benefits, or lack thereof, of introducing E10 to Mexico. ~~Five of these cases were initially denied and are going through the appeals process.~~ An injunction was granted in October 2017, preventing the blending and selling of E10, but was overturned by a higher court in June 2018 making it legal to blend and sell E10 by PEMEX throughout Mexico except for its three largest metropolitan areas. U.S. ethanol exports to Mexico totaled 3029.4 mmg in ~~2017.~~

~~The Tax Cuts and Jobs Act was enacted on December 22, 2017 and is effective January 1,~~ 2018. We continue to analyze the Act’s impact to current and future taxes. We are also following the guidance of SAB 118 which provides a measurement period to complete accounting for certain elements of the tax reform. On March 23, 2018, Congress rescinded an unintended consequence of the Act under section 199A, which provided certain tax benefits to producers selling grain to cooperative associations and enabled a potential marketplace advantage over other agribusiness companies.

We report the financial and operating performance for the following four operating segments: (1) ethanol production, which includes the production of ethanol and distillers grains, and recovery of corn oil, (2) agribusiness and energy services, which includes grain handling and storage, commodity marketing and merchant trading for company-produced and third-party ethanol, distillers grains, corn oil, natural gas and other commodities, (3) food and ingredients, which includes cattle feeding ~~vinegar production~~ and food-grade corn oil operations and included vinegar production until the sale of Fleischmann’s Vinegar during the fourth quarter of 2018 and (4) partnership, which includes fuel storage and transportation services.

The three months ended March 31, 2019 do not include operations of the Bluffton, Lakota, Hopewell and Riga ethanol plants which were either permanently closed or sold during the fourth quarter of 2018. Additionally, the three months ended March 31, 2019 do not include Fleischmann’s Vinegar operations, which was also sold in the fourth quarter of 2018.

During the normal course of business, our operating segments do business with each other. For example, our agribusiness and energy services segment procures grain and natural gas and sells products, including ethanol, distillers grains and corn oil of our ethanol production segment. Our partnership segment provides fuel storage and transportation services for our agribusiness and energy services segment. These intersegment activities are treated like third-party transactions with origination, marketing and storage fees charged at estimated market values. Consequently, these transactions affect segment performance; however, they do not impact our consolidated results since the revenues and corresponding costs are eliminated.

Corporate activities include selling, general and administrative expenses, consisting primarily of compensation, professional fees and overhead costs not directly related to a specific operating segment. When we evaluate segment performance, we review the following segment information as well as earnings before interest, income taxes, depreciation

and amortization, excluding amortization of operating lease right-of-use assets and amortization of debt issuance costs, or EBITDA.

The company also owns a 90.0% interest in BioProcess Algae, a joint venture formed in 2008. Beginning April 1, 2016, we consolidate the financial results of BioProcess Algae, and record a noncontrolling interest for the economic interest in the joint venture held by others.

As of ~~June 30, 2018,~~March 31, 2019, we, together with our subsidiaries, own a ~~62.5%~~49.1% limited partner interest and a 2.0% general partner interest in the partnership and own all of the partnership’s incentive distribution rights, with the remaining ~~35.5%~~48.9% limited partner interest owned by public common unitholders. We consolidate the financial results of the partnership, and record a noncontrolling interest for the economic interest in the partnership held by the public common unitholders.

The selected operating segment financial information are as follows (in thousands):

Three Months Ended
June 30,

%

Six Months Ended
June 30,

%

2018

2017

Variance

2018

2017

Variance
Revenues:

Ethanol production:

Revenues from external customers
$
589,256

$
617,297

(4.5%)

$
1,153,019

$
1,237,176

(6.8%)
Intersegment revenues

4,219

1,549

172.4

6,172

3,045

102.7
Total segment revenues

593,475

618,846

(4.1)

1,159,191

1,240,221

(6.5)
Agribusiness and energy services:

-

Revenues from external customers

170,074

150,755

12.8

371,861

319,066

16.5
Intersegment revenues

14,128

9,781

44.4

25,557

19,273

32.6
Total segment revenues

184,202

160,536

14.7

397,418

338,339

17.5
Food and ingredients:

-

Revenues from external customers

225,887

116,660

93.6

503,996

214,682

134.8
Intersegment revenues

38

37

2.7

80

75

6.7
Total segment revenues

225,925

116,697

93.6

504,076

214,757

134.7
Partnership:

-

Revenues from external customers

1,620

1,551

4.4

3,248

3,023

7.4
Intersegment revenues

24,220

23,514

3.0

48,477

49,271

(1.6)
Total segment revenues

25,840

25,065

3.1

51,725

52,294

(1.1)
Revenues including intersegment activity

1,029,442

921,144

11.8

2,112,410

1,845,611

14.5
Intersegment eliminations

(42,605)

(34,881)

22.1

(80,286)

(71,664)

12.0
Revenues as reported
$
986,837

$
886,263

11.3%

$
2,032,124

$
1,773,947

14.6%

Three Months Ended
June 30,

%

Six Months Ended
June 30,

%

2018

2017

Variance

2018

2017

Variance
Cost of goods sold:

Ethanol production
$
581,613

$
612,646

(5.1%)

$
1,146,172

$
1,211,784

(5.4%)
Agribusiness and energy services

165,174

152,110

8.6

366,886

318,504

15.2
Food and ingredients

206,440

100,009

106.4

466,205

183,044

154.7
Partnership

-

-

*

-

-

*
Intersegment eliminations

(42,602)

(34,746)

22.6

(80,303)

(71,417)

12.4

$
910,625

$
830,019

9.7%

$
1,898,960

$
1,641,915

15.7%

Three Months Ended
June 30,

%

Six Months Ended
June 30,

%

2018

2017

Variance

2018

2017

Variance
Operating income (loss):

Ethanol production
$
(17,214)

$
(22,459)

23.4%

$
(44,743)

$
(29,057)

(54.0%)
Agribusiness and energy services

12,166

3,083

294.6

19,230

9,452

103.4
Food and ingredients

12,981

10,714

21.2

25,566

20,340

25.7
Partnership

16,129

14,798

9.0

31,489

31,417

0.2
Intersegment eliminations

144

(80)

*

212

(155)

*
Corporate activities

(12,441)

(9,842)

(26.4)

(23,914)

(18,391)

(30.0)

$
11,765

$
(3,786)

410.8%

$
7,840

$
13,606

(42.4%)


	Three Months Ended March 31,				%
	2019		2018		Variance
Revenues:
Ethanol production:
Revenues from external customers	$	268,716	$	563,763	(52.3%)
Intersegment revenues		2,117		1,953	8.4
Total segment revenues		270,833		565,716	(52.1)
Agribusiness and energy services:
Revenues from external customers		162,795		201,787	(19.3)
Intersegment revenues		6,413		11,429	(43.9)
Total segment revenues		169,208		213,216	(20.6)
Food and ingredients:
Revenues from external customers		208,499		278,109	(25.0)
Intersegment revenues		38		42	(9.5)
Total segment revenues		208,537		278,151	(25.0)
Partnership:
Revenues from external customers		2,305		1,628	41.6
Intersegment revenues		18,782		24,257	(22.6)
Total segment revenues		21,087		25,885	(18.5)
Revenues including intersegment activity		669,665		1,082,968	(38.2)
Intersegment eliminations		(27,350)		(37,681)	(27.4)
Revenues as reported	$	642,315	$	1,045,287	(38.6%)


	Three Months Ended June 30,				%	Six Months Ended June 30,				%	Three Months Ended March 31,				%
	2018		2017		Variance	2018		2017		Variance	2019		2018		Variance
EBITDA:
Ethanol production	$	3,362	$	(873)	*	$	(3,733)	$	12,951	*	$	(28,503)	$	(7,095)	*
Agribusiness and energy services		12,796		3,747	241.5%		20,498		10,760	90.5%		5,862		7,702	(23.9)
Food and ingredients		19,044		13,955	36.5		35,041		26,469	32.4		257		15,997	(98.4)
Partnership		17,138		16,066	6.7		33,761		33,960	(0.6)		13,771		16,623	(17.2)
Intersegment eliminations		144		(80)	*		212		(155)	*		(3,677)		68	*
Corporate activities		(10,642)		(8,742)	(21.7)		(20,817)		(16,063)	(29.6)		(6,379)		(10,175)	37.3
	$	41,842	$	24,073	73.8%	$	64,962	$	67,922	(4.4%)	$	(18,669)	$	23,120	*

We use EBITDA as a segment measure of profitability to compare the financial performance of our reportable segments and manage those segments. We believe EBITDA is a useful measure to compare our performance against other companies. EBITDA should not be considered an alternative to, or more meaningful than, net income, which is prepared in accordance with GAAP. EBITDA calculations may vary from company to company. Accordingly, our computation of EBITDA may not be comparable with a similarly titled measure of other companies.

