Quarterly report pursuant to sections 13 or 15(d)

2. VARIABLE INTEREST ENTITY.

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2. VARIABLE INTEREST ENTITY.
 3 Months Ended
Mar. 31, 2012
Consolidation, Variable Interest Entity, Policy [Policy Text Block]
2. VARIABLE INTEREST ENTITY.

The Company concluded that at all times since New PE Holdco’s inception, New PE Holdco has been a VIE because the owners of New PE Holdco, due to the Company’s involvement through its contractual arrangements, have at all times lacked the power to direct the activities that most significantly impacted its economic performance. Some of these activities include efficient management and operation of the Pacific Ethanol Plants, sale of ethanol, the procurement of feedstock, sale of co-products and implementation of risk management strategies. At the time of New PE Holdco’s inception, however, the Company did not have an obligation to absorb losses or receive benefits that could potentially be significant to New PE Holdco and, as a result, it was determined that the Company was not New PE Holdco’s primary beneficiary. Upon the Company’s purchase of its 20% ownership interest in New PE Holdco on October 6, 2010, the Company, through its ownership interest, had an obligation to absorb losses and receive benefits that could potentially be significant to New PE Holdco. As a result, the Company then became the primary beneficiary of New PE Holdco and began consolidating the financial results of New PE Holdco. On November 29, 2011, the Company purchased an additional 7% ownership interest in New PE Holdco for $4,502,000 in cash. On December 19, 2011, the Company purchased another 7% ownership interest in New PE Holdco for $4,615,000 in cash.


The carrying values and classification of assets that are collateral for the obligations of New PE Holdco consisted of the following (in thousands):


    March 31, 2012   December 31, 2011
Cash and cash equivalents   $ 1,293     $ 2,070  
Other current assets     10,742       14,320  
Property and equipment     153,134       155,523  
Other assets     1,456       1,693  
Total assets   $ 166,625     $ 173,606  

Current liabilities   $ 4,883     $ 3,064  
Long-term debt     79,257       73,256  
Other liabilities     171       158  
Total liabilities   $ 84,311     $ 76,478  

The Company’s acquisition of its ownership interest in New PE Holdco does not impact the Company’s rights or obligations under any of its contractual agreements. Further, creditors of New PE Holdco do not have recourse to the Company. Since its acquisition, the Company has not provided any additional support to New PE Holdco beyond the terms of its contractual agreements.