UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to _____
Commission file number 2-55070
THE ANDERSONS
(Exact name of registrant as specified in its charter)
OHIO 34-4437884
(State of incorporation (I.R.S. Employer
or organization) Identification No.)
480 W. Dussel Drive, Maumee, Ohio 43537
(Address of principal executive offices) (Zip Code)
(419) 893-5050
(Telephone Number)
Not applicable
(Former name, former address and former fiscal year,
if changed since last report.)
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 X No
The registrant is a limited partnership and has no voting stock. Because of
its form or organization, that includes transfer restrictions, there is no
market for any partnership interest in the registrant.
THE ANDERSONS
INDEX
Page No.
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets -
September 30, 1994 and December 31, 1993. . . . . . . . . . . . .3
Condensed Consolidated Statements of Income -
Three months ended September 30, 1994 and 1993. . . . . . . . . .5
Condensed Consolidated Statements of Income -
Nine months ended September 30, 1994 and 1993 . . . . . . . . . .6
Condensed Consolidated Statements of Cash Flows -
Nine months ended September 30, 1994 and 1993 . . . . . . . . . .7
Notes to Condensed Consolidated Financial Statements. . . . . . . .8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . . . .9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . 12
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE ANDERSONS
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30 December 31
1994 1993
CURRENT ASSETS
Cash and cash equivalents $ 4,107,107 $ 3,936,955
Accounts Receivable:
Trade accounts - net 53,438,321 60,036,382
Margin deposits 3,165,375 15,320,979
56,603,696 75,357,361
Inventories:
Grain 49,357,400 135,346,670
Agricultural products 19,219,297 16,170,908
Merchandise 36,577,604 32,497,574
Lawn products and corn cob products 14,323,839 20,579,022
Supplies and other 10,061,371 6,429,477
129,539,511 211,023,651
Prepaid expenses 1,249,578 858,941
TOTAL CURRENT ASSETS 191,499,892 291,176,908
OTHER ASSETS
Investments in and advances to affiliates 649,247 942,053
Investments and other assets 3,586,977 3,965,729
TOTAL OTHER ASSETS 4,236,224 4,907,782
PROPERTY, PLANT AND EQUIPMENT
Land 12,774,490 9,457,460
Land improvements and leasehold
improvements 21,486,667 19,378,810
Buildings and storage facilities 69,295,782 62,022,387
Machinery and equipment 83,220,579 80,141,615
Construction in progress 5,022,072 1,707,564
191,799,590 172,707,836
Less allowances for depreciation and
amortization 116,874,321 112,290,748
NET PROPERTY, PLANT AND EQUIPMENT 74,925,269 60,417,088
$270,661,385 $356,501,778
NOTE: The balance sheet at December 31, 1993 has been derived from the
audited financial statements at that date.
See notes to condensed consolidated financial statements.
THE ANDERSONS
CONDENSED CONSOLIDATED BALANCE SHEETS - (continued)
(UNAUDITED)
September 30 December 31
1994 1993
CURRENT LIABILITIES
Notes payable $ 53,900,000 $ 87,900,000
Accounts payable for grain 24,027,853 83,712,076
Other accounts payable 49,123,023 58,896,317
Amounts due General Partner 6,025,387 4,173,287
Accrued expenses 5,684,887 7,496,181
Current maturities of long-term debt 5,516,000 1,992,000
TOTAL CURRENT LIABILITIES 144,277,150 244,169,861
LONG-TERM DEBT
Note payable, 7.84%, payable
quarterly, due 2004 14,925,000 -
Note payable, 6.1875%, payable
$800,000 annually, due 1997 6,400,000 6,800,000
Notes payable relating to revolving
credit facility, variable rate
due 1996 - 7,500,000
Note payable, variable rate (6.9375% at
9/30/94) payable monthly through 7/5/96 4,794,513 -
Other notes payable 800,042 888,409
Industrial development revenue bonds:
6.5% due 1999 5,000,000 5,000,000
Variable rate (5.19% at 9/30/94),
due 1995 to 2004 8,114,000 8,114,000
Variable rate (3.28% at 9/30/94),
due 2025 3,100,000 3,100,000
Debenture bonds:
9.2% to 11.4%, due 1995 and 1996 7,566,000 7,586,000
6.5% to 7.2%, due 1997 to 1999 5,284,000 4,894,000
10% to 10.5%, due 1997 and 1998 2,849,000 2,849,000
10% due 2000 and 2001 2,742,000 2,774,000
7.5% to 8.5%, due 2002 to 2004 4,731,000 4,061,000
Other bonds, 4% to 9.6% 829,898 684,711
67,135,453 54,251,120
Less current maturities of long-term debt 5,516,000 1,992,000
TOTAL LONG-TERM DEBT 61,619,453 52,259,120
AMOUNT DUE GENERAL PARTNER 2,698,129 2,413,041
DEFERRED GAIN 15,899 1,145,151
MINORITY INTEREST 982,756 1,103,892
PARTNERS' CAPITAL
General partner 901,319 761,839
Limited partners 60,166,679 54,648,874
TOTAL PARTNERS' CAPITAL 61,067,998 55,410,713
$270,661,385 $356,501,778
NOTE: The balance sheet at December 31, 1993 has been derived from the
audited financial statements at that date.
See notes to condensed consolidated financial statements.
THE ANDERSONS
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months
Ended September 30
1994 1993
REVENUES
Sales and merchandising revenues $184,183,287 $167,493,930
Other income 681,715 586,620
184,865,002 168,080,550
COSTS AND EXPENSES
Cost of sales and revenues 155,645,822 141,083,325
Operating, administrative and
general expenses 29,757,198 26,277,009
Interest expense 1,852,142 1,317,238
187,255,162 168,677,572
NET LOSS - Note B $ 2,390,160 $ 597,022
Allocation of loss :
To general partner $ 32,086 $ 8,791
To limited partners 2,358,074 588,231
$ 2,390,160 $ 597,022
Loss allocation per $1000 of
partners' capital:
Weighted average capital for
allocation purposes - Note C $ 51,906,327 $ 46,437,133
Loss per $1000 $ 46 $ 13
See notes to condensed consolidated financial statements.
THE ANDERSONS
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Nine Months
Ended September 30
1994 1993
REVENUES
Sales and merchandising revenues $633,258,980 $495,460,289
Other income 1,981,638 2,260,693
635,240,618 497,720,982
COSTS AND EXPENSES
Cost of sales and revenues 531,477,396 409,137,698
Operating, administrative and
general expenses 88,111,012 79,303,812
Interest expense 5,916,812 4,304,683
615,505,220 492,746,193
NET INCOME - Note B $ 9,735,398 $ 4,974,789
Allocation of income:
To general partner $ 139,480 $ 64,394
To limited partners 9,595,918 4,910,395
$ 9,735,398 $ 4,974,789
Income allocation per $1000 of
partners' capital:
Weighted average capital for
allocation purposes - Note C $ 53,174,736 $ 48,103,954
Income per $1000 $ 183 $ 103
See notes to condensed consolidated financial statements.
THE ANDERSONS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months
Ended September 30
OPERATING ACTIVITIES 1994 1993
Net income $ 9,735,398 $ 4,974,789
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 5,925,201 5,185,978
Amortization of deferred gain (40,643) (289,467)
Minority interest in net income of
subsidiaries 100,916 154,557
Payments to minority interests (222,052) (156,658)
Provision for losses on receivables,
investments and other assets 396,242 346,518
Gain on sale of property, plant and
equipment (196,247) (234,022)
Changes in operating assets
and liabilities:
Accounts receivable 18,357,423 3,941,299
Inventories 81,484,140 36,848,787
Prepaid expenses (444,213) (615,054)
Accounts payable for grain (59,684,223) (45,073,185)
Other accounts payable and
accrued expenses (8,463,985) (5,603,369)
Other assets (1,426,821) (790,892)
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES 45,521,136 (1,310,719)
INVESTING ACTIVITIES
Purchases of property, plant, equipment (17,881,575) (7,362,756)
Proceeds from sale of property, plant
and equipment 824,074 465,500
Proceeds from sale of investment 1,679,215 -
Advances from (to) affiliates 438,000 (1,150,374)
NET CASH USED IN INVESTING ACTIVITIES (14,940,286) (8,047,630)
FINANCING ACTIVITIES
Net (decrease) increase in short-term
borrowings (34,000,000) 13,045,000
Proceeds from issuance of long-term debt 24,332,388 18,785,909
Payments of long-term debt (16,664,973) (16,026,421)
Payments to partners and other deductions
from capital accounts (4,811,788) (5,953,401)
Capital invested by partners 733,675 423,630
NET CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES (30,410,698) 10,274,717
INCREASE IN CASH AND CASH EQUIVALENT 170,152 916,368
Cash and cash equivalents at beginning
of year 3,936,955 1,365,906
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 4,107,107 $ 2,282,274
Noncash Investing and Financing Activities:
Assumption of long-term debt in purchase
of property, plant and equipment $ 5,216,918 $ -
See notes to condensed consolidated financial statements.
THE ANDERSONS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note A - In the opinion of management, all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of
the results of operations for the periods indicated have been
made.
The accompanying unaudited condensed consolidated financial
statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the
Partnership's annual report on Form 10-K for the year ended
December 31, 1993.
Note B - No provision has been made for federal income taxes on the
Partnership's net income since such amounts are includable in the
federal income tax returns of its partners.
Provision for federal income taxes is made on the net income or
loss of the Partnership's corporate subsidiaries, but is
insignificant.
Note C - The Partnership Agreement reflects each partner's invested capital
as of the beginning of each year. Partners' capital used in
determining the allocation of net income per $1,000 of partners'
capital is weighted to reflect cash distributions made to partners
during the year. The indicated allocations for the three-month
and nine-month periods ended September 30, 1994 and 1993 are the
allocations which would have been made had such periods
constituted an entire fiscal year.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources:
Working capital totalled $47 million at both September 30, 1994 and
December 31, 1993. However, as is typical in the grain industry,
significant decreases occurred in the current assets and current liabilities
of the Partnership during this time period. Grain inventories and payables
are generally at a high point on December 31, following the fall harvest,
and the balances at September 30 are generally much lower prior to the
upcoming fall harvest. Grain receivable balances are also generally higher
at December 31 than September 30. As a result of higher accounts
receivables and inventories at the end of the year, short-term borrowings
are generally higher at the end of the year than at September 30.
Partners' capital totaled $61 million at September 30, 1994, up $5.7
million from December 31, 1993. Increases include net income of $9.7
million and new equity of $734,000, received at the beginning of the year.
Decreases to partners' capital include distributions to partners of $4.2
million and equity withdrawals of $604,000. A quarterly cash distribution
of approximately $235,000 is expected to be paid in December and a quarterly
tax distribution of approximately $490,000 is expected to be paid in January
1995. The cash and tax distributions are discretionary and can be
discontinued or eliminated if operating results are insufficient to warrant
payment. Further withdrawals of capital in 1994 are not expected to be
significant.
Capital expenditures have totalled $23 million in the first nine months
of 1994 and are expected to be approximately $3 million in the last quarter.
Included in the expenditures incurred to date is the purchase of two general
stores that had previously been leased and the construction of a raw
material pre-processing and storage facility for corncobs. Committed
expenditures in the last quarter include $1 million for the purchase of
three agricultural products facilities subject to a lease expiring during
the year. To fund the capital expenditures, the Partnership assumed a $5.2
million note payable in the purchase of one of the general stores. In
addition, the Partnership issued a note payable of $15 million.
The Partnership is currently offering Five-Year and Ten-Year debentures
for sale. Through November 1, 1994, the Partnership sold $1.6 million of
the new debentures. The remaining proceeds to be realized in 1994 from the
sale of the debentures is unknown since the offering is not underwritten.
The Partnership recently called for redemption as of November 1, 1994,
outstanding debentures totalling $2.2 million.
At September 30, 1994, the Partnership's $10 million long-term
revolving line of credit was available for use. Short-term lines of credit
currently total $202 million and the borrowing against these lines totalled
$53.9 million at September 30, 1994. The highest borrowing against the
short-term lines was $127.6 million and occurred in January. The
Partnership's liquidity is enhanced by the fact that grain inventories are
readily marketable. In management's opinion, the Partnership's liquidity is
adequate to meet short-term and long-term needs.
The Partnership hedges virtually all of its fixed price grain purchases
and sales transactions through the use of futures contracts with the Chicago
Board of Trade. The Partnership's hedging program is designed to reduce the
risk of changing grain prices. Hedging transactions limit the potential
gains and losses from market price changes of the grain commodities.
Results of Operations:
Three Months Ended September 30, 1994 and 1993:
The Partnership experienced a net loss in the third quarter of 1994 of
$2.4 million, compared to a loss of $600,000 in the third quarter of 1993.
Sales and merchandising revenues were up $16.7 million and gross profit was
up $2.1 million. Interest expense was up $535,000, due to higher interest
rates and an increase in both short-term and long-term borrowings.
Operating, administrative and general expenses were up $3.5 million, with
approximately 65% of the increase coming from expanded operations including
a general store opened in the fall of 1993 and additional agricultural
facilities leased during the year.
Sales in the grain area were $101 million in the third quarter of 1994,
up $4 million from a year ago. The average selling price was $2.93 per
bushel compared to $2.91 per bushel in the third quarter of last year.
Bushels sold increased by 3%. Margins on grain sales were up from a year
ago resulting in an increase in gross profit on grain sales of about 50%.
Merchandising revenues were down $3.4 million led by a $2.8 million decrease
in basis and spreads. During the quarter the basis (the difference between
the Chicago Board of Trade cash grain market price and the local cash grain
market price) for wheat and corn decreased. The wheat basis dropped
dramatically due to the unexpected large crop of soft red wheat in the
eastern corn belt, and the slow export program of wheat from the United
States as world wheat prices climbed steadily in the third quarter. The
corn basis dropped in the third quarter when bad weather in June turned to
good weather and projections for the new corn crop increased substantially.
The pending huge new crop caused increased sales of the old corn crop,
pushing the basis lower. Drying and mixing income decreased in the third
quarter of 1994. The poor quality of the 1993 wheat crop resulted in higher
drying and mixing income in the third quarter of last year than that
experienced this year. Gross profit in the grain area was down $1.6 million
as a result of the decrease in merchandising revenues.
In the agricultural products area, sales were $22.5 million, up $7
million from a year ago as a result of a 66% increase in wholesale sales.
Retail sales were down 25%. Average wholesale fertilizer selling prices
were up 10% and volume was up 50%. Margins on wholesale sales were also up
resulting in a gross profit increase of $750,000 or about 45%.
Sales in the retail area were $39.5 million in the third quarter of
1994 compared to $33.7 million in the same period last year. The Lima, Ohio
store opened in the fourth quarter of 1993 accounted for $3.3 million of the
sales increase while sales in the Columbus market were up 10% and sales in
the Toledo market were up 2%. As a result of the sales increase and an
increase in margins, gross profit in the retail area was up $2.1 million, a
23% increase.
Sales of lawn care products were $9.5 million, up $1.3 million from the
third quarter of last year. Tons sold increased by 9%, while average
selling prices were about the same. Gross profit was up 24%, due to the
volume increase. In the industrial products area sales were up 6% and gross
profit was up 5%. In the other businesses of the Partnership, sales and
gross profit were up.
Nine Months Ended September 30, 1994 and 1993:
Net income in the first nine months of 1994 was $9.7 million, compared
to $5 million in the same period last year. Sales and merchandising
revenues were up $138 million and gross profit was up $15 million, an 18%
increase. Interest expense was up $1.6 million, as both short-term and
long-term borrowings have increased and interest rates have also increased.
Operating, administrative and general expenses were up $8.8 million, with
approximately 70% of the increase coming from expanded operations.
Sales in the grain area were $322 million in the first nine months of
1994, up $81 million from a year ago. The average selling price was $3.48
per bushel up from $2.95 per bushel a year ago. The number of bushels sold
increased by about 13% and the margins on grain sales also increased.
Merchandising revenues were down $2.7 million from last year. The decrease
in basis as noted above in the discussion for the third quarter, resulted in
significant decrease in basis income for the first nine months of 1994.
Drying and mixing income has been below 1993 levels all year long. High
moisture in the 1992 corn crop resulted in higher than normal drying and
mixing income in 1993. Storage income was up in the first nine months of
1994. Gross profit from the grain area was the same as last year.
In the agricultural products area, sales were $103 million, up $26
million from a year ago. Wholesale sales of fertilizer products were up
$18.7 million, as volume was up 23% and average selling prices were up 6%.
Margins were also up in the first nine months of 1994. Retail sales were up
$7.7 million from a year ago. Gross profit in the agricultural products
area was up in the first nine months of 1994 by $6.3 million, an increase of
50%. About one half of the gross profit increase was the result of the
liquidation in 1994 of phosphate inventories purchased in 1993 when the
market price of phosphate was depressed. In 1994 the market price of
phosphate appreciated significantly and the Partnership liquidated its
inventory. The increase in wholesale sales and margins and the increase in
retail sales also contributed to the gross profit increase.
Sales in the retail area were $122 million in the first nine months of
1994 compared to $104 million last year. Sales in the Columbus market were
up 9% and sales in the Toledo market were up about 2%. The Lima, Ohio store
opened in the fourth quarter of last year accounted for $10 million of the
sales increase. As a result of the sales increase and an increase in
margins, gross profit in the retail area was up $6.4 million or 22%.
Sales of lawn care products were $42 million, up $8 million from the
first nine months of last year. Tons sold increased by 26%, while average
selling prices decreased by 5%. Gross profit was up $2 million, due to the
volume increase as margins were down. In the industrial products area sales
were the same as last year and gross profit was down 6%. In the other
businesses, sales and gross profit were up.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K. There were no reports on Form 8-K for
the three months ended September 30, 1994.
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.
THE ANDERSONS
(Registrant)
By THE ANDERSONS MANAGEMENT CORP.
(General Partner)
Date: November 14, 1994 By /s/ Richard P. Anderson
Richard P. Anderson
President and Chief Executive
Officer
Date: November 14, 1994 By /s/ Richard R. George
Richard R. George
Corporate Controller (Principal
Accounting Officer)
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