The following table reconciles net ~~income (loss)~~loss to EBITDA ~~for the periods indicated~~ (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
	2018		2017		2018		2017		2019		2018
Net income (loss)	$	3,751	$	(11,796)	$	(15,704)	$	(10,145)
Net loss									$	(37,871)	$	(19,455)
Interest expense		22,021		19,430		44,149		37,926		14,427		22,128
Income tax benefit		(10,753)		(9,749)		(16,780)		(12,130)		(14,460)		(6,027)
Depreciation and amortization(1)		26,823		26,188		53,297		52,271		19,235		26,474
EBITDA	$	41,842	$	24,073	$	64,962	$	67,922	$	(18,669)	$	23,120

Three Months Ended ~~June 30, 2018,~~ March 31, 2019Compared with the Three Months Ended ~~June 30, 2017~~March 31, 2018

Consolidated revenues ~~increased $100.6~~decreased $403.0 million for the three months ended ~~June 30, 2018,~~March 31, 2019 compared with the same period in ~~2017,~~2018 primarily ~~as a result~~ due to the disposition of three ethanol plants and the ~~acquisitions~~sale of ~~cattle feeding operations at~~Fleischmann’s Vinegar during the ~~end of the first quarter and at the beginning of the second~~fourth quarter of ~~2017. The increase was partially offset by~~2018 as well as lower ~~average realized prices for ethanol and corn oil.~~production volumes at our remaining plants.

Operating income ~~increased $15.6~~decreased $36.1 million and EBITDA ~~increased $17.8~~decreased $41.8 million for the three months ended ~~June 30, 2018~~March 31, 2019 compared with the same period last year primarily due to ~~higher cattle volumes sold, increased average prices for distiller grains~~lower volume and ~~increased~~decreased margins ~~in our agribusiness and energy services and~~on ethanol production ~~segments.~~and cattle as well as the disposition of Fleischmann’s Vinegar during the fourth quarter of 2018. Interest expense ~~increased $2.6~~decreased $7.7 million for the three months ended ~~June 30, 2018,~~March 31, 2019, compared with the same period in ~~2017,~~2018, primarily due to ~~higher average debt outstanding as well as higher borrowing costs.~~the repayment of the $500 million senior secured term loan during the fourth quarter of 2018. Income tax benefit was ~~$10.8 million for the three months ended June 30, 2018, compared with $9.7 million for the same period in 2017.~~

million for the three months ended March 31, 2019 compared with $6.0 million for the same period in 2018.

The following discussion provides greater detail about our ~~second~~first quarter segment performance.


	Three Months Ended June 30,			Three Months Ended March 31,
	2018	2017	% Variance	2019	2018	% Variance

Ethanol produced
Ethanol sold
(thousands of gallons)	296,282	275,539	7.5	155,040	280,410	(44.7)
Distillers grains produced
Distillers grains sold
(thousands of equivalent dried tons)	739	728	1.5	398	747	(46.7)
Corn oil produced
Corn oil sold
(thousands of pounds)	75,556	65,685	15.0	34,983	69,134	(49.4)
Corn consumed
(thousands of bushels)	103,147	95,680	7.8	54,041	97,283	(44.4)

Revenues in our ethanol production segment decreased ~~$25.4~~$294.9 million for the three months ended ~~June 30, 2018,~~March 31, 2019 compared with the same period in ~~2017~~2018 primarily due to the disposition of three ethanol plants during the fourth quarter of 2018 as well as lower ~~average~~production volumes of ethanol, distillers grains and corn oil ~~prices realized and lower ethanol volumes sold, partially offset by higher average distillers grains prices realized.~~due to the depressed margin environment.

Cost of goods sold for our ethanol production segment decreased ~~$31.0~~$271.1 million for the three months ended ~~June 30, 2018,~~March 31, 2019 compared with the same period last year primarily due to ~~decreased volumes sold offset by higher corn prices.~~the disposition of three ethanol plants in addition to lower production volumes. As a result of the factors identified above, operating income ~~increased $5.2~~decreased $16.7 million and EBITDA ~~increased $4.2~~decreased $21.4 million for the three months ended ~~June 30, 2018,~~March 31, 2019 compared with the same period in ~~2017.~~2018. Depreciation and amortization expense for the segment was ~~$20.6~~$15.3 million for the three months ended ~~June 30, 2018,~~March 31, 2019 compared with ~~$20.1~~$20.4 million for the same period last ~~year.~~year, primarily due to the disposition of three ethanol plants during the fourth quarter of 2018.

Revenues in our agribusiness and energy services segment ~~increased $23.7~~decreased $44.0 million while both operating income ~~increased $9.1 million~~ and EBITDA ~~increased~~decreased by ~~$9.0~~$1.8 million for the three months ended ~~June 30, 2018,~~March 31, 2019 compared with the same period in ~~2017.~~2018. The ~~increase~~decrease in revenues was primarily due to ~~an increase~~a decrease in ethanol, ~~trading activity, partially offset by a decrease in~~distillers grain and corn oil production and trading activity, ~~and~~as well as lower average realized prices for ~~corn oil.~~ethanol. Operating income and EBITDA ~~increased~~decreased primarily as a result of ~~increased trading activity~~decreased margins.

Revenues in our food and ingredients segment ~~increased $109.2~~decreased $69.6 million for the three months ended ~~June 30, 2018,~~March 31, 2019 compared with the same period in ~~2017.~~2018. The ~~increase~~decrease in revenues was primarily due to ~~an increase~~the sale of Fleischmann’s Vinegar during the fourth quarter of 2018, as well as a decrease in cattle volumes sold ~~as a result of~~ ~~the acquisitions of cattle feeding operations~~ during the ~~first and second quarters of 2017~~.three months ended March 31, 2019. Cattle head sold for the three months ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~ was approximately ~~118,000~~127,000 and ~~38,000,~~137,000, respectively.

Operating income ~~increased~~decreased by ~~$2.3~~$14.0 million and EBITDA ~~increased $5.1~~decreased $15.7 million for the three months ended ~~June 30, 2018,~~March 31, 2019 compared with the same period in ~~2017~~2018 primarily due to the ~~increase~~sale of Fleischmann’s Vinegar during the fourth quarter of 2018 as well as the decrease in cattle volumes outlined above. During the three months ended June 30, 2018, the company recognized a gain within other income of $2.6 million related to property insurance proceeds received in excess of the book value of certain fixed assets that were damagedOverall performance at ~~the Hereford cattle feed yard.~~

~~Revenues generated by~~ our partnership segment increased $0.8 million for the three months ended June 30, 2018 compared to the same period of 2017, due to higher storage and throughput volumes and trucking revenue, partially offset by a reduction in revenues generated from our rail transportation services. Operating income increased $1.3 million and EBITDA increased $1.1 million for the three months ended June 30, 2018, compared with the same period in 2017 ~~primarily due to lower railcar lease expense associated with our terminal operations.~~

Intersegment eliminations of revenues increased by $7.7 million for the three months ended June 30, 2018, compared with the same period in 2017 due to increased intersegment corn purchases within the agribusiness and energy services segment as well as increased intersegment distillers grain revenues within the ethanol production segment, both primarily due to sales to the food and ingredients segment for cattle feed.

Operating income was impacted by an increase in operating expenses for corporate activities of $2.6 million for the three months ended June 30, 2018, compared with the same period in 2017 primarily due to increased selling, general and administrative expenses related to personnel costs in 2018.

