The United States fuel ethanol industry has experienced rapid growth increasing from 1.3 billion gallons produced in 1997 to 3.9 billion gallons produced in 2005.

Historically, ethanol was marketed both as an oxygenate to reduce vehicle emissions as part of federal and state clean air programs and as an octane enhancer to improve engine performance. The oxygenate requirements of the Clean Air Act will be completely eliminated on May 5, 2006 by the RFS contained in the Energy Policy Act of 2005.

Ethanol is employed by the refining industry as a fuel oxygenate, which when blended with gasoline, allows engines to combust fuel more completely and reduce emissions from motor vehicles. As an oxygenate, ethanol has a high oxygen content and burns more completely, generating less pollution. The amount and use of fuel oxygenates is mandated through regulation, such as the federal Clean Air Act, which requires the use of oxygenated gasoline in areas with unhealthy levels of air pollution. As a result, ethanol usage has increased, and substantially all of the forecasted growth in demand for ethanol is expected to result from additional proposed regulations mandating usage of renewable fuels. The oxygenate requirements of the RFG program included in the Clean Air Act will be completely eliminated by May 5, 2006 by the Energy Policy Act of 2005. The use of ethanol as an oxygenate additive in fuel pursuant to the RFG program requirements represented approximately 54.6% of the ethanol market in 2004.

Through its wet milling process, the Illinois facility produces co-products such as corn gluten feed, corn gluten meal and corn germ. In addition, the fermentation process yields carbon dioxide. These co-products are sold for various consumer uses into large commodity markets. Corn gluten feed, corn gluten meal and CCDS are used as animal feed ingredients, corn germ is sold for the extraction of corn oil and carbon dioxide is sold for food-grade use such as beverage carbonation. Through its dry milling process, the Nebraska facility produces co-products such as DDGS, distillers wet grains, CCDS and carbon dioxide. Distillers products are marketed as high protein animal feed and carbon dioxide is sold for food-grade use.

Substantially all of the Company’s ethanol sales for the year ended December 31, 2005 were in the United States, with the majority of its sales in the Midwestern United States. Brewers\\\' yeast and corn gluten feed and meal are marketed on a global basis. The Illinois facility\\\'s access to an adjacent barge loading system provides cost-effective transportation to international markets.

The Illinois facility is located in Pekin, Illinois on the east bank of the Illinois River, about 160 miles southwest of Chicago. In addition to ethanol, the Illinois facility has the capacity to produce annually a total of 24,000 tons of brewer\\\'s yeast, 180,000 tons of corn gluten feed, 41,000 tons of corn gluten meal, 69,000 tons of corn germ, 67,000 tons of CCDS and 202,000 tons of carbon dioxide. The Company is in the process of expanding its Illinois facility with the addition of a new dry mill facility and it expects that the prefunded expansion will be complete in early 2007.

Cost of sales for the year ended December 31, 2005 was $848.1 million, compared to $793.1 million for the year ended December 31, 2004, an increase of $55.0 million or 6.9%.

Other income for the year ended December 31, 2005 was $1.0 million compared to $3.2 million for the year ended December 31, 2004.

Operating income for the year ended December 31, 2005 was $65.9 million compared to $52.8 million for the year ended December 31, 2004.