Two days after a report published in The Muncie Star Press in Muncie, Ind. painted a tough financial situation for Cardinal Ethanol, the Star Press said, the company released new information that said its situation is improving.

"Cardinal Ethanol would like to assure you that it has no intention of ceasing operation of its ethanol plant," the company said in a news release Tuesday, according to the Star Press. "Over the past six months, Cardinal Ethanol has achieved positive operating margins, which have led to improved cash flow and liquidity, allowing Cardinal Ethanol to meet all of its financial obligations."

The company also reported that it expects to report positive net income for the quarter ending Sept. 30.

"Not only has Cardinal Ethanol maintained positive operating margins for the past six months, but it is operating at 100 percent of capacity, is current on its loan payments and is in compliance with its financial loan covenants," the news release said, according to the Star Press. "Improved cash flow has allowed Cardinal Ethanol to repay all of its borrowings on its short term revolving line of credit, and it therefore has the ability to draw against that line of credit if needed."

(Muncie Star Press, Nov. 19, 2009)
(http://www.thestarpress.com/…)

DTN: Donna Funk, a certified public accountant with Kennedy & Coe in Wichita, Kan., which provides consultation services for about 10 ethanol plants, told DTN Wednesday that accountants for ethanol companies have taken note of the recent struggles in the industry. "Some of the recent discussions I’ve heard are related to plants that have filed 10Qs with accounting going concern disclosures," Funk said. "As you might be aware, accounting standards are typically very conservative and given the recent performance of the industry there are many auditors that are going to exercise extreme caution when evaluating a plants ability to continue." The disclosure by Cardinal Ethanol is not new, as many ethanol companies have mentioned bankruptcy as a possibility in their financial reports. (Todd Neeley)