We recorded income tax benefit of $10.8 million for the three months ended June 30, 2018, compared with $9.7 million for the same period in 2017. The increase in income tax benefit was due primarily to the company’s recognition of ~~a net tax benefit of $8.3 million during the three months ended June 30, 2018 for federal and state R&D Credits relating to current and prior periods.~~

~~Six Months Ended June 30, 2018, Compared with the Six Months Ended June 30, 2017~~

~~Consolidated revenues increased $258.2 million for the six months ended June 30, 2018, compared with the same period in 2017, primarily~~ ~~as a result of~~ ~~the acquisitions of~~ cattle feeding operations ~~at the end of~~was negatively impacted by severe winter weather and abnormally negative basis during the first quarter ~~and at the beginning~~ of the second quarter of 2017. The increase was also driven by additional natural gas volumes sold, partially offset by a decrease in volumes for ethanol and distillers grains and lower average realized prices for ethanol and corn oil.

Operating income decreased $5.8 million and EBITDA decreased $3.0 million for the six months ended June 30, 2018 compared with the same period last year primarily due to decreased margins in our ethanol production segment. Interest expense increased $6.2 million for the six months ended June 30, 2018, compared with the same period in 2017, primarily due to higher average debt outstanding as well as higher borrowing costs. Income tax benefit was $16.8 million for the six months ended June 30, 2018, compared with $12.1 million for the same period in 2017.

~~The following discussion provides greater detail about our~~ ~~second~~ ~~quarter segment performance.~~

Revenues in our ethanol production segment decreased $81.0 million for the six months ended June 30, 2018, compared with the same period in 2017 primarily due to lower volumes of ethanol and distillers grains sold in addition to lower average ethanol and corn oil prices realized, partially offset by higher average distillers grains prices realized.

Cost of goods sold for our ethanol production segment decreased $65.6 million for the six months ended June 30, 2018, compared with the same period last year due to lower production volumes and lower corn prices. As a result of the factors

identified above, operating income decreased $15.7 million and EBITDA decreased $16.7 million for the six months ended June 30, 2018, compared with the same period in 2017. Depreciation and amortization expense for the segment was $41.0 million for the six months ended June 30, 2018, compared with $40.5 million for the same period last year.

Revenues in our agribusiness and energy services segment increased $59.1 million while operating income increased $9.8 million and EBITDA increased by $9.7 million for the six months ended June 30, 2018, compared with the same period in 2017. The increase in revenues was primarily due to an increase in ethanol and natural gas trading activity, partially offset by a decrease in corn oil trading activity and lower average realized prices for corn oil. Operating income and EBITDA increased primarily as a result of increased trading activity margins.

Revenues in our food and ingredients segment increased $289.3 million for the six months ended June 30, 2018, compared with the same period in 2017. The increase in revenues was primarily due to an increase in cattle volumes sold ~~as a result of~~ ~~the acquisitions of cattle feeding operations during the first and second quarters of 2017. Cattle head sold for the six months ended June 30, 2018 and 2017 was approximately 255,000 and 80,000, respectively.~~

Operating income increased by $5.2 million and EBITDA increased $8.6 million for the six months ended June 30, 2018, compared with the same period in 2017 primarily due to the increase in cattle volumes and margins outlined above. During the six months ended June 30, 2018, the company recognized a gain within other income of $2.6 million related to property insurance proceeds received in excess of the book value of certain fixed assets that were damaged at the Hereford cattle feed yard.2019.

Revenues generated by our partnership segment decreased ~~$0.6~~$4.8 million for the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 compared to the same period of ~~2017,~~2018, primarily due to lower storage and throughput volumes due to disposition of three ethanol plants during the fourth quarter of 2018 as well as lower production at our remaining plants and lower revenues generated from ~~our~~ rail transportation ~~and terminal services.~~ services due to the assignment of various railcar operating leases as part of the disposition.

Operating income ~~increased $0.1~~decreased $2.8 million and EBITDA decreased $2.9 million for the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019 compared with the same period in ~~2017~~ ~~primarily due to a decrease in railcar lease expense, partially offset by increased wages, fuel and other expenses. EBITDA decreased $0.2 million for the six months ended June 30,~~ 2018 ~~compared with the same period in 2017~~ primarily due to the ~~decrease in revenue.~~ factors described above.

Intersegment eliminations of revenues ~~increased~~decreased by ~~$8.6~~$10.3 million for the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019 compared with the same period in ~~2017~~2018 due to ~~increased~~a decrease in storage and throughput fees paid to the partnership segment as well as decreased intersegment corn purchases and marketing fees within the agribusiness and energy services ~~segment as well as increased intersegment distillers grain revenues within the ethanol production segment, both primarily due to sales to the food and ingredients segment for cattle feed.~~segment.

Operating income was impacted by ~~an increase~~a decrease in operating expenses for corporate activities of ~~$5.5~~$2.9 million for the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019 compared with the same period in ~~2017~~2018 primarily due to ~~increased~~decreased selling, general and administrative expenses ~~related to personnel costs~~primarily as a result of a workforce reduction which occurred as part of our portfolio optimization program in the last half of 2018.

We recorded income tax benefit of ~~$16.8~~$14.5 million for the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019, compared with ~~$12.1~~$6.0 million for the same period in ~~2017.~~2018. The increase in income tax benefit was due ~~primarily~~ to a higher loss before income taxes for the ~~company’s recognition of~~ ~~a net tax benefit of $8.3 million during the six~~three months ended ~~June 30, 2018 for federal and state R&D Credits relating to current and prior periods.~~March 31, 2019.

Our principal sources of liquidity include cash generated from operating activities and bank credit facilities. We fund our operating expenses and service debt primarily with operating cash flows. Capital resources for maintenance and growth expenditures are funded by a variety of sources, including cash generated from operating activities, borrowings under bank credit facilities, or issuance of senior notes or equity. Our ability to access capital markets for debt under reasonable terms

depends on our financial condition, credit ratings and market conditions. We believe that our ability to obtain financing at reasonable rates and history of consistent cash flow from operating activities provide a solid foundation to meet our future liquidity and capital resource requirements.

On ~~June 30, 2018,~~March 31, 2019, we had ~~$235.1~~$214.1 million in cash and equivalents, excluding restricted cash, consisting of ~~$171.9~~$183.5 million held at our parent company and the remainder held at our subsidiaries. Additionally, we had ~~$15.9~~$59.2 million in restricted cash at ~~June 30, 2018.~~March 31, 2019. We also had ~~$568.6~~$472.8 million available under our committed revolving credit agreements, some of which were subject to restrictions or other lending conditions. Funds at certain subsidiaries are generally required for their ongoing operational needs and restricted from distribution. At ~~June 30, 2018,~~March 31, 2019, our subsidiaries had approximately ~~$166.0~~$143.6 million of net assets that were not available to us in the form of dividends, loans or advances due to restrictions contained in their credit facilities. ~~As a result of the~~ $500 million term loan agreement and related debt extinguishment at Green Plains Processing and Fleischmann’s Vinegar, we no longer consider certain subsidiaries to have restrictions on cash and asset distributions.

Net cash ~~provided by~~used in operating activities was ~~$45.9~~$20.8 million for the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019 compared with ~~$37.7~~$41.1 million ~~used~~ for the same period in ~~2017.~~2018. Operating activities compared to the prior year were primarily affected by ~~a decrease~~changes in ~~inventory, partially offset by lesser decreases in accounts payable and accrued liabilities~~working capital as well as decreases in operating income when compared to the same period of the prior year. Net cash used in investing activities was ~~$11.0~~$7.7 million for the ~~six~~three months ended ~~June 30,~~March 31, 2019 compared with $0.9 million for the same period in 2018, due primarily to capital expenditures at our existing ethanol ~~and vinegar~~ plants partially offset by cash received from working capital adjustments pertaining to the sale of three ethanol plants and cash received from other investing ~~activities.~~activities in 2018. Net cash used in financing activities was ~~$96.2~~$16.5 million for the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 compared with ~~$15.7~~$5.2 million for the same period in ~~2017,~~2018, with the increase in cash used resulting from ~~higher repayments of short-term~~a decrease in net borrowings.

Additionally, Green Plains Trade, Green Plains Cattle and Green Plains Grain use revolving credit facilities to finance working capital requirements. We frequently draw from and repay these facilities which results in significant cash movements reflected on a gross basis within financing activities as proceeds from and payments on short-term borrowings.

We incurred capital expenditures of ~~$14.6~~$10.8 million in the first ~~six~~three months of ~~2018~~2019 primarily for a high-protein expansion project at one of our ethanol plants, and for various maintenance ~~and expansion~~ projects. Capital spending for the remainder of ~~2018~~2019 is expected to be approximately ~~$11.3~~$40.0 million for various projects, which are expected to be financed with ~~cash provided by operating activities and~~ available borrowings under our credit ~~facilities.~~facilities and cash provided by operating activities.

Our business is highly sensitive to the price of commodities, particularly for corn, ethanol, distillers grains, corn oil, natural gas and cattle. We use derivative financial instruments to reduce the market risk associated with fluctuations in commodity prices. Sudden changes in commodity prices may require cash deposits with brokers for margin calls or significant liquidity with little advanced notice to meet margin calls, depending on our open derivative positions. We continuously monitor our exposure to margin calls and believe we will continue to maintain adequate liquidity to cover margin calls from our operating results and borrowings.

We have paid a quarterly cash dividend since August 2013 and anticipate declaring a cash dividend in future quarters on a regular basis. Future declarations of dividends, however, are subject to board approval and may be adjusted as our liquidity, business needs or market conditions change. On ~~May 9, 2018,~~February 7, 2019, our board of directors declared a quarterly cash dividend of $0.12 per share. The dividend was paid on ~~June~~March 15, ~~2018,~~2019, to shareholders of record at the close of business on ~~May 25, 2018.~~February 22, 2019.

For each calendar quarter commencing with the quarter ended September 30, 2015, the partnership agreement requires the partnership to distribute all available cash, as defined, to its partners, including us, within 45 days after the end of each calendar quarter. Available cash generally means all cash and cash equivalents on hand at the end of that quarter less cash reserves established by our general partner plus all or any portion of the cash on hand resulting from working capital borrowings made subsequent to the end of that quarter. On ~~July 19, 2018,~~April 18, 2019, the board of directors of the general partner of the partnership declared a cash distribution of $0.475 per unit on outstanding common and subordinated units. The distribution is payable on ~~August~~May 10, ~~2018,~~2019, to unitholders of record at the close of business on ~~August~~May 3, ~~2018.~~2019.

In August 2014, we announced a share repurchase program of up to $100 million of our common stock. Under the program, we may repurchase shares in open market transactions, privately negotiated transactions, accelerated share buyback programs, tender offers or by other means. The timing and amount of repurchase transactions are determined by our management based on market conditions, share price, legal requirements and other factors. The program may be suspended, modified or discontinued at any time without prior notice. WeThe company did not repurchase any shares during the ~~second~~first quarter of ~~2018 due to certain restrictions under the term loan agreement.~~2019. To date, we have repurchased ~~909,667 shares~~1,119,349 of common stock for approximately ~~$16.7~~$19.7 million under the program.

We believe we have sufficient working capital for our existing operations. Furthermore, our liquidity position was improved as a result of the sale of three of our ethanol plants as well as the sale of Fleischmann’s Vinegar during the fourth quarter of 2018. The majority of net cash proceeds from the sales, net of fees and taxes, was used to pay off the outstanding term loan balance. A continued sustained period of unprofitable operations, however, may strain our liquidity making it difficult to maintain compliance with our financing arrangements. We may sell additional assets or equity or borrow capital to improve or preserve our liquidity, expand our business ~~or build additional~~ or acquire existing businesses. We cannot provide assurance that we will be able to secure funding necessary for additional working capital or these projects at reasonable terms, if at all.

For additional information related to our debt, see Note 98 – Debt included as part of the notes to consolidated financial statements and Note 1112 – Debt included as part of the notes to consolidated financial statements included in our annual report on Form 10-K for the year ended December 31, ~~2017.~~2018.

We were in compliance with our debt covenants at ~~June 30, 2018.~~March 31, 2019. Based on our forecasts, ~~and the current margin environment,~~ we believe we will maintain compliance at each of our subsidiaries for the next twelve months or have sufficient liquidity available on a consolidated basis to resolve noncompliance. We cannot provide assurance that actual results will approximate our forecasts or that we will inject the necessary capital into a subsidiary to maintain compliance with its respective covenants. In the event a subsidiary is unable to comply with its debt covenants, the subsidiary’s lenders may determine that an event of default has occurred, and following notice, the lenders may terminate the commitment and declare the unpaid balance due and payable.

As outlined in Note 8 - Debt, we use LIBOR as a reference rate for certain revolving credit facilities. LIBOR is set to be phased out at the end of 2021. At this time, it is not possible to predict the effect of this change or the alternative reference rate to be used. We will need to renegotiate certain credit facilities to determine the interest rate to replace LIBOR with the new standard that is established. As such, the potential effect of any such event on interest expense cannot yet be determined.

~~On August 29, 2017,~~During the ~~company and substantially all of the company’s subsidiaries, but not including Green Plains Partners and certain other entities as guarantors,~~three months ended September 30, 2018, we entered into ~~a $500.0 million term loan agreement~~exchange agreements with ~~BNP Paribas, as administrative agent and collateral agent and~~ certain other financial institutions, which matures on August 29, 2023, and may be prepaid at any time without premium or penalty other than customary breakage costs with respect to Eurodollar-based loans or certain other limited circumstances in which event a 1.0% prepayment premium would be due.

~~The term loan agreement requires principal payments~~beneficial owners of $1.25 million on the last day of each quarter, beginning on December 31, 2017, with a final installment payable on August 29, 2023, equal to the unpaid principal and interest balances of the term loan agreement. Beginning in 2018, the credit facility also has a provision requiring the company to make special annual payments of 50% or 75% of its available free cash flow, subject to certain limitations. The term loan bears interest at a floating rate of a base rate plus a margin of 4.50% or LIBOR plus a margin of 5.50%.

The term loan agreement is guaranteed by the company and the term loan obligors, and secured by substantially all of the assets of the company and the term loan obligors, including 17 ethanol production facilities with annual capacity of approximately 1.5 billion gallons, as well as the vinegar production facilities.

The term loan agreement provides for customary events of default, which include (subject in certain cases to customary grace and cure periods), among others, the following: nonpayment of principal or interest; breach of covenants or other agreements in the term loan agreement; defaults in failure to pay certain other indebtedness; and certain events of bankruptcy or insolvency. If any event of default occurs, the remaining principal balance and accrued interest on the term loan agreement will become immediately due and payable.

~~In September 2013, we issued $120.0 million of~~our outstanding 3.25% convertible senior notes due 2018 (the “Old Notes”), pursuant to which such investors exchanged

$56.8 million in ~~2018, or 3.25%~~aggregate principal amount of the Old Notes for $56.8 million in aggregate principal amount of notes ~~which~~due October 1, 2019 (the “New Notes”).

The New Notes are senior, unsecured obligations ~~with~~of the company and bear interest at a rate of 3.25% per annum, payable semi-annually in arrears on April 1 and October 1 of each ~~year. Prior to~~year, beginning on October 1, 2018. Interest on the New Notes accrued from, and including, April 1, ~~2018,~~2018. The New Notes will mature on October 1, 2019, unless earlier converted. Holders of New Notes may convert their New Notes, at their option, in integral multiples of $1,000 principal amount, at any time prior to the ~~3.25% notes were not convertible unless certain conditions are satisfied.~~close of business on the scheduled trading day immediately preceding the maturity date of the New Notes. The conversion rate isfor the New Notes will initially be 50.6481 shares of the company’s common stock per $1,000 principal amount of New Notes, which corresponds to an initial conversion price of approximately $19.74 per share of the company’s common stock. The conversion rate will be subject to adjustment upon the occurrence of certain ~~events, including when~~events. Upon conversion of the ~~quarterly cash dividend exceeds $0.04 per share. The~~convertible notes, the company will settle its conversion obligation by delivering shares of its common stock at the applicable conversion rate, ~~was recently adjusted as of June 30, 2018 to 50.6481 shares of common stock per $1,000 of principal, which is equal to a conversion price of approximately $19.74 per share.~~ We may settle the 3.25% notes in cash, common stock or a combination of cash and common stock. For all conversions of notes which occur on or after April 1, 2018, the company elected to convert for whole shares of common stock with any fractional share being settledtogether with cash in ~~lieu.~~ lieu of any fractional share.

~~During fiscal year 2017, approximately $56.3~~We do not have the right to redeem the New Notes at its election before their maturity. The New Notes are subject to customary provisions providing for the acceleration of their principal and interest upon the occurrence of events that constitute an “event of default.” Events of default include, among other events, certain payment defaults, defaults in settling conversions, certain defaults under our other indebtedness and certain insolvency-related events. Upon maturity, we will settle the New Notes in cash. At March 31, 2019, the outstanding principal balance was $54.6 million ~~in aggregate principal of~~on the ~~3.25% notes were exchanged for cash and 2,783,725 shares of the company’s common stock. During the three months ended June 30, 2018, an additional 50 shares~~

of the company’s common stock were exchanged for approximately $1 thousand in aggregate principal amount of the 3.25% notes. Following the closing of these agreements, $63.7 million aggregate principal of the 3.25% notes remain outstanding.New Notes.

In August 2016, we issued $170.0 million of 4.125% convertible senior notes due in 2022, or 4.125% notes, which are senior, unsecured obligations with interest payable on March 1 and September 1 of each year. Prior to March 1, 2022, the 4.125% notes are not convertible unless certain conditions are satisfied. The initial conversion rate is 35.7143 shares of common stock per $1,000 of principal which is equal to a conversion price of approximately $28.00 per share. The conversion rate is subject to adjustment upon the occurrence of certain events, including when the quarterly cash dividend exceeds $0.12 per share. We may settle the 4.125% notes in cash, common stock or a combination of cash and common stock. At March 31, 2019, the outstanding principal balance was $144.3 million on the 4.125% notes.

We have small equipment financing loans, ~~capital~~finance leases on equipment or facilities, and other forms of debt financing.

Green Plains Grain has a $125.0 million senior secured asset-based revolving credit facility to finance working capital up to the maximum commitment based on eligible collateral, which matures in July of 2019. This facility can be increased by up to $75.0 million with agent approval and up to $50.0 million for seasonal borrowings. Total commitments outstanding under the facility cannot exceed $~~250.0~~$250.0 million. At ~~June 30, 2018,~~March 31, 2019, the outstanding principal balance was ~~$71.8~~$37.0 million on the facility and ~~our~~the interest rate was ~~5.22%~~5.53%.

Green Plains Trade has a $300.0 million senior secured asset-based revolving credit facility to finance working capital up to the maximum commitment based on eligible collateral, which matures in July of 2022. This facility can be increased by up to $70.0 million with agent approval. Advances are subject to variable interest rates equal to a daily LIBOR rate plus 2.25% or the base rate plus 1.25%. The unused portion of the credit facility is also subject to a commitment fee of 0.375% per annum. At ~~June 30, 2018,~~March 31, 2019, the outstanding principal balance was ~~$131.2~~$87.2 million on the facility and the interest rate was ~~4.27%~~4.73%.

Green Plains Commodity Management has an uncommitted $20.0 million revolving credit facility which matures April 30, 2023 to finance margins related to its hedging programs. Advances are subject to variable interest rates equal to LIBOR plus 1.75%. At ~~June 30, 2018,~~March 31, 2019, the outstanding principal balance was ~~$11.4~~$9.3 million on the facility and the interest rate was ~~3.73%~~4.17%.

Green Plains Cattle has a ~~$425.0~~$500.0 million senior secured asset-based revolving credit facility to finance working capital up to the maximum commitment based on eligible collateral, which matures in April of 2020. This facility can be increased by up to ~~$75.0~~$100.0 million with agent approval and includes a swing-line sublimit of $20.0 ~~million.~~million. At ~~June 30, 2018,~~March 31, 2019, the outstanding principal balance was ~~$243.1~~$393.0 million on the facility and our interest rate was ~~4.11%~~4.50%.

Advances under the revolving credit facility, as amended, are subject to variable interest rates equal to LIBOR plus 2.0% to 3.0% or the base rate plus 1.0% to 2.0%, depending on the preceding three months’ excess borrowing availability. The unused portion of the credit facility is also subject to a commitment fee of 0.20% to 0.30% per annum, depending on the preceding three months’ excess borrowing availability. Interest is payable as required, but not less than quarterly in arrears and principal is due upon maturity.

~~Subsequent to June 30, 2018, the company amended the~~ Green Plains Cattle senior secured asset-based revolving credit facility, increasing the maximum commitment from $425.0 million to $500.0 million. The amended credit facility also includes an accordion feature that enables the credit facility to be increased by up to $100.0 million with agent approval.

Green Plains Partners, through a wholly owned subsidiary, has a ~~$235.0~~$200.0 million revolving credit facility, which matures on July 1, 2020, to fund working capital, acquisitions, distributions, capital expenditures and other general partnership purposes. ~~On February 20, 2018, the partnership accessed a portion of its available accordion to increase the revolving~~The credit facility can be increased by ~~$40.0~~an additional $20.0 million ~~from $195.0 million to $235.0 million.~~without the consent of the lenders. At ~~June 30, 2018,~~March 31, 2019, the outstanding principal balance ~~was $128.9 million on~~of the facility was $135.0 million and ~~the~~our interest rate was ~~4.86%~~5.51%.

Contractual obligations as of ~~June 30, 2018,~~March 31, 2019, were as follows (in thousands):


		Payments Due By Period										Payments Due By Period
Contractual Obligations		Total	Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years			Total	Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years

Long-term and short-term debt obligations (1)	$	1,343,485	$	528,004	$	141,208	$	182,035	$	492,238	$	914,178	$	584,548	$	137,394	$	172,015	$	20,221
Interest and fees on debt obligations (2)		247,208		68,816		89,306		75,249		13,837		72,524		41,148		18,293		5,177		7,906
Operating lease obligations (3)		100,092		28,723		35,721		13,846		21,802		73,220		20,019		23,639		9,133		20,429
Other		13,227		424		6,544		4,379		1,880		22,261		3,907		5,715		2,975		9,664
Purchase obligations:
Forward grain purchase contracts (4)		306,066		299,146		4,503		2,000		417		178,329		173,819		2,593		1,917		-
Other commodity purchase contracts (5)		175,231		175,231		-		-		-		178,568		166,905		9,346		2,317		-
Other		419		209		210		-		-		79		79		-		-		-
Total contractual obligations	$	2,185,728	$	1,100,553	$	277,492	$	277,509	$	530,174	$	1,439,159	$	990,425	$	196,980	$	193,534	$	58,220

Key accounting policies, including those relating to revenue recognition, depreciation of property and equipment, ~~asset retirement obligations,~~carrying value of intangible assets, impairment of long-lived assets and goodwill, derivative financial instruments, and accounting for income taxes, are impacted significantly by judgments, assumptions and estimates used in the preparation of the consolidated financial statements. Information about our critical accounting policies and estimates are included in our annual report on Form 10-K for the year ended December 31, ~~2017.~~2018.

We do not have any off-balance sheet ~~arrangements other than the operating leases, which are entered into during the ordinary course of business and disclosed in the~~ arrangements.

We use various financial instruments to manage and reduce our exposure to various market risks, including changes in commodity prices and interest rates. We conduct all of our business in U.S. dollars and are not currently exposed to foreign currency risk.

We are exposed to interest rate risk through our loans which bear interest at variable rates. Interest rates on our variable-rate debt are based on the market rate for the lender’s prime rate or LIBOR. A 10% increase in interest rates would affect our interest cost by approximately ~~$6.0~~$3.2 million per year. At ~~June 30, 2018,~~March 31, 2019, we had ~~$1.3 billion~~$883.3 million in debt, ~~$1.1 billion~~$661.5 million of which had variable interest rates.

Our business is highly sensitive to commodity price risk, particularly for ethanol, corn, distillers grains, corn oil, natural gas, ~~ethanol, distillers grains~~ and cattle. Ethanol prices are sensitive to world crude oil supply and demand, the price of crude oil, gasoline and corn, the price of substitute fuels, refining capacity and utilization, government regulation and consumer demand for alternative fuels. Corn prices are affected by weather conditions, yield, changes in domestic and global supply and demand, and government programs and policies. Distillers grains prices are impacted by livestock numbers on feed, prices for feed alternatives and supply, which is associated with ethanol plant production. Natural gas prices are influenced by severe weather in the summer and winter and hurricanes in the spring, summer and fall. Other factors include North American energy exploration and production, and the amount of natural gas in underground storage during injection and withdrawal seasons. Ethanol prices are sensitive to world crude oil supply and demand, the price of crude oil, gasoline and corn, the price of substitute fuels, refining capacity and utilization, government regulation and consumer demand for alternative fuels. Distillers grains prices are impacted by livestock numbers on feed, prices for feed alternatives and supply, which is associated with ethanol plant production. Cattle prices are impacted by weather conditions, overall economic conditions and government ~~regulations.~~regulations and packer processing disruptions.

To reduce the risk associated with fluctuations in the price of ethanol, corn, ~~natural gas, ethanol,~~ distillers grains, corn oil, natural gas and cattle, at times we use forward fixed-price physical contracts and derivative financial instruments, such as futures and options executed on the Chicago Board of Trade, ~~and~~ the New York Mercantile Exchange and the Chicago Mercantile Exchange. We focus on locking in favorable operating margins, when available, using a model that continually monitors market prices for corn, natural gas and other inputs relative to the price for ethanol and distillers grains at each of our production facilities. We create offsetting positions using a combination of forward fixed-price purchases, sales contracts and derivative financial instruments. As a result, we frequently have gains on derivative financial instruments that are offset by losses on forward fixed-price physical contracts or inventories and vice versa. Our results are impacted by a mismatch of gains or losses associated with the derivative instrument during a reporting period when the physical commodity purchases or sale has not yet occurred. During the three ~~and six~~ months ended ~~June 30, 2018,~~March 31, 2019, revenues included net ~~gains~~losses of ~~$6.7~~$28.7 million ~~and $9.4 million, respectively,~~ and cost of goods sold included net gains of ~~$7.8~~$3.9 million ~~and net losses of $8.7 million, respectively,~~ associated with derivative financial instruments.

In the ethanol production segment, net gains and losses from settled derivative instruments are offset by physical commodity purchases or sales to achieve the intended operating margins. To reduce commodity price risk caused by market fluctuations, we enter into exchange-traded futures and options contracts that serve as economic hedges.

Our exposure to market risk, which includes the impact of our risk management activities resulting from our fixed-price purchase and sale contracts and derivatives, is based on the estimated net income effect resulting from a hypothetical 10% change in price for the next 12 months starting on ~~June 30, 2018, are~~March 31, 2019, which is as follows (in thousands):


Commodity	Estimated Total Volume Requirements for the Next 12 Months (1)	Unit of Measure	Net Income Effect of Approximate 10% Change in Price		Estimated Total Volume Requirements for the Next 12 Months (1)	Unit of Measure	Net Income Effect of Approximate 10% Change in Price

Ethanol	1,470,000	Gallons	$	167,585	1,123,000	Gallons	$	122,793
Corn	518,000	Bushels	$	152,095	387,000	Bushels	$	106,253
Distillers grains	4,100	Tons (2)	$	37,717	2,900	Tons (2)	$	26,398
Corn oil	359,000	Pounds	$	6,802	292,000	Pounds	$	6,031
Natural gas	41,700	MmBTU	$	7,030	31,200	MmBTU	$	4,922

(1) Estimated volumes ~~reflect anticipated expansion of production capacity at our ethanol plants and assumes~~assume production at full capacity.

In the agribusiness and energy services segment, our inventories, physical purchase and sale contracts and derivatives are marked to market. To reduce commodity price risk caused by market fluctuations for purchase and sale commitments of grain and grain held in inventory, we enter into exchange-traded futures and options contracts that serve as economic hedges.

The market value of exchange-traded futures and options used for hedging are highly correlated with the underlying market value of grain inventories and related purchase and sale contracts for grain. The less correlated portion of inventory and purchase and sale contract market values, known as basis, is much less volatile than the overall market value of exchange-traded futures and tends to follow historical patterns. We manage this less volatile risk by constantly monitoring our position relative to the price changes in the market. Inventory values are affected by the month-to-month spread in the

futures markets. These spreads are also less volatile than overall market value of our inventory and tend to follow historical patterns, but cannot be mitigated directly. Our accounting policy for futures and options, as well as the underlying inventory held for sale and purchase and sale contracts, is to reflect their current market values and include gains and losses in the consolidated statement of operations.

Our daily net commodity position consists of inventories related to purchase and sale contracts and exchange-traded contracts. The fair value of our position ~~and related~~was approximately $2.4 million for grain at March 31, 2019. Our market risk at ~~June 30, 2018~~that date, based on the estimated net income effect resulting from a hypothetical 10% change in price, was ~~immaterial.~~ approximately $0.2 million.

In the food and ingredients segment, our physical cattle purchase and sale contracts and derivatives are marked to market. To reduce commodity price risk caused by market fluctuations for purchase and sale commitments of cattle, we enter into exchange-traded futures and options contracts that serve as ~~economic~~ hedges.

The market value of exchange-traded futures and options used for hedging are highly correlated with the underlying market value of purchase and sale contracts for cattle. The less correlated portion of inventory and purchase and sale contract market values, known as basis, is much less volatile than the overall market value of exchange-traded futures and tends to follow historical patterns. We manage this less volatile risk by constantly monitoring our position relative to the price changes in the market. Inventory values are affected by the month-to-month spread in the futures markets. These spreads are also less volatile than overall market value of our inventory and tend to follow historical patterns, but cannot be mitigated directly. Our accounting policy for futures and options, as well as the underlying inventory held for sale and purchase and sale contracts, is to reflect their current market values and include gains and losses in the consolidated statement of operations.

Our daily net commodity position consists of inventories related to purchase and sale contracts and exchange-traded contracts. The fair value of our position was approximately ~~$7.3~~$1.6 million for cattle at ~~June 30, 2018.~~March 31, 2019. Our market risk at that date, based on the estimated net income effect resulting from a hypothetical 10% change in price, was approximately ~~$0.6~~$0.1 million.

Our daily net commodity position consists of inventories related to purchase and sale contracts and exchange-traded contracts. The fair value of our position was approximately ~~$19.0~~$11.7 million for grain and other cattle feed at ~~June 30, 2018.~~March 31, 2019. Our market risk at that date, based on the estimated net income effect resulting from a hypothetical 10% change in price, was approximately ~~$0.4~~$0.9 million.

We maintain disclosure controls and procedures designed to ensure information that must be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, as appropriate, to allow timely decisions regarding required financial disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Under the supervision and participation of our chief executive officer and chief financial officer, management carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of ~~June 30, 2018,~~March 31, 2019, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act and concluded that our disclosure controls and procedures were effective.

Management is responsible for establishing and maintaining effective internal control over financial reporting to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our consolidated financial statements for external purposes in accordance with U.S. generally accepted accounting principles. There were no material changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We implemented internal controls to ensure we properly assessed the impact of the new lease accounting standard on our financial statements to facilitate the adoption on January 1, 2019. There were no significant changes to our internal control over financial reporting due to the adoption of this standard.

We are currently involved in litigation that has arisen during the ordinary course of business. We do not believe this litigation will have a material adverse effect on our financial position, results of operations or cash flows.

Investors should carefully consider the discussion of risks and the other information in our annual report on Form 10-K for the year ended December 31, ~~2017,~~2018, in Part I, Item 1A, “Risk Factors,” and the discussion of risks and other information in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” under “Cautionary Information Regarding Forward-Looking Statements,” of this report. Investors should also carefully consider the discussion of risks with the partnership under the heading “Risk Factors” and other information in their annual report on Form 10-K for the year ended December 31, ~~2017.~~2018. Although we have attempted to discuss key factors, our investors need to be aware that other risks may prove to be important in the future. New risks may emerge at any time and we cannot predict such risks or estimate the extent to which they may affect our financial performance. The following risk factor supplements and/or updates risk factors previously disclosed and should be considered in conjunction with the other information included in, or incorporated by reference in, this quarterly report on Form 10-Q.

~~Government mandates affecting ethanol usage could change and impact the ethanol market.~~

Under the provisions of the EISA, Congress established a mandate setting the minimum volume of renewable fuels that must be blended with gasoline under the RFS II, which affects the domestic market for ethanol. The EPA has the authority to waive the requirements, in whole or in part, if there is inadequate domestic renewable fuel supply or the requirement severely harms the economy or the environment. After 2022, volumes shall be determined by the EPA in coordination with the Secretaries of Energy and Agriculture, taking into account such factors as impact on environment, energy security, future rates of production, cost to consumers, infrastructure, and other factors such as impact on commodity prices, job creation, rural economic development, or impact on food prices.

Our operations could be adversely impacted by legislation or EPA actions, as set forth below or otherwise, that may reduce the RFS II mandate. Similarly, should federal mandates regarding oxygenated gasoline be repealed, the market for domestic ethanol could be adversely impacted. Economic incentives to blend based on the relative value of gasoline versus ethanol, taking into consideration the octane value of ethanol, environmental requirements and the RFS II mandate, may affect future demand. A significant increase in supply beyond the RFS II mandate could have an adverse impact on ethanol prices. Moreover, changes to RFS II could negatively impact the price of ethanol or cause imported sugarcane ethanol to become more economical than domestic ethanol.

According to RFS II, if mandatory renewable fuel volumes are reduced by at least 20% for two consecutive years, the EPA is required to modify, or reset, statutory volumes through 2022. Since 2018 is the first year the total RVOs are more than 20% below statutory levels, the EPA Administrator directed his staff to initiate the required technical analysis to perform any future reset consistent with the reset rules. If 2019 RVOs are also more than 20% below statutory levels, the RVO reset will be triggered under RFS II and the EPA will be required to modify statutory volumes through 2022 within one year of the trigger event, based on the same factors used to set the RVOs post-2022.

The U.S. Federal District Court for the D.C. Circuit ruled on July 28, 2017, in favor of the Americans for Clean Energy and its petitioners against the EPA related to its decision to lower the 2016 volume requirements. The Court concluded the EPA erred in how it interpreted the “inadequate domestic supply” waiver provision of RFS II, which authorizes the EPA to consider supply-side factors affecting the volume of renewable fuel available to refiners, blenders, and importers to meet the statutory volume requirements. As a result, the Court vacated the EPA’s decision to reduce the total renewable fuel volume requirements for 2016 through its waiver authority, which the EPA is expected to address.

On November 22, 2017, the EPA issued a Notice of Denial of Petitions for rulemaking to change the RFS point of obligation which resulted in the EPA confirming the point of obligation will not change. However, Valero Energy and refining trade group American Fuel and Petrochemical Manufacturers (AFPM) have challenged the EPA’s handling of the U.S. biofuel mandate in separate actions on January 26, 2018. AFPM is asking the D.C. U.S. Court of Appeals to review the EPA’s November 2017 decision to reject proposed changes to the structure of the RFS, including moving the point of obligation from refiners and importers of fuel to fuel blenders. Valero filed two petitions with the same court, one seeking review of the annual Renewable Volume Obligation (RVO) rule set by the EPA for 2018 and 2019, which dictates the

volumes of renewable fuels to be blended in the coming years, and a second arguing against the EPA’s December 2017 assertion that the agency has fulfilled its duty to periodically review the RFS as directed by statute.

Future demand may be influenced by economic incentives to blend based on the relative value of gasoline versus ethanol, taking into consideration the octane value of ethanol, environmental requirements and the RFS II mandate. A significant increase in supply beyond the RFS II mandate could have an adverse impact on ethanol prices. Moreover, any changes to RFS II originating from issues associated with the market price of RINs could negatively impact the demand for ethanol, discretionary blending of ethanol and/or the price of ethanol. Recent actions by the EPA to grant small refiner exemptions as well as the Philadelphia Energy Solutions Bankruptcy Court’s decision to grant RIN relief have resulted in lower RIN prices.

Flexible-fuel vehicles, which are designed to run on a mixture of fuels such as E85, receive preferential treatment to meet corporate average fuel economy standards in the form of CAFE credits. Flexible-fuel vehicle credits have been decreasing since 2014 and will be completely phased out by 2020. Absent CAFE preferences, auto manufacturers may not be willing to build flexible-fuel vehicles, reducing the growth of E85 markets and resulting in lower ethanol prices.

~~To the extent federal or state laws or regulations are modified, the demand for ethanol may be reduced, which could negatively and materially affect our financial performance.~~

We announced that we are evaluating the performance of our entire portfolio of assets and businesses. Based on this evaluation, we may sell certain assets or businesses or exit particular markets that are no longer a strategic fit or no longer meet their growth or profitability targets. Depending on the nature of the assets sold, our profitability may be impacted by lost operating income or cash flows from such businesses. In addition, divestitures we complete may not yield the targeted improvements in their business and may divert management’s attention from our day-to-day operations. Any charges that we are required to record or the failure to achieve the intended financial results associated with our portfolio optimization strategy could have an adverse effect on our business, financial condition or results of operations.

Employees surrender shares when restricted stock grants are vested to satisfy statutory minimum required payroll tax withholding obligations.

The following table lists the shares that were surrendered during the ~~second~~first quarter of ~~2018:~~2019:

In August 2014, we announced a share repurchase program of up to $100 million of our common stock. Under this program, we may repurchase shares in open market transactions, privately negotiated transactions, accelerated buyback programs, tender offers or by other means. The timing and amount of the transactions are determined by management based on its evaluation of market conditions, share price, legal requirements and other factors. The program may be suspended, modified or discontinued at any time, without prior notice. We did not repurchase any shares during the ~~second~~first quarter of ~~2018 due to certain restrictions under the term loan agreement.~~2019. Approximately ~~$83.3~~$80.3 million of shares are remaining to be repurchased under the program.

On April 13, 2018, we entered into a privately negotiated agreement with a holder, of our 3.25% Convertible Senior Notes due 2018 (the “2018 Notes”). Under the agreement, we exchanged 50 shares of our common stock, par value $0.01 per share, for $1 thousand in aggregate principal amount of the 2018 Notes. The exchange was completed on April 23, 2018.

~~The exchange of treasury shares of common stock for the 2018 Notes is being made pursuant to an exemption from registration provided in Section 4(a)(2) of the Securities Act of 1933, as amended.~~

On April 30, 2018 Green Plains Commodity Management entered into an agreement for an uncommitted $20.0 million revolving credit facility, which matures on April 30, 2023, to finance margins related to its hedging programs. Advances are subject to variable interest rates equal to LIBOR plus 1.75%. This credit agreement is filed as Exhibit 10.2 to this Quarterly Report on Form 10-Q and incorporated herein by reference.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



		Page
Commonly Used Defined Terms		2
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements

	Consolidated Balance Sheets	3

	Consolidated Statements of Operations	4

	Consolidated Statements of Comprehensive Income	5

	Consolidated Statements of Cash Flows	6

	Notes to Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3132

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4443

Item 4.	Controls and Procedures	4645


PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	4746

Item 1A.	Risk Factors	4746

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4846

Item 3.	Defaults Upon Senior Securities	4946

Item 4.	Mine Safety Disclosures	4946

Item 5.	Other Information	4946

Item 6.	Exhibits	5047

Signatures		5148


Amounts of Identifiable Assets Acquired and Liabilities Assumed
Accounts receivable		$	1,897
Inventory		$	~~22,450~~
~~Prepaid expenses and other~~			52104,809
Property and equipment, net			~~36,960~~16,190

Current liabilities			~~(180)~~(118)
	Total identifiable net assets	$	~~59,282~~122,778


Amounts of Identifiable Assets Disposed and Liabilities Relinquished
Cash		$	2,107
Accounts receivable, net			15,935
Inventory			15,167
Prepaid expenses and other			853
Property and equipment			64,552
Other assets			79,389

Current liabilities			(8,587)
Deferred tax liabilities			(26,617)
	Total identifiable net assets		142,799

Goodwill			142,002
	Net assets disposed	$	284,801


Amounts of Identifiable Assets Disposed and Liabilities Relinquished
Inventory		$	36,812
Prepaid expenses and other			189
Property and equipment			184,970
Other assets			1,717

Current liabilities			(746)
Other liabilities			(4,706)
	Total identifiable net assets		218,236

Goodwill			6,188
	Net assets disposed	$	224,424


	March 31, 2019		December 31, 2018
Green Plains Cattle:
$500.0 million revolver	$	393,000	$	374,492
Green Plains Grain:
$125.0 million revolver		37,000		41,000
$50.0 million inventory financing		-		-
Green Plains Trade:
$300.0 million revolver		87,205		108,485
Green Plains Commodity Management:
$20.0 million hedge line		9,318		14,266
	$	526,523	$	538,243


	Three Months Ended June 30, 2018
	Ethanol Production		Agribusiness & Energy Services		Food & Ingredients		Partnership		Eliminations		Total
Revenues:
Revenues from contracts with customers under ASC Topic 606:
Ethanol	$	634	$	-	$	-	$	-	$	-	$	634
Distillers grains		62,657		-		-		-		-		62,657
Cattle and vinegar		-		-		222,059		-		-		222,059
Service revenues		-		-		-		1,229		-		1,229
Other		1,201		806		-		-		-		2,007
Intersegment revenues		875		-		38		-		(913)		-
Total revenues from contracts with customers		65,367		806		222,097		1,229		(913)		288,586
Revenues from contracts accounted for as derivatives under ASC Topic 815 (1):
Ethanol		451,083		106,117		-		-		-		557,200
Distillers grains		49,940		32,706		-		-		-		82,646
Corn oil		19,132		3,488		5,350		-		-		27,970
Grain		337		22,843		-		-		-		23,180
Cattle and vinegar		-		-		(1,522)		-		-		(1,522)
Other		4,272		4,114		-		-		-		8,386
Intersegment revenues		3,344		14,128		-		2,517		(19,989)		-
Total revenues from contracts accounted for as derivatives		528,108		183,396		3,828		2,517		(19,989)		697,860
Leasing revenues under ASC Topic 840 (2)		-		-		-		22,094		(21,703)		391
Total Revenues	$	593,475	$	184,202	$	225,925	$	25,840	$	(42,605)	$	986,837


	Asset Derivatives'						Liability Derivatives'
	Fair Value						Fair Value
	March 31, 2019			December 31, 2018			March 31, 2019			December 31, 2018
Derivative financial instruments	$	7,428	(1)	$	9,976	(2)	$	8,117	(3)	$	7,852	(4)
Other assets		-			1			-			-
Other liabilities		-			-			-			2
Total	$	7,428		$	9,977		$	8,117		$	7,854


Location of Gain or (Loss)	Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
Reclassified from Accumulated Other	Three Months Ended June 30,				Six Months Ended June 30,
Comprehensive Income into Income	2018		2017		2018		2017
Revenues	$	(313)	$	2,825	$	1,448	$	6,977
Cost of goods sold		1,079		(648)		101		182
Net gain recognized in earnings before tax	$	766	$	2,177	$	1,549	$	7,159


	Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
Location of Gain or (Loss) Reclassified from Accumulated	Three Months Ended March 31,
Other Comprehensive Income into Income	2019		2018
Revenues	$	(13,359)	$	1,761
Cost of goods sold		(157)		(978)
Net gain (loss) recognized in loss before tax	$	(13,516)	$	783


	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives
Gain or (Loss) Recognized in	Three Months Ended June 30,				Six Months Ended June 30,
Other Comprehensive Income on Derivatives	2018		2017		2018		2017
Commodity contracts	$	(5,422)	$	(5,444)	$	16,844	$	(2,834)


	Location and Amount of Gain or (Loss) Recognized in
	Income on Cash Flow and Fair Value Hedging Relationships
	for the Three Months Ended June 30,
		2018				2017
		Revenue		Cost of Goods Sold		Revenue		Cost of Goods Sold
Gain (loss) on cash flow hedging relationships:

Commodity contracts:
Amount of gain (loss) reclassified from accumulated other comprehensive income into income	$	(313)	$	1,079	$	2,825	$	(648)

Gain (loss) on fair value hedging relationships:

Commodity contracts:
Hedged item		-		1,103		(31)		(2,526)
Derivatives designated as hedging instruments		-		(446)		(578)		2,406

Total amounts of income and expense line items presented in the statement of operations in which the effects of cash flow or fair value hedges are recorded	$	(313)	$	1,736	$	2,216	$	(768)


	Location and Amount of Gain or (Loss) Recognized in
	Income on Cash Flow and Fair Value Hedging Relationships
	for the Six Months Ended June 30,
		2018				2017
		Revenue		Cost of Goods Sold		Revenue		Cost of Goods Sold
Gain on cash flow hedging relationships:

Commodity contracts:
Amount of gain reclassified from accumulated other comprehensive income into income	$	1,448	$	101	$	6,977	$	182

Gain (loss) on fair value hedging relationships:

Commodity contracts:
Hedged item		-		10,496		1,390		(4,454)
Derivatives designated as hedging instruments		-		(8,878)		(1,673)		5,445

Total amounts of income and expense line items presented in the statement of operations in which the effects of cash flow or fair value hedges are recorded	$	1,448	$	1,719	$	6,694	$	1,173


	Shares	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2017	143,750	$	12.44	1.8	$	635
Granted	-		-	-		-
Exercised	(15,000)		10.00	-		120
Forfeited	-		-	-		-
Expired	-		-	-		-
Outstanding at June 30, 2018	128,750	$	12.72	1.5	$	718
Exercisable at June 30, 2018 (1)	128,750	$	12.72	1.5	$	718


	~~Six Months Ended June 30, 2018~~
~~Risk-free interest rate~~	~~2.44~~	%
~~Dividend yield~~	~~2.64~~	%
~~Expected volatility~~	~~45.11~~	%


	FY 2019 Performance Awards			FY 2018 Performance Awards
Risk-free interest rate		2.45	%		2.44	%
Dividend yield		3.13	%		2.64	%
Expected volatility		41.69	%		45.11	%
Monte Carlo valuation		99.62	%		97.39	%
Closing stock price on the date of grant	$	15.34		$	18.15


	Performance Shares	Weighted- Average Grant- Date Fair Value		Weighted-Average Remaining Vesting Term (in years)
Non-Vested at December 31, 2018	134,022	$	17.92
Granted	216,703		15.43
Non-Vested at March 31, 2019	350,725	$	16.38	2.6


	Balance at		Adjustments		Balance at
	December 31,		Due to		January 1,
	2018		ASC 842		2019
		(audited)
Assets
Operating lease right-of-use assets	$	-	$	61,268	$	61,268
Other assets		365		(365)		-

Liabilities
Accounts payable		196		(196)		-
Operating lease current liabilities		-		18,315		18,315
Operating lease long-term liabilities		-		46,024		46,024
Other liabilities		3,240		(3,240)		-


	Three Months Ended
	March 31, 2019
Lease expense
Operating lease expense	$	5,549
Variable lease expense (1)		151
Total lease expense	$	5,700


	Three Months Ended
	March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	5,550



	March 31, 2019
Weighted average remaining lease term		6.8 years

Weighted average discount rate		5.46%


Period	Total Number of Shares Withheld for Employee Awards	Average Price Paid per Share
April 1 - April 30	-	$	-
May 1 - May 31	6,440		19.30
June 1 - June 30	-		-
Total	6,440	$	19.30




Exhibit No.	Description of Exhibit
*10.1	~~Replacement Page for Fifth Amendment to the Credit~~Side Letter Agreement dated as of November 16, 2017, among Green Plains Cattle Company LLC, Bank of the West and ING Capital LLC, as Joint Administrative Agents, and the lenders party to the Credit Agreement, originally filed as Exhibit 10.1 to the company’s Current Report on Form 8-K dated November 17, 2017
~~10.2~~	~~Credit Agreement, dated April 30,~~October 22, 2018 by and ~~among Green Plains Commodity Management LLC (as borrower)~~between the company and ~~Macquarie Bank Limited (as agent for lenders)~~
~~10.3~~	~~Second Amendment to Term Loan Agreement, dated July 13, 2018, among Green Plains Inc. and BNP Paribas, as administrative agent and collateral agent~~
~~10.4~~	Sixth Amendment to the Credit Agreement, dated as of July 31, 2018, by and among Green Plains Cattle Company LLC and Bank of the West and ING Capital LLC, as Joint Administrative Agents, and the lenders party to the Credit AgreementKenneth M. Simril
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following information from Green Plains Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended ~~June 30, 2018,~~March 31, 2019, formatted in Extensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Cash Flows, and (v) the Notes to Consolidated Financial Statements



Date: ~~August 2, 2018~~May 9, 2019	GREEN PLAINS INC. (Registrant) By: /s/ Todd A. Becker _ Todd A. Becker President and Chief Executive Officer (Principal Executive Officer)
Date: ~~August 2, 2018~~May 9, 2019	By: /s/ John W. Neppl _ John W. Neppl Chief Financial Officer (Principal Financial Officer)

Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives

Three Months Ended March 31,

Gain (Loss) Recognized in Other Comprehensive Income on Derivatives

Commodity contracts