UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1995
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
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 or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
480 W. Dussel Drive, Maumee, Ohio 43537
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (419) 893-5050
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
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, a limited partnership with no voting stock, merged with
and into its corporate general partner, on January 2, 1996. This is the
Registrants final Annual Report on form 10-K. Because of its form of
organization, there is no market for any partnership interests in the
registrant.
DOCUMENTS INCORPORATED BY REFERENCE
None
PART I
Item 1. Business
(a) General Development of Business
The Andersons (the "Partnership") is engaged in grain merchandising and
operates grain elevator facilities located in Ohio, Michigan, Indiana and
Illinois. The Partnership is also engaged in the distribution of agricultural
products such as fertilizers, seeds and farm supplies. The Partnership
operates retail general stores; produces, distributes and markets lawn care
products and corncob products; and repairs and leases railcars.
The Partnership is the successor to other Ohio limited partnerships which
have operated as "The Andersons" continuously since 1947. Except where the
context otherwise requires, the terms "Partnership," and "The Andersons"
include The Andersons and all predecessor entities.
The Andersons Management Corp. (the "Corporation") was formed in 1987 and
is the sole general partner of the Partnership. All of the common shares of
the Corporation are owned by limited partners of the Partnership. The
Corporation's Board of Directors has overall responsibility for the management
of the Corporation, including its responsibilities as general partner of the
Partnership. The Corporation provides all management and labor services
required by the Partnership in its operations under a Management Agreement
entered into between the Partnership and the Corporation. See "Item 13.
Certain Relationships and Related Transactions - Management Agreement."
On January 2, 1996, the Partnership merged with and into its general
partner, the Corporation, and the name of the Corporation was changed to "The
Andersons, Inc." Registered common shares were issued to former partners and
shortly thereafter, the shares began trading on the Nasdaq National Market.
(b) Financial Information About Industry Segments
See Note 12 to the Partnership's Consolidated Financial Statements for
information regarding the Partnership's business segments.
(c) Narrative Description of Business
Agriculture Group
The agriculture group consists of grain operations, wholesale fertilizer
operations, and retail farm centers.
The Partnership's grain operations involve merchandising grain and
operating terminal grain elevator facilities, which includes purchasing,
handling, processing and conditioning grain, storing grain purchased by the
Partnership as well as grain owned by others, and selling grain. The principal
grains sold by the Partnership are yellow corn, yellow soybeans and soft red
and white wheat. The Partnership's total grain storage capacity was
approximately 67 million bushels at December 31, 1995.
Virtually all grain merchandised by the Partnership is grown in the
Midwestern part of the United States and is acquired from country elevators,
dealers and producers. The Partnership effects grain purchases at prices
referenced to Chicago Board of Trade quotations. The Partnership competes for
the purchase of grain with grain processors and feeders, as well as with other
grain merchandisers.
The Partnership's grain business may be adversely affected by unfavorable
weather conditions, disease, insect damage, the total acreage planted by
farmers, government regulations and policies, and commodity price levels as
they affect grower incentive or a supplier's decision when to deