FutureFuel Corp.
FutureFuel Corp. (Form: 10-Q, Received: 05/07/2013 16:17:00)
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
(Mark One)
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2013
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________
Commission file number: 0-52577
 
FUTUREFUEL CORP.
(Exact Name of Registrant as Specified in Its Charter)
 
Delaware
 
20-3340900
(State or Other Jurisdiction of
Incorporation or Organization)
 
(IRS Employer Identification No.)
8235 Forsyth Blvd., Suite 400
St. Louis, Missouri  63105
(Address of Principal Executive Offices)
 
(805) 565-9800
(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  o
 
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  o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):
 
Large accelerated filer o
Accelerated filer
Non-accelerated filer o
(do not check if a smaller reporting company)
Smaller reporting company
o
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No  √
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of May 7, 2013: 43,334,441
 
 
 

 
 
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
 
The following sets forth our unaudited consolidated balance sheet as at March 31, 2013, our audited consolidated balance sheet as at December 31, 2012, our unaudited consolidated statements of operations and comprehensive income for the three- month periods ended March 31, 2013 and March 31, 2012, and our consolidated statements of cash flows for the three-month periods ended March 31, 2013 and March 31, 2012.
 
FutureFuel Corp.
Consolidated Balance Sheets
As of March 31, 2013 and December 31, 2012
(Dollars in thousands)
 
   
(Unaudited)
March 31, 2013
   
December 31, 2012
 
Assets
           
Cash and cash equivalents
  $ 62,211     $ 58,737  
Accounts receivable, net of allowances of $0 and $0 at March 31, 2013 and December 31, 2012, respectively
    27,903       22,782  
Accounts receivable – related parties
    4,485       -  
Inventory
    70,702       41,992  
Prepaid expenses
    1,423       1,595  
Prepaid expenses – related parties
    32       32  
Marketable securities
    96,352       87,768  
Other current assets
    1,586       1,030  
Total current assets
    264,694       213,936  
Property, plant and equipment, net
    138,142       138,865  
Other assets
    2,492       2,436  
Total noncurrent assets
    140,634       141,301  
Total Assets
  $ 405,328     $ 355,237  
                 
Liabilities and Stockholders’ Equity
               
Accounts payable
  $ 21,826     $ 12,589  
Accounts payable – related parties
    3,841       3,887  
Income taxes payable
    4,908       620  
Current deferred income tax liability
    9,640       6,953  
Deferred revenue – short-term
    6,094       6,071  
Contingent liability – short-term
    2,521       2,521  
Accrued expenses and other current liabilities
    4,509       3,593  
Accrued expenses and other current liabilities – related parties
    50       -  
Total current liabilities
    53,389       36,234  
Deferred revenue – long-term
    26,976       27,684  
Other noncurrent liabilities
    954       948  
Noncurrent deferred income tax liability
    29,721       30,037  
Total noncurrent liabilities
    57,651       58,669  
Total liabilities
    111,040       94,903  
Commitments and contingencies
               
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, none issued and outstanding
    -       -  
Common stock, $0.0001 par value, 75,000,000 shares authorized, 43,334,441 and 41,739,569 issued and outstanding as of March 31, 2013 and December 31, 2012, respectively
    4       4  
Accumulated other comprehensive income
    7,976       2,597  
Additional paid in capital
    276,333       257,041  
Retained earnings
    9,975       692  
Total stockholders’ equity
    294,288       260,334  
Total Liabilities and Stockholders’ Equity
  $ 405,328     $ 355,237  
 
The accompanying notes are an integral part of these financial statements.
 
 
2

 
 
FutureFuel Corp.
Consolidated Statements of Operations and Comprehensive Income
For the Three Months Ended March 31, 2013 and 2012
(Dollars in thousands, except per share amounts)
(Unaudited)
 
   
Three Months Ended
March 31,
 
   
2013
   
2012
 
Revenues
  $ 90,771     $ 84,837  
Revenues – related parties
    1,394       890  
Cost of goods sold
    59,297       70,956  
Cost of goods sold – related parties
    10,620       986  
Distribution
    751       864  
Distribution – related parties
    116       120  
Gross profit
    21,381       12,801  
Selling, general, and administrative expenses
               
Compensation expense
    926       749  
Other expense
    506       591  
Related party expense
    83       35  
Research and development expenses
    916       843  
      2,431       2,218  
Income from operations
    18,950       10,583  
Interest and dividend income
    1,153       1,140  
Interest expense
    (6 )     (6 )
Gain on marketable securities
    59       314  
Other income/(expense)
    -       (52 )
      1,206       1,396  
Income before income taxes
    20,156       11,979  
Provision for income taxes
    6,106       4,866  
Net income
  $ 14,050     $ 7,113  
                 
Earnings per common share
               
Basic
  $ 0.33     $ 0.17  
Diluted
  $ 0.33     $ 0.17  
Weighted average shares outstanding
               
Basic
    42,928,109       41,314,859  
Diluted
    42,949,854       41,493,135  
                 
Comprehensive Income
               
Net income
  $ 14,050     $ 7,113  
Other comprehensive income from unrealized net gains on available-for-sale securities, net of tax of $3,353 in 2013 and of $701 in 2012
    5,379       1,126  
Comprehensive income
  $ 19,429     $ 8,239  
 
The accompanying notes are an integral part of these financial statements.
 
 
3

 
 
FutureFuel Corp.
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2013 and 2012
(Dollars in thousands)
(Unaudited)
 
   
Three Months Ended March 31,
 
   
2013
   
2012
 
Cash flows provided by operating activities
           
Net income
  $ 14,050     $ 7,113  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation
    2,658       2,584  
Provision/(benefit) for deferred income taxes
    (982 )     (161 )
Change in fair value of derivative instruments
    941       (1,266 )
Impairment of fixed assets
    382       -  
Gain on the sale of investments
    (59 )     (314 )
Losses on disposals of fixed assets
    -       63  
Noncash interest expense
    6       6  
Changes in operating assets and liabilities:
               
Accounts receivable
    (5,121 )     13,607  
Accounts receivable – related parties
    (4,485 )     (47 )
Inventory
    (28,710 )     (10,513 )
Prepaid expenses
    172       216  
Accrued interest on marketable securities
    109       -  
Other assets
    (56 )     15  
Accounts payable
    9,237       2,776  
Accounts payable – related parties
    (46 )     (2,694 )
Income taxes payable
    4,288       3,198  
Accrued expenses and other current liabilities
    916       317  
Accrued expenses and other current liabilities – related parties
    50       (26 )
Deferred revenue
    (685 )     (891 )
Net cash (used in)/provided by operating activities
    (7,335 )     13,983  
Cash flows from investing activities
               
Collateralization of derivative instruments
    (1,605 )     1,050  
Purchase of marketable securities
    (3,399 )     (17,406 )
Proceeds from the sale of marketable securities
    3,606       7,648  
Proceeds from the sale of fixed assets
    -       31  
Capital expenditures
    (2,318 )     (2,113 )
Net cash used in investing activities
    (3,716 )     (10,790 )
Cash flows from financing activities
               
Proceeds from the issuance of stock
    19,292       72  
Excess tax benefits associated with stock options
    -       8  
Payment of dividends
    (4,767 )     (4,132 )
Net cash provided by/(used in) financing activities
    14,525       (4,052 )
Net change in cash and cash equivalents
    3,474       (859 )
Cash and cash equivalents at beginning of period
    58,737       89,745  
Cash and cash equivalents at end of period
  $ 62,211     $ 88,886  
                 
Cash paid for interest
  $ -     $ -  
Cash paid for income taxes
  $ 581     $ 2,090  
 
The accompanying notes are an integral part of these financial statements.
 
 
4

 
 
1)           Nature of operations and basis of presentation
 
Organization
 
FutureFuel Corp. (“FutureFuel ”), through its wholly-owned subsidiary, FutureFuel Chemical Company (“FutureFuel Chemical”), owns and operates a chemical production facility located on approximately 2,200 acres of land six miles southeast of Batesville in north central Arkansas fronting the White River (the “Batesville Plant”).  FutureFuel Chemical manufactures diversified chemical products, biobased products comprised of biofuels, and biobased specialty chemical products.  FutureFuel Chemical’s operations are reported in two segments: chemicals and biofuels.
 
The chemicals segment manufactures a diversified listing of chemical products that are sold to third party customers.  The majority of the revenues from the chemical segment are derived from the custom manufacturing of specialty chemicals for specific customers.  Historically, the chemicals segment has relied upon two customers for a substantial amount of its revenues.
 
The biofuels segment was established in 2005 as an initiative of the then site management to leverage the Batesville Plant’s technical and operational expertise as well as available manufacturing capacity to pursue business growth opportunities.
 
Basis of Presentation
 
The accompanying consolidated financial statements have been prepared by FutureFuel in accordance and consistent with the accounting policies stated in FutureFuel’s 2012 audited consolidated financial statements and should be read in conjunction with the 2012 audited consolidated financial statements of FutureFuel.
 
In the opinion of FutureFuel, all normal recurring adjustments necessary for a fair presentation have been included in the unaudited consolidated financial statements.  The unaudited consolidated financial statements have been prepared in compliance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) accounting principles generally accepted in the United States for interim financial information and with instructions to Form 10-Q adopted by the Securities and Exchange Commission (“SEC”).  Accordingly, the financial statements do not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements, and do include amounts that are based upon management estimates and judgments.  Future actual results could differ from such current estimates.  The unaudited consolidated financial statements include assets, liabilities, revenues, and expenses of FutureFuel and its wholly owned subsidiaries, FutureFuel Chemical, FFC Grain, L.L.C., FutureFuel Warehouse Company, LLC., and Legacy Regional Transport, L.L.C.  Intercompany transactions and balances have been eliminated in consolidation.
 
 
5

 
 
Notes to Consolidated Financial Statements of FutureFuel Corp.
(Dollars in thousands, except per share amounts)
(Unaudited)
 
2)            Inventory
 
The carrying values of inventory were as follows as of:
 
   
March 31,
2013
   
December 31,
2012
 
At average cost (approximates current cost)
           
Finished goods
  $ 23,052     $ 15,803  
Work in process
    1,127       1,304  
Raw materials and supplies
    58,961       37,086  
      83,140       54,193  
LIFO reserve
    (12,438 )     (12,201 )
Total inventory
  $ 70,702     $ 41,992  
 
3)            Derivative instruments
 
FutureFuel is exposed to certain risks relating to its ongoing business operations.  Commodity price risk is the primary risk managed by using derivative instruments.  Regulated fixed price futures and option contracts are utilized to manage the price risk associated with future purchases of feedstock used in FutureFuel’s biodiesel production along with physical feedstock and finished product inventories attributed to this process.
 
FutureFuel recognizes all derivative instruments as either assets or liabilities at fair value in its consolidated balance sheet.  FutureFuel’s derivative instruments do not qualify for hedge accounting under the specific guidelines of ASC 815-20-25, Derivatives and Hedging, Hedging-General, Recognition .  While management believes these instruments are entered into in order to effectively manage various risks, none of the derivative instruments are designated and accounted for as hedges primarily as a result of the extensive record keeping requirements.
 
The fair value of FutureFuel’s derivative instruments is determined based on the closing prices of the derivative instruments on relevant commodity exchanges at the end of an accounting period.  Changes in fair value of the derivative instruments are recorded in the statement of operations as a component of cost of goods sold, and amounted to a gain of $1,339 and a loss of $3,406 for the three months ended March 31, 2013 and 2012, respectively.
 
The volumes and carrying values of FutureFuel’s derivative instruments were as follows at:
 
   
Asset/(Liability)
 
   
March 31, 2013
   
December 31, 2012
 
   
Quantity
(Contracts) Long/
(Short)
   
Fair Value
   
Quantity
(Contracts) Long/
(Short)
   
Fair Value
 
Regulated options, included in other current assets
    (200 )   $ (1,360 )     (150 )   $ (726 )
Regulated fixed price future commitments, included in other current assets
    (260 )   $ (527 )     (50 )   $ (221 )
 
The margin account maintained with a broker to collateralize these derivative instruments carried an account balance of $3,457 and $1,853 at March 31, 2013 and December 31, 2012, respectively. The carrying values of the margin account and of the derivative instruments are included, net, in other current assets.
 
 
6

 
 
Notes to Consolidated Financial Statements of FutureFuel Corp.
(Dollars in thousands, except per share amounts)
(Unaudited)
 
4)           Marketable securities
 
At March 31, 2013 and December 31, 2012, FutureFuel had investments in certain preferred stock, trust preferred securities, auction rate securities, and other equity instruments.  These investments are classified as current assets in the consolidated balance sheet.  FutureFuel has designated these securities as being available-for-sale.  Accordingly, they are recorded at fair value, with the unrealized gains and losses, net of taxes, reported as a component of stockholders’ equity.  These securities were comprised of the following at:
 
   
March 31, 2013
   
Adjusted
Cost
   
Unrealized
Gains
   
Unrealized
Losses
   
Fair Value
Equity instruments
  $ 46,104     $ 10,615     $ (70 )   $ 56,649  
Preferred stock
    20,418       1,786       -       22,204  
Trust preferred securities
    15,734       615       -       16,349  
Auction rate securities
    1,150       -       -       1,150  
Total
  $ 83,406     $ 13,016     $ (70 )   $ 96,352  

 
   
December 31, 2012
 
   
Adjusted
Cost
   
Unrealized
Gains
   
Unrealized
Losses
   
Fair Value
 
Equity instruments
  $ 46,842     $ 4,307     $ (1,550 )   $ 49,599  
Preferred stock
    20,418       1,068       -       21,486  
Trust preferred securities
    15,143       402       (12 )     15,533  
Auction rate securities
    1,150       -       -       1,150  
Total
  $ 83,553     $ 5,777     $ (1,562 )   $ 87,768  
 
The aggregate fair value of instruments with unrealized losses totaled $1,892 and $22,818 at March 31, 2013 and December 31, 2012, respectively. As of March 31, 2013 and December 31, 2012, FutureFuel had a total of $0 and $1,915 invested in marketable securities that were in an unrealized loss position for a greater than 12-month period, respectively.
 
5)           Accrued expenses and other current liabilities
 
Accrued expenses and other current liabilities, including those associated with related parties, consisted of the following at:
 
   
March 31,
2013
   
December 31,
2012
 
Accrued employee liabilities
  $ 2,880     $ 2,073  
Accrued property, use, and franchise taxes
    1,552       1,472  
Other
    127       48  
Total
  $ 4,559     $ 3,593  
 
6)            Borrowings
 
In March 2007, FutureFuel Chemical entered into a $50 million credit agreement with a commercial bank.  The loan is a revolving facility the proceeds of which may be used for working capital, capital expenditures, and the general corporate purposes of FutureFuel Chemical.  The facility terminates on June 30, 2013.  Advances are made pursuant to a borrowing base comprised of 85% of eligible accounts plus 60% of eligible direct inventory plus 50% of eligible indirect inventory.  Advances are secured by a perfected first priority security interest in accounts receivable and inventory.  The interest rate floats at certain margins over the London Interbank Offered Rate (“LIBOR”) or base rate based upon the leverage ratio from time to time as set forth in the following table.
 
 
7

 
 
Notes to Consolidated Financial Statements of FutureFuel Corp.
(Dollars in thousands, except per share amounts)
(Unaudited)
 
Leverage
Ratio
 
Base Rate
Margin
 
LIBOR
Margin
> 3
 
-0.55%
 
1.70%
> 2 < 3
 
-0.70%
 
1.55%
> 1 < 2
 
-0.85%
 
1.40%
< 1
 
-1.00%
 
1.25%
 
There is an unused commitment fee of 0.325% per annum. On the last day of each fiscal quarter, the ratio of EBITDA to fixed charges may not be less than 3:1. FutureFuel has guaranteed FutureFuel Chemical’s obligations under this credit agreement.
 
As of March 31, 2013 and December 31, 2012 borrowings under this credit agreement totaled $0 and $0, respectively.
 
7)           Provision for income taxes
 
The following table summarizes the provision for income taxes.
 
   
For the three months
ended March 31,
 
   
2013
   
2012
 
Provision for income taxes
  $ 6,106     $ 4,866  
Effective tax rate
    30.3 %     40.6 %
 
The effective tax rate for the three months ended March 31, 2013 reflects FutureFuel’s expected tax rate on reported operating earnings before income tax and the full anticipated impact of the retroactive reinstatement of the 2012 agri-biodiesel production tax credit, which was recognized in the three months ended March 31, 2013 as a discrete item.  As a result of this treatment, FutureFuel’s effective tax rate for the three months ended March 31, 2013 is abnormally low and is not expected to continue at this rate for the remainder of 2013.
 
The effective tax rate for the three months ended March 31, 2012 reflected FutureFuel’s expected tax rate on reported operating earnings before income tax and included the impact of the elimination of the agri-biodiesel production credit for 2012 and of the change of the valuation allowance associated with certain deferred tax assets.  FutureFuel had determined that it did not believe that it had a more likely than not probability of realizing a portion of its deferred tax assets at March 31, 2012.  As such, it recorded a valuation allowance of $384.  No such valuation allowance was recorded at March 31, 2013.
 
Unrecognized tax benefits totaled $0 and $0 at March 31, 2013 and December 31, 2012, respectively.
 
FutureFuel records interest and penalties net as a component of income tax expense.  At March 31, 2013 and December 31, 2012, respectively, FutureFuel recorded $0 and $0 in accruals for interest and tax penalties.
 
FutureFuel and its subsidiaries file tax returns in the U.S. federal jurisdiction and with various state jurisdictions.  FutureFuel is subject to U.S., state, and local examinations by tax authorities from 2009 forward.  FutureFuel Chemical is subject to the effects of tax examinations that may impact the carry-over basis of its assets and liabilities.
 
 
8

 
 
Notes to Consolidated Financial Statements of FutureFuel Corp.
(Dollars in thousands, except per share amounts)
(Unaudited)
 
8)           Earnings per share
 
The computation of basic and diluted earnings per common share was as follows:
 
   
For the three months
ended March 31,
 
   
2013
   
2012
 
Net income available to common stockholders
  $ 14,050     $ 7,113  
                 
Weighted average number of common shares outstanding
    42,928,109       41,314,859  
Effect of stock options
    21,745       178,276  
Weighted average diluted number of common shares outstanding
    42,949,854       41,493,135  
                 
Basic earnings per share
  $ 0.33     $ 0.17  
Diluted earnings per share
  $ 0.33     $ 0.17  
 
Certain options to purchase shares of FutureFuel’s common stock were not included in the computation of diluted earnings per share for the three months ended March 31, 2012 as they were anti-dilutive. The weighted average number of options excluded on this basis was 120,000. No options to purchase shares of FutureFuel’s common stock were excluded for the computation of diluted earnings per share for the three months ended March 31, 2013.
 
9)           Segment information
 
FutureFuel has two reportable segments organized along product lines – chemicals and biofuels.
 
Chemicals
 
FutureFuel’s chemicals segment manufactures diversified chemical products that are sold externally to third party customers.  This segment comprises two components: “custom manufacturing” (manufacturing chemicals for specific customers); and “performance chemicals” (multi-customer specialty chemicals).
 
Biofuels
 
FutureFuel’s biofuels business segment primarily manufactures and markets biodiesel.  Biodiesel revenues are generated through the sale of biodiesel to customers through FutureFuel’s distribution network at the Batesville Plant, through distribution facilities available at leased oil storage facilities, and through a network of remotely located tanks.  Results of the biofuels business segment also reflect the sale of biodiesel blends, RINs, biodiesel production byproducts and the purchase and sale of other petroleum products.
 
Summary of long-lived assets and revenues by geographic area
 
All of FutureFuel’s long-lived assets are located in the U.S.
 
Most of FutureFuel’s sales are transacted with title passing at the time of shipment from the Batesville Plant, although some sales are transacted based on title passing at the delivery point.  While many of FutureFuel’s chemicals are utilized to manufacture products that are shipped, further processed, and/or consumed throughout the world, the chemical products, with limited exceptions, generally leave the United States only after ownership has transferred from FutureFuel to the customer.  Rarely is FutureFuel the exporter of record, never is FutureFuel the importer of record into foreign countries, and FutureFuel is not always aware of the exact quantities of its products that are moved into foreign markets by its customers.  FutureFuel does track the addresses of its customers for invoicing purposes and uses this address to determine whether a particular sale is within or without the United States.  FutureFuel’s revenues attributable to the United States and foreign countries (based upon the billing addresses of its customers) were as follows:
 
 
9

 
 
Notes to Consolidated Financial Statements of FutureFuel Corp.
(Dollars in thousands, except per share amounts)
(Unaudited)
 
Three Months Ended
 
United States
   
All Foreign
Countries
   
Total
 
March 31, 2013
  $ 87,978     $ 4,187     $ 92,165  
March 31, 2012
  $ 81,144     $ 4,583     $ 85,727  
 
For the three months ended March 31, 2013 and 2012, revenues from Mexico accounted for 3% and 5%, respectively, of total revenues. Other than Mexico, revenues from a single foreign country during the three months ended March 31, 2013 and 2012 did not exceed 1% of total revenues.
 
Summary of business by segment
 
   
For the three months
ended March 31,
 
   
2013
   
2012
 
Revenues
           
Chemicals
  $ 40,136     $ 38,409  
Biofuels
    52,029       47,318  
Revenues
  $ 92,165     $ 85,727  
                 
Segment gross profit
               
Chemicals
  $ 13,066     $ 11,669  
Biofuels
    8,315       1,132  
Segment gross margins
    21,381       12,801  
Corporate expenses
    (2,431 )     (2,218 )
Income before interest and taxes
    18,950       10,583  
Interest and other income
    1,212       1,454  
Interest and other expense
    (6 )     (58 )
Provision for income taxes
    (6,106 )     (4,866 )
Net income
  $ 14,050     $ 7,113  
 
Depreciation is allocated to segment costs of goods sold based on plant usage. The total assets and capital expenditures of FutureFuel have not been allocated to individual segments as large portions of these assets are shared to varying degrees by each segment, causing such an allocation to be of little value.
 
10)          Fair value measurements
 
Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date.  Fair value accounting pronouncements also include a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.  Observable inputs are inputs market participants would use in valuing the asset or liability developed based on market data obtained from sources independent of FutureFuel.  Unobservable inputs are inputs that reflect FutureFuel’s assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances.  The hierarchy is broken down into three levels.  Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.  Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly.  Level 3 inputs are unobservable inputs for the asset or liability.  Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
 
 
10

 
 
Notes to Consolidated Financial Statements of FutureFuel Corp.
(Dollars in thousands, except per share amounts)
(Unaudited)
 
The following tables provide information by level for assets and liabilities that are measured at fair value, on a recurring basis, at March 31, 2013 and December 31, 2012.
 
   
Asset/(Liability)
 
   
Fair Value at
March 31,
   
Fair Value Measurements Using
Inputs Considered as
 
Description
 
2013
   
Level 1
   
Level 2
   
Level 3
 
Derivative instruments
  $ (1,887 )   $ (1,887 )   $ -     $ -  
Preferred stock, trust preferred securities, auction rate securities, and other equity instruments
  $ 96,352     $ 96,352     $ -     $ -  

 
   
Asset/(Liability)
 
   
Fair Value at
December 31,
   
Fair Value Measurements Using
Inputs Considered as
 
Description
 
2012
   
Level 1
   
Level 2
   
Level 3
 
Derivative instruments
  $ (947 )   $ (947 )   $ -     $ -  
Preferred stock, trust preferred securities, auction rate securities, and other equity instruments
  $ 87,768     $ 87,768     $ -     $ -  
 
11)         Reclassifications from accumulated other comprehensive income

The following table summarizes changes in accumulated other comprehensive income from unrealized gains and losses on available-for-sale securities in the three months ended March 31, 2013:

Changes in Accumulated Other Comprehensive Income
Unrealized Gains and Losses on Available-for-Sale Securities
(net of tax)
 
Balance at December 31, 2012
  $ 2,597  
Other comprehensive income before reclassifications
    5,435  
Amounts reclassified from accumulated other comprehensive income
    (56 )
Net current-period other comprehensive income
    5,379  
Balance at March 31, 2013
  $ 7,976  

The following table summarizes amounts reclassified from accumulated other comprehensive income in the three months ended March 31, 2013:

Reclassifications from Accumulated Other Comprehensive Income
   
Amount Reclassified
 
Affected Line Item in Statement of Operations
Unrealized gains/(losses) on available-for-sale securities
  $ (92 )
Gain on
marketable securities
Total before tax
    (92 )  
Tax benefit
    36    
Total reclassifications
  $ (56 )  
 
 
11

 
 
Notes to Consolidated Financial Statements of FutureFuel Corp.
(Dollars in thousands, except per share amounts)
(Unaudited)
 
12)          Legal matters
 
From time to time, FutureFuel and its operations are parties to, or targets of, lawsuits, claims, investigations, and proceedings, which are being handled and defended in the ordinary course of business.  While FutureFuel is unable to predict the outcomes of these matters, it does not believe, based upon currently available facts, that the ultimate resolution of any such pending matters will have a material adverse effect on its overall financial condition, results of operations, or cash flows.  However, adverse developments could negatively impact earnings or cash flows in a particular future period.
 
13)         Related party transactions
 
FutureFuel enters into transactions with companies affiliated with or controlled by a director and significant shareholder.  Revenues, expenses, prepaid amounts, and unpaid amounts related to these transactions are captured in the accompanying consolidated financial statements as related party line items.
 
Related party revenues are the result of sales of biodiesel, petrodiesel, blends, other petroleum products and other similar or related products to these related parties.
 
Related party cost of goods sold and distribution are the result of sales of biodiesel, petrodiesel, blends, and other petroleum products to these related parties along with the associated expense from the purchase of natural gas, storage and terminalling services, and income tax and consulting services by FutureFuel from these related parties.
 
 
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read together with our consolidated financial statements, including the notes thereto, set forth herein.  This discussion contains forward-looking statements that reflect our current views with respect to future events and financial performance.  Actual results may differ materially from those anticipated in these forward-looking statements.  See “Forward Looking Information” below for additional discussion regarding risks associated with forward-looking statements.
 
           Liquidity and Capital Resources
 
Our net cash provided by (used in) operating activities, investing activities, and financing activities for the three months ended March 31, 2013 and 2012 are set forth in the following chart.
 
(Dollars in thousands)
 
   
March 31,
2013
   
March 31,
2012
 
Net cash (used in)/provided by operating activities
  $ (7,335 )   $ 13,983  
Net cash used in investing activities
  $ (3,716 )   $ (10,790 )
Net cash provided by/(used in) financing activities
  $ 14,525     $ (4,052 )

Operating Activities
 
Cash from operating activities decreased from $13,983,000 of cash provided by operating activities in the first three months of 2012 to a net $7,335,000 of cash used in operating activities in the first three months of 2013.  This decrease was primarily attributable to an increase in our accounts receivable, including accounts receivable from related parties, and an increase in inventory balances.  In the first three months of 2012, accounts receivable, including accounts receivable from related parties, increased cash provided by operating activities by $13,560,000.  In the first three months of 2013, accounts receivable, including accounts receivable from related parties, decreased cash from operating activities by $9,606,000.  The increase in accounts receivable balances in 2013 was primarily related to the timing and amount of sales made on a common carrier pipeline.  In the first three months of 2012, changes in inventory carrying values decreased cash provided from operating activities by $10,513,000.  In the first three months of 2013, changes in inventory carrying values decreased cash from operating activities by $28,710,000.  The increase in inventory carrying value in the first three months of 2013 is primarily due to increased purchases of biodiesel feedstock and from the timing and amount of purchases made on a common carrier pipeline.  Partially offsetting these decreases to cash from operating activities is an increase in accounts payable, including accounts payable to related parties, an increase in our net income, and an increase in income taxes payable.  In the first three months of 2012, changes in accounts payable, including accounts payable to related parties, increased cash from operating activities by $82,000.  In the first three months of 2013, changes in accounts payable, including accounts payable to related parties, increased cash from operating activities by $9,191,000.  This increase is primarily due to the timing and amount of payments to venders and suppliers.  Net income in the first three months of 2012 totaled $7,113,000, while in the first three months of 2013 net income totaled $14,050,000.  See the below discussion for the reasons for this change in net income for the periods presented.  Changes in our income taxes payable increased cash provided by operating activities by $3,198,000 in the first three months of 2012.  Such changes increased cash from operating activities by $4,288,000 in the first three months of 2013.  This difference is due to the timing and amount of estimated income tax payments made.
 
 
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Investing Activities
 
Cash used in investing activities decreased from $10,790,000 in the first three months of 2012 to $3,716,000 in the first three months of 2013.  This decrease was primarily the result of a reduction in the net purchases of marketable securities in the first three months of 2013 compared to the first three months of 2012.  Such net purchases totaled $9,758,000 in the first three months of 2012 and totaled $207,000 of net sales in the first three months of 2013.  Our capital expenditures and customer reimbursements for capital expenditures are summarized in the following table:
 
 (Dollars in thousands)
 
   
Three Months Ended
March 31, 2013
   
Three Months
Ended
March 31, 2012
 
Cash paid for capital expenditures
  $ 2,318     $ 2,113  
Cash received as reimbursement of capital expenditures
    (1,057 )     (157 )
Cash paid, net of reimbursement, for capital expenditures
  $ 1,261     $ 1,956  

Financing Activities
 
Cash from financing activities increased from $4,052,000 of cash used in financing activities for the first three months of 2012 to $14,525,000 of cash provided by financing activities in the first three months of 2013.  This change is primarily the result of an increase in proceeds from the issuance of stock.  In the first three months of 2012 no shares of FutureFuel common stock were sold under its at-the-market offering.  In the first three months of 2013, 1,594,872 shares of FutureFuel’s common stock were sold under its at-the-market offering, generating $19,292,000 in net proceeds.
 
On February 6, 2013, FutureFuel announced the completion of the sale of shares under the at-the-market offering.  FutureFuel sold an aggregate 3,000,000 shares in open market trading for aggregate gross proceeds of $37,247,000, resulting in net proceeds of $36,127,000 after deducting commissions and fees.
 
Credit Facility
 
We entered into a $50 million credit agreement with a commercial bank in March 2007.  The loan is a revolving facility the proceeds of which may be used for our working capital, capital expenditures, and general corporate purposes.  The facility terminates on June 30, 2013.  Advances are made pursuant to a borrowing base.  Advances are secured by a perfected first priority security interest in our accounts receivable and inventory.  The interest rate floats at certain margins over LIBOR or base rate based upon the leverage ratio from time to time.  There is an unused commitment fee.  The ratio of total funded debt to EBITDA may not be less than 3:1.  We had no borrowings under this credit agreement at March 31, 2013 or December 31, 2012.
 
We intend to fund future capital requirements for our businesses from cash flow generated by us as well as from existing cash, cash investments, and, if the need should arise, borrowings under our credit facility.  We do not believe there will be a need to issue any securities to fund such capital requirements.
 
Dividends
 
In the first quarter of 2013, we paid a regular cash dividend in the amount of $0.11 per share on our common stock.  The regular cash dividend amounted to $4,767,000.
 
In the first quarter of 2012, we paid a regular cash dividend in the amount of $0.10 per share on our common stock.  The regular cash dividend amounted to $4,132,000.
 
Capital Management
 
As a result of our initial equity offering, our subsequent positive operating results, the exercise of warrants, and the issuance of shares in our at-the-market offering, we accumulated excess working capital.  Some of this excess working capital has been paid out as special and regular cash dividends.  Additional, regular cash dividends will be paid in 2013, as previously reported.  Third parties have not placed significant restrictions on our working capital management decisions.
 
 
14

 
 
A significant portion of these funds were held in cash or cash equivalents at multiple financial institutions.  In the first quarter of 2013 and 2012, we also had investments in certain preferred stock, trust preferred securities, auction rate securities, and other equity instruments.  We classify these investments as current assets in the accompanying consolidated balance sheets and designate them as being “available-for-sale”.  Accordingly, they are recorded at fair value, with the unrealized gains and losses, net of taxes, reported as a component of stockholders’ equity.  The fair value of these preferred stock, trust preferred securities, auction rate, and other equity instruments totaled $96,352,000 and $87,768,000 at March 31, 2013 and December 31, 2012, respectively.
 
Lastly, we maintain depositary accounts such as checking accounts, money market accounts, and other similar accounts at selected financial institutions.
 
Results of Operations
 
In General
 
We break our chemicals business into two main product groups: custom manufacturing and performance chemicals.  Custom manufacturing consists of products made for specific customers based upon specifications provided by such customers.  Major products in the custom manufacturing group include: (i) nonanoyloxybenzene-sulfonate (or NOBS), a bleach activator manufactured for The Procter & Gamble Company for use in a household detergent; (ii) a proprietary herbicide (and intermediates) manufactured exclusively for a customer; (iii) chlorinated polyolefin adhesion promoters (or CPOs) and antioxidant precursors (or DIPB) for a customer; and (iv) a biocide intermediate for another customer.  The custom manufacturing group also includes agrochemicals as well as industrial and consumer products (cosmetics and personal care products, specialty polymer, photographic and imaging chemicals, and an intermediate anode powder).
 
Revenues generated from the bleach activator are based on a supply agreement with the customer.  The supply agreement stipulates selling price per kilogram based on volume sold, with price moving up as volumes move down, and vice-versa.  On August 28, 2012, we signed an amendment to our existing agreement with the bleach activator customer.   Among other things, the amendment: (i) extended the term of the agreement to December 31, 2016 (unless terminated earlier in accordance with the provisions of the agreement); and (ii) allows us to sell certain formulations of the bleach activator to third parties as a performance chemical.   We pay for raw materials required to produce the bleach activator.  The contract with the customer provides that the price received by us for the bleach activator is indexed to changes in certain items, enabling us to pass along most inflationary increases in production costs to the customer.  Revenue from the bleach activator for the three months ended March 31, 2013 increased by 1% from revenues for the three months ended March 31, 2012.  Annual sales revenues and sales volume of the bleach activator have, generally, decreased over the last several years.  We continue to work collaboratively with our customer to assess their future demand, which demand may continue to decline.
 
We (and our predecessor at our Batesville plant) have been the primary manufacturer of a proprietary herbicide and certain intermediates for a customer (and its predecessors) since approximately 1993.  However, in recent years, these products have faced generic competition, from other suppliers to our customer, from others who compete with our customer for the sale of herbicides, and from other agricultural chemicals present in the market place.  In response to its perceptions of this competition, in 2011 the customer initiated discussions with us to reduce volume and alter other terms of the contracts.  Sales volumes of these products have declined.  Being of the opinion that the current contracts do not adequately provide a framework to support our mutual efforts, we exercised our rights to terminate these contracts, effective September 1, 2013 for the proprietary herbicide and October 1, 2013 for the intermediates.  We anticipate that we will continue to do business with our customer after those dates provided we can reach mutually acceptable terms.  No assurances can be given, however, that such mutually acceptable terms will be reached.
 
The bleach activator and proprietary herbicide customers represented approximately 22% of our revenues for the three months ended March 31, 2013.  We believe that the loss of these two companies as customers would have a material adverse effect on us.
 
In 2008, we entered into a contract with a new customer for the toll manufacture of an industrial intermediate utilized in the antimicrobial industry.  We invested approximately $10 million in capital expenditures to modify and expand our plant to produce this industrial intermediate.  The customer reimbursed these expenditures, which reimbursements have been classified as deferred revenue on our balance sheet and will be earned into income over the expected life of the product.  The contract stipulates a price curve based on volumes sold and has an inflationary pricing provision whereby we pass along most inflationary changes in production costs to the customer.
 
 
15

 
 
Pricing for the other custom manufacturing products is negotiated directly with the customer.  Some, but not all, of these products have pricing mechanisms and/or protections against raw material or conversion cost changes.
 
Performance chemicals consist of specialty chemicals that are manufactured to general market-determined specifications and are sold to a broad customer base.  The major product line in the performance chemicals group is SSIPA/LiSIPA, polymer modifiers that improve the properties of nylon fiber.  This group of products also includes sulfonated monomers, specialty solvents, polymer additives, and chemical intermediates.
 
SSIPA/LiSIPA revenues are generated from a diverse customer base of nylon fiber manufacturers and other customers that produce condensation polymers.  Contract sales are, in certain instances, indexed to key raw materials for inflation; otherwise, there is no pricing mechanism or specific protection against raw material or conversion cost changes.
 
Pricing for the other performance chemical products is established based upon competitive market conditions.  Some, but not all, of these products have pricing mechanisms and/or specific protections against raw material or conversion cost changes.

For our biofuels segment, we procure all of our own feedstock and only sell biodiesel for our own account.  We have the capability to process multiple types of vegetable oils and animal fats.  We can receive feedstock by rail or truck, and have substantial storage capacity to acquire feedstock at advantaged prices when market conditions permit.  In 2010, we redesigned our continuous line to produce biodiesel from feedstock with high free fatty acids.  Annual capacity is in excess of 45 million gallons of biodiesel per year.
 
There currently is uncertainty as to whether we will produce biodiesel in the future.  This uncertainty results from: (i) changes in feedstock prices relative to biodiesel prices; and (ii) the permanency of government mandates and tax credits, including the $1.00 per gallon biodiesel blenders credit set to expire at December 31, 2013.  See “Risk Factors” contained in our Form 10-K for the year ended December 31, 2012 filed with the SEC on March 18, 2013.  A copy can also be obtained at our website at http://ir.futurefuelcorporation.com/sec.cfm .
 
While biodiesel is the principal component of the biofuels segment, we also generate revenue from the sale of petrodiesel both in blends with our biodiesel and with no biodiesel added.  Petrodiesel and biodiesel blends are available to customers at our Batesville plant, at leased storage facilities, and through a network of remotely operated tanks.  In addition, we deliver blended product to a small group of customers within our region.  We also sell refined petroleum products on common carrier pipelines in part to maintain our status as a shipper on the pipeline.
 
The majority of our expenses are cost of goods sold.  Cost of goods sold include raw material costs as well as both fixed and variable conversion costs, conversion costs being those expenses that are directly or indirectly related to the operation of our plant.  Significant conversion costs include labor, benefits, energy, supplies, depreciation, and maintenance and repair.  In addition to raw material and conversion costs, cost of goods sold includes environmental reserves and costs related to idle capacity.  Finally, cost of goods sold includes hedging gains and losses recognized by us related to our biofuels segment.  Cost of goods sold is allocated to the chemicals and biofuels business segments based on equipment and resource usage for most conversion costs and based on revenues for most other costs.
 
Operating costs include selling, general and administrative, and research and development expenses.
 
The discussion of results of operations that follows is based on revenues and expenses in total and for individual product lines and do not differentiate related party transactions.
 
 
16

 
 
Three Months Ended March 31, 2013 Compared to Three Months Ended March 31, 2012
 
Set forth below is a summary of certain financial information for the periods indicated.
 
(Dollars in thousands other than per share amounts)
 
   
Three Months Ended March 
31, 2013
   
Three Months Ended
 March
 31, 2012
   
Dollar Change
   
% Change
 
Revenues
  $ 92,165     $ 85,727     $ 6,438       7.5 %
Income from operations
  $ 18,950     $ 10,583     $ 8,367       79.1 %
Net income
  $ 14,050     $ 7,113     $ 6,937       97.5 %
Earnings per common share - basic
  $ 0.33     $ 0.17     $ 0.16       94.1 %
Earnings per common share – diluted
  $ 0.33     $ 0.17     $ 0.16       94.1 %
Capital expenditures (net of reimbursements)
  $ 1,261     $ 1,956     $ (695 )     (35.5 %)
Adjusted EBITDA
  $ 17,734     $ 16,584     $ 1,150       6.9 %

We use adjusted EBITDA as a key operating metric to measure both performance and liquidity.  Adjusted EBITDA is a non-GAAP financial measure.  Adjusted EBITDA is not a substitute for operating income, net income, or cash flow from operating activities (each as determined in accordance with GAAP) as a measure of performance or liquidity.  Adjusted EBITDA has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of results as reported under GAAP.  We define adjusted EBITDA as net income before interest, income taxes, depreciation, and amortization expenses, excluding, when applicable, non-cash stock-based compensation expenses, public offering expenses, acquisition-related transaction costs, purchase accounting adjustments, losses on disposal of property and equipment, gains or losses on derivative instruments, other non-operating income or expenses, and, in 2013, the impact from the retroactive reinstatement of the 2012 $1.00 biodiesel blenders tax credit.  Information relating to adjusted EBITDA is provided so that investors have the same data that we employ in assessing the overall operation and liquidity of our business.  Our calculation of adjusted EBITDA may be different from similarly titled measures used by other companies; therefore, the results of our calculation are not necessarily comparable to the results of other companies.
 
Adjusted EBITDA allows our chief operating decision makers to assess the performance and liquidity of our business on a consolidated basis to assess the ability of our operating segments to produce operating cash flow to fund working capital needs, to fund capital expenditures, and to pay dividends.  In particular, our management believes that adjusted EBITDA permits a comparative assessment of our operating performance and our liquidity, relative to a performance and liquidity based on GAAP results, while isolating the effects of depreciation and amortization, which may vary among our operating segments without any correlation to their underlying operating performance, and of non-cash stock-based compensation expense, which is a non-cash expense that varies widely among similar companies, and gains and losses on derivative instruments, whose immediate recognition can cause net income to be volatile from period to period due to the timing of the valuation change in the derivative instruments relative to the sale of biofuel.
 
 
17

 
 
The following table reconciles adjusted EBITDA with net income, the most directly comparable GAAP performance financial measure.
 
(Dollars in thousands)
 
   
Three Months Ended March 
31, 2013
   
Three Months Ended
March
 31, 2012
 
Adjusted EBITDA
  $ 17,734     $ 16,584  
Depreciation
    (2,658 )     (2,584 )
Retroactive reinstatement of 2012 $1.00 blenders tax credit recognized in 2013
    2,535       -  
Interest and dividend income
    1,153       1,140  
Interest expense
    (6 )     (6 )
Loss on disposal of property and equipment
    -       (63 )
Gains/(losses) on derivative instruments
    1,339       (3,406 )
Other income/(expense), net
    59       314  
Income tax expense
    (6,106 )     (4,866 )
Net income
  $ 14,050     $ 7,113  

The following table reconciles adjusted EBITDA with cash flows from operations, the most directly comparable GAAP liquidity financial measure.
 
(Dollars in thousands)
 
   
Three Months Ended March 
31, 2013
   
Three Months Ended
March
 31, 2012
 
Adjusted EBITDA
  $ 17,734     $ 16,584  
Benefit for deferred income taxes
    (982 )     (161 )
Impairment of fixed assets
    382       -  
Retroactive reinstatement of 2012 $1.00 blenders tax credit recognized in 2013
    2,535       -  
Interest and dividend income
    1,153       1,140  
Income tax expense
    (6,106 )     (4,866 )
Gains/(losses) on derivative instruments
    1,339       (3,406 )
Change in fair value of derivative instruments
    941       (1,266 )
Changes in operating assets and liabilities, net
    (24,331 )     5,958  
Net cash (used in)/provided by operating activities
  $ (7,335 )   $ 13,983  

Revenues
 
Revenues for the three months ended March 31, 2013 were $92,165,000 as compared to revenues for the three months ended March 31, 2012 of $85,727,000, an increase of 8%.  Revenues from biofuels were up 10% and accounted for 56% of total revenues in the first quarter of 2013 as compared to 55% in the first quarter of 2012.  Revenues from chemicals increased 4% and accounted for 44% of total revenues in the first quarter of 2013 as compared to 45% in the first quarter of 2012.  Within the chemicals segment, revenues for the three months ended March 31, 2013 changed as follows compared to the three months ended March 31, 2012: (i) revenues from the proprietary herbicide and intermediates increased 16%; (ii) revenues from the industrial intermediate utilized in the antimicrobial industry increased 20%; (iii) revenues from other custom chemicals increased 10%; (iv) revenues from CPOs increased 9%; (v) revenues from DIPB decreased 14%; and (vi) revenues from other performance chemicals decreased 11%.  Revenues from the first three months of 2013 from the bleach activator were consistent with those of the first three months of 2012.
 
 
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Revenue from the bleach activator and the proprietary herbicide and intermediates are together the most significant components of our chemicals business revenue base, accounting for 22% of total revenues for both the three months ended March 31, 2013 and March 31, 2012.  The future volume of and revenues from the bleach activator depend on both consumer demand for the product containing the bleach activator and the manufacturing, sales, and marketing priorities of our customer.  We are unable to predict with any certainty the revenues we will receive from this product in the future.  With respect to the proprietary herbicide and intermediates, the increase in revenue for the three months March 31, 2013 as compared to the three months ended March 31, 2012 was equally attributable to increased sales price and change in product mix.  See the discussion above as to the future business with the proprietary herbicide and intermediates customer.
 
Revenues from CPOs and DIPB together decreased 6% during the first quarter of 2013 compared to the first quarter of 2012.  The combined decreased revenues from these two products were attributable to decreased sales volumes of DIPB.
 
Revenues from other custom chemical products increased 10% in the first quarter of 2013 as compared to the first quarter of 2012.  The increase was due to increased sales during the first three months of 2013 of two new products we began manufacturing in the fourth quarter of 2012.
 
Revenues from proprietary chemicals decreased 11% for the first quarter of 2013 as compared to the first quarter of 2012 and accounted for approximately 3% of total revenues for the three months ended March 31, 2013.  The decrease was due to decreased sales of two products we campaign for customers.
 
Revenues from biofuels increased 10% from $47,318,000 in the three months ended March 31, 2012 to $52,029,000 in the three months ended March 31, 2013.  We have experienced an increase in demand for our biodiesel as a result of the reinstatement of the blenders credit and sales quantities in the first quarter of 2013 increased compared to the first quarter of 2012.  The reinstatement of the $1.00 per gallon federal blender’s credit in January 2013 along with the continued government mandated renewable fuel standard for biodiesel combined to improve the demand for biodiesel in the United States in 2013.  A substantial portion of our biodiesel sold in the three months ended March 31, 2013 and 2012 was to a major refiner in the United States and no assurances can be given that we will continue to sell to such major refiner or, if we do sell, the volume that will be sold or the profit margin that will be realized.  We continue to develop our regional fuel business.  Revenues from biofuels have also been benefited by our sales of refined petroleum products as a supplier on a common carrier pipeline.  Such sales totaled $9,218,000 and $8,881,000 in the first three months of 2013 and 2012, respectively.
 
Cost of Goods Sold and Distribution
 
Total cost of goods sold and distribution for the first quarter of 2013 were $70,784,000 as compared to $72,926,000 for the first quarter of 2012, a decrease of 3%, which compares to an 8% increase in revenues for the period.
 
Cost of goods sold and distribution for the three months ended March 31, 2013 for our chemicals segment totaled $27,070,000 as compared to $26,740,000 for the three months ended March 31, 2012.  On a percentage basis, total cost of goods sold and distribution increased approximately 1% for the three months ended March 31, 2013 compared to the three months ended March 31, 2012.  This compares against a 4% increase in chemical segment revenue for that period.  This difference was largely a result of sales price adjustments, production process improvements, and reductions in our operating costs due to an ongoing effort to minimize such expenditures.
 
Cost of goods sold and distribution for the first quarter of 2013 in our biofuels segment were $43,714,000 as compared to $46,186,000 for the first quarter of 2012.  On a percentage basis, cost of goods sold and distribution decreased 5% versus an increase of 10% in revenues.  This difference resulted from a combination of the following: (i) hedging gains in the first quarter of 2013 totaled $1,339 as compared to a loss of $3,406 in the first quarter of 2012; (ii) the recognition in the first quarter of 2013 of the retroactive reinstatement of the 2012 $1.00 per gallon biodiesel blenders tax credit totaling $2,535 (recorded as a reduction of cost of goods sold and distribution expense); and (iii) improved market conditions for biodiesel, largely as a result of the presence of the $1.00 per gallon biodiesel blenders tax credit, in the first quarter of 2013 as compared to the first quarter of 2012, when the tax credit was not available.  Partially offsetting these items was $382 in impairment of fixed asset charges incurred in the first three months of 2013 related to our granary.  No such expenditures were incurred in the first three months of 2012.  At March 31, 2013 we maintained minimal inventory of RINs, or renewable identification numbers.
 
 
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Operating Expenses
 
Operating expenses increased 10% from $2,218,000 in the first quarter of 2012 to $2,431,000 in the first quarter of 2013.  This increase was attributable to increased compensation expenditures and increased research and development expenditures.
 
Provision for Income Taxes
 
The effective tax rate for the three months ended March 31, 2013 reflects our expected tax rate on reported operating earnings before income tax and the full anticipated impact of the retroactive reinstatement of the 2012 agri-biodiesel production tax credit, which was recognized in the three months ended March 31, 2013 as a discrete item.  As a result of this treatment, our effective tax rate for the three months ended March 31, 2013 is abnormally low and is not expected to continue at this rate for the remainder of 2013.
 
The effective tax rate for the three months ended March 31, 2012 reflected our expected tax rate on reported operating earnings before income tax and included the impact of the elimination of the agri-biodiesel production credit for 2012 and of the change of the valuation allowance associated with certain deferred tax assets.  We had determined that we did not believe that we had a more likely than not probability of realizing a portion of our deferred tax assets at March 31, 2012.  As such, we recorded a valuation allowance of $384,000.  No such valuation allowance was recorded at March 31, 2013.
 
Net Income
 
Net income increased from $7,113,000 for the three months ended March 31, 2012 to $14,050,000 for the three months ended March 31, 2013.  This increase was the net result of several factors including improved market conditions in the biodiesel industry, profits realized from production process improvements in the chemicals segment, and new chemical products added to our chemical portfolio.  Additionally, however, net income in the first quarter of 2013 was significantly benefited by certain non-recurring or unpredictable items.  These items include the impact of the retroactive reinstatements of the $1.00 biodiesel blenders credit and the agri-biodiesel production credit for 2012.  The retroactive reinstatement of the $1.00 biodiesel blenders credit for 2012 increased first quarter 2013 net income by $2,535 on a pretax basis, $1,541 on an after-tax basis.  The retroactive reinstatement of the agri-biodiesel production credit for 2012 benefited net income in the first three months of 2013 by $912 on an after-tax basis.  While both of these items pertained to 2012 activity, their benefit was not recorded as a component of our net income until 2013 as the law granting these benefits was not enacted until the first quarter 2013.  The benefit realized in the first quarter of 2013 from the retroactive reinstatement of these two items for 2012 is not expected to recur.  Both the $1.00 biodiesel blenders credit and agri-biodiesel production credits are set to expire at December 31, 2013.
 
Further benefiting net income in the first quarter of 2013 were net realized and unrealized gains on derivative instruments.  Such net gains increased net income by $1,339 in the first three months of 2013 on a pretax basis, $825 on an after-tax basis.  In the first three months of 2012, net income was reduced by $3,406 on a pretax basis, $2,098 on an after-tax basis, as a result of net realized and unrealized losses on derivative instruments.  Changes in the fair value of our derivative instruments are recognized at the end of each accounting period and recorded in the statement of operations as a component of cost of goods sold.  Our immediate recognition of derivative instrument gains and losses can cause net income to be volatile from period to period due to the timing of the change in value of the derivative instruments relative to the sale of biofuel being sold.
 
Critical Accounting Estimates
 
Revenue Recognition
 
For most product sales, revenue is recognized when product is shipped from our facilities and risk of loss and title have passed to the customer, which is in accordance with our customer contracts and the stated shipping terms.  Nearly all custom manufactured products are manufactured under written contracts.  Performance chemicals and biodiesel are generally sold pursuant to the terms of written purchase orders.  In general, customers do not have any rights of return, except for quality disputes.  However, all of our products are tested for quality before shipment, and historically returns have been inconsequential.  We do not offer rebates or warranties.
 
 
20

 
 
Revenue from bill and hold transactions in which a performance obligation exists is recognized when the total performance obligation has been met and title to the product has transferred.  Bill and hold transactions for five specialty chemical products in the first three months of 2012 and 2013 relate to revenue that was recognized in accordance with contractual agreements based on product produced and ready for use.  These sales were subject to written monthly purchase orders with agreement that production was reasonable.  The inventory was custom manufactured and stored at the customer’s request and could not be sold to another buyer.  Credit and payment terms for bill and hold customers are similar to other specialty chemical customers.  Sales revenue under bill and hold arrangements were $11,933,000 and $9,860,000 for the three months ended March 31, 2013 and 2012, respectively.
 
           Off-Balance Sheet Arrangements
 
We engage in two types of hedging transactions.  First, we hedge our biofuels sales through the purchase and sale of futures contracts and options on futures contracts of energy commodities.  This activity was captured on our balance sheet at March 31, 2013 and December 31, 2012.  Second, we hedge our biofuels feedstock through the execution of purchase contracts and supply agreements with certain vendors.  These hedging transactions are recognized in earnings and were not recorded on our balance sheet at March 31, 2013 or December 31, 2012 as they do not meet the definition of a derivative instrument as defined under accounting principles generally accepted in the U.S.  The purchase of biofuels feedstock generally involves two components: basis and price.  Basis covers any refining or processing required as well as transportation.  Price covers the purchases of the actual agricultural commodity.  Both basis and price fluctuate over time.  A supply agreement with a vendor constitutes a hedge when we have committed to a certain volume of feedstock in a future period and have fixed the basis for that volume.
 
Other Matters
 
Organizational Changes
 
We are pleased to announce that effective June 1, 2013, Rose M. Sparks will become our chief financial officer, in addition to being our principal accounting officer.  She will also become chief financial officer and treasurer of FutureFuel Chemical, replacing Christopher Schmitt.  Ms. Sparks has served as our controller since we acquired FutureFuel Chemical in 2006, has over twenty years of experience at the Batesville facility, and is a licensed certified public accountant.  In her capacity as controller, Ms. Sparks has worked closely with members of our upper management in all aspects of financial reporting.  Effective June 1, 2013, Mr. Schmitt will leave the company and assume new responsibilities with Apex  Oil Company, Inc., an affiliated company of our Chairman.
 
Additionally, David Baker, Sr. Vice President Operations Support of FutureFuel Chemical, will be retiring from the company effective June 1, 2013.  Mr. Baker has served our company since its acquisition, and before that Eastman Chemical Company, in various capacities for over forty years.  We would like to express our sincere gratitude to Mr. Baker for his years of dedicated service to our company, his utmost professionalism, and for his numerous contributions to our success as a company.
 
Legal Matters
 
We entered into an agreement with a customer to construct at a fixed price a processing plant and produce a certain chemical for the customer.  We engaged a third party to act as general contractor on the construction of this plant for a guaranteed price.  That general contractor defaulted on its obligations under its contract with us and abandoned the project.  The general contractor’s default did not have a material adverse effect on us or our financial condition, results of operations, or cash flows.  As a result of the contractor’s default, we undertook the general contractor role ourselves.  We also filed suit against our former contractor to recoup any damages that we incurred as a result of his default.  The former contractor counterclaimed against us for amounts he asserted were due him under our contract with him.  The trial was conducted on this matter and the jury determined that we were not the breaching party under the contract but rather the general contractor was the breaching party and that the general contractor did not substantially complete his obligations under the contract.  The jury did however award the contractor certain amounts that the jury determined we owed him under the contract for services rendered through the date of breach.  Upon our motion, the court reduced the amount awarded by the jury.  Such amount does not have a material adverse effect on our overall financial condition, results of operations, or cash flows.  Both we and the contractor appealed certain rulings made in the course of this case and those appeals are pending.  We do not believe that the effect of these appeals will have a material adverse effect our overall financial condition, results of operations, or cash flows.
 
 
21

 
 
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
 
In recent years, general economic inflation has not had a material adverse impact on our costs and, as described elsewhere herein, we have passed some price increases along to our customers.  However, we are subject to certain market risks as described below.
 
Market risk represents the potential loss arising from adverse changes in market rates and prices.  Commodity price risk is inherent in the chemical and biofuels business both with respect to input (electricity, coal, raw materials, biofuels feedstock, etc.) and output (manufactured chemicals and biofuels).
 
We seek to mitigate our market risks associated with the manufacturing and sale of chemicals by entering into term sale contracts that include contractual market price adjustment protections to allow changes in market prices of key raw materials to be passed on to the customer.  Such price protections are not always obtained, however, so raw material price risk remains significant.
 
In order to manage price risk caused by market fluctuations in biofuels prices, we may enter into exchange traded commodity futures and options contracts.  We account for these derivative instruments in accordance with ASC 815-20-25, Derivatives and Hedging, Hedging-General, Recognition .  Under this standard, the accounting for changes in the fair value of a derivative instrument depends upon whether it has been designated as an accounting hedging relationship and, further, on the type of hedging relationship.  To qualify for designation as an accounting hedging relationship, specific criteria must be met and appropriate documentation maintained.  We had no derivative instruments that qualified under these rules as designated accounting hedges in the first three months of 2013 or 2012.  Changes in the fair value of our derivative instruments are recognized at the end of each accounting period and recorded in the statement of operations as a component of cost of goods sold.
 
Our immediate recognition of derivative instrument gains and losses can cause net income to be volatile from period to period due to the timing of the change in value of the derivative instruments relative to the sale of biofuel being sold.  As of March 31, 2013 and December 31, 2012, the fair values of our derivative instruments were a net liability in the amount of $1,887,000 and $947,000, respectively.
 
Our gross profit will be impacted by the prices we pay for raw materials and conversion costs (costs incurred in the production of chemicals and biofuels) for which we do not possess contractual market price adjustment protection.  These items are principally comprised of crude corn oil and yellow grease and petrodiesel.  The availability and price of these items are subject to wide fluctuations due to unpredictable factors such as weather conditions, overall economic conditions, governmental policies, commodity markets, and global supply and demand.
 
We prepared a sensitivity analysis of our exposure to market risk with respect to key raw materials and conversion costs for which we do not possess contractual market price adjustment protections, based on average prices for the first three months of 2013.  We included only those raw materials and conversion costs for which a hypothetical adverse change in price would result in a 1% or greater decrease in gross profit.  Assuming that the prices of the associated finished goods could not be increased and assuming no change in quantities sold, a hypothetical 10% change in the average price of the commodity listed below would result in the following change in annual gross profit.
 
 
22

 
 
(Volume and dollars in thousands)
 
Item
 
Volume (a) Requirements
 
Units
 
Hypothetical Adverse Change in Price
   
Decrease in Gross Profit
   
Percentage Decrease in Gross Profit
 
Crude corn oil and yellow grease
    70,356  
LB
    10 %   $ 2,645       12.4 %
Petrofuels
    3,223  
GAL
    10 %   $ 1,024       4.8 %
Methanol
    30,244  
LB
    10 %   $ 595       2.8 %
 

 
(a)
Volume requirements and average price information are based upon volumes used and prices obtained for the three months ended March 31, 2013.  Volume requirements may differ materially from these quantities in future years as our business evolves.
 
We had no borrowings as of March 31, 2013 or December 31, 2012 and, as such, we were not exposed to interest rate risk for those periods.  Due to the relative insignificance of transactions denominated in foreign currency, we consider our foreign currency risk to be immaterial.
 
Item 4. Controls and Procedures.
 
Under the supervision and with the participation of our chief executive officer and our principal financial officer and other senior management personnel, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15(d)-15(e)) under the Securities Exchange Act of 1934, as amended (or the Exchange Act), as of the end of the period covered by this report.  Based on that evaluation, our chief executive officer and our principal financial officer have concluded that these disclosure controls and procedures as of March 31, 2013 were effective to ensure that information required to be disclosed in the reports that 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.
 
There were no changes in our internal control over financial reporting during our last fiscal quarter that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.
 
 
23

 
 
PART II
OTHER INFORMATION
 
Item 1. Legal Proceedings.
 
We are not a party to, nor is any of our property subject to, any material pending legal proceedings, other than ordinary routine litigation incidental to our business.  However, from time to time, we may be a party to, or a target of, lawsuits, claims, investigations, and proceedings, including product liability, personal injury, asbestos, patent and intellectual property, commercial, contract, environmental, antitrust, health and safety, and employment matters, which we expect to be handled and defended in the ordinary course of business.  While we are unable to predict the outcome of any matters currently pending, we do not believe that the ultimate resolution of any such pending matters will have a material adverse effect on our overall financial condition, results of operations, or cash flows.  However, adverse developments could negatively impact earnings or cash flows in future periods.  Please see the discussion  above under Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Other Matters for additional discussion on our legal matters.
 
Item 1A. Risk Factors.
 
There have been no material changes to the risk factors we previously disclosed in Item 1A of our Form 10-K, Annual Report for the year ended December 31, 2012 filed with the SEC on March 18, 2013.
 
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
 
None.
 
Item 3. Defaults Upon Senior Securities.
 
None.
 
Item 4. Mine Safety Disclosures.
 
None.
 
Item 5. Other Information.
 
None.
 
Item 6. Exhibits.
 
Exhibit
Description
11.
Statement re Computation of per Share Earnings
31(a).
Rule 13a-15(e)/15d-15(e) Certification of chief executive officer
31(b).
Rule 13a-15(e)/15d-15(e) Certification of chief principal officer
32.
Section 1350 Certification of chief executive officer and principal financial officer
101
Interactive Data Files**
101.INS
XBRL Instance
101.SCH
XBRL Taxonomy Extension Schema
101.CAL
XBRL Taxonomy Extension Calculation
101.DEF
XBRL Taxonomy Extension Definition
101.LAB
XBRL Taxonomy Extension Labels
101.PRE
XBRL Taxonomy Extension Presentation
**
Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files in Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, a amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
 
 
24

 
 
Special Note Regarding Forward Looking Information
 
This report, and the documents incorporated by reference into this report, contain forward-looking statements.  Forward-looking statements deal with our current plans, intentions, beliefs, and expectations, and statements of future economic performance.  Statements containing such terms as “believe,” “do not believe,” “plan,” “expect,” “intend,” “estimate,” “anticipate,” and other phrases of similar meaning are considered to contain uncertainty and are forward-looking statements.  In addition, from time to time we or our representatives have made or will make forward-looking statements orally or in writing.  Furthermore, such forward-looking statements may be included in various filings that we make with the SEC, or in press releases, or in oral statements made by or with the approval of one of our authorized executive officers.
 
These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements.  Factors that might cause actual results to differ include, but are not limited to, those set forth under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in our future filings made with the SEC.  You should not place undue reliance on any forward-looking statements contained in this report which reflect our management’s opinions only as of their respective dates.  Except as required by law, we undertake no obligation to revise or publicly release the results of any revisions to forward-looking statements.  The risks and uncertainties described in this report and in subsequent filings with the SEC are not the only ones we face.  New factors emerge from time to time, and it is not possible for us to predict which will arise.  There may be additional risks not presently known to us or that we currently believe are immaterial to our business.  In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements .   If any such risks occur, our business, operating results, liquidity, and financial condition could be materially affected in an adverse manner.  You should consult any additional disclosures we have made or will make in our reports to the SEC on Forms 10-K, 10-Q, and 8-K, and any amendments thereto.  All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this report.
 
 
25

 
 
SIGNATURES
 
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 thereunto duly authorized.
 
FUTUREFUEL CORP.
 

 
By:
/s/ Paul A. Novelly      
Paul A. Novelly, Chairman and Chief Executive Officer
 
Date:  May 7, 2013  
 


By:
/s/ Rose M. Sparks      
Rose M. Sparks, Principal Financial Officer
 
Date:  May 7, 2013
 
 
 
 
26
Exhibit 11
 
Statement re Computation of Per Share Earnings
 
The composition of basic and diluted earnings per share were as follows for:
 
(Dollars in thousands, except per share amounts)
 

    For the three months ended March 31,  
   
2013
   
2012
 
Net income available to common stockholders
  $ 14,050     $ 7,113  
                 
Weighted average number of common shares outstanding
    42,928,109       41,314,859  
Effect of stock options
    21,745       178,276  
Weighted average diluted number of common shares outstanding
    42,949,854       41,493,135  
                 
Basic earnings per share
  $ 0.33     $ 0.17  
Diluted earnings per share
  $ 0.33     $ 0.17  
Exhibit 31(a)
Certification
 
I, Paul A. Novelly, certify that:
 
 
1.
I have reviewed this report on Form 10-Q of FutureFuel Corp. (the “registrant”).
 
 
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.
 
 
3.
Based on my knowledge, the financial statements, and the other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.
 
 
4.
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
 
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
 
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
 
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
 
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially effect, the registrant’s internal control over financial reporting.
 
 
5.
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
 
 
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
 
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
Date:       May 7, 2013
 
/s/ Paul A. Novelly
       
Paul A. Novelly, Chairman and Chief Executive Officer
   
 
 
Exhibit 31(b)
Certification
 
I, Rose M. Sparks, certify that:
 
 
1.
I have reviewed this report on Form 10-Q of FutureFuel Corp. (the “registrant”).
 
 
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.
 
 
3.
Based on my knowledge, the financial statements, and the other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.
 
 
4.
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
 
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
 
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
 
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
 
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially effect, the registrant’s internal control over financial reporting.
 
 
5.
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
 
 
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
 
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
Date:       May 7, 2013
 
 
/s/ Rose M. Sparks
       
Rose M. Sparks, Principal Financial Officer
   
 
 
Exhibit 32
Certification
Pursuant to 18 U.S.C. §1350,
As Adopted Pursuant  to
§906 of the Sarbanes-Oxley Act of 2002
 
In connection with the Quarterly Report of Future Fuel Corp. (the “ Company ”) on Form 10-Q for the period ending March 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “ Report ”), the undersigned hereby certify pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
 
1.
The Report fully complies with the requirements of §13(a) of the Securities Exchange Act of 1934, as amended.
 
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 

 
 
/s/ Paul A. Novelly
 
 
Paul A. Novelly,
 
  Chairman and Chief Executive Officer  
 

 
 
/s/ Rose M. Sparks
 
 
Rose M. Sparks, Principal Financial Officer
 
     
 
May 7, 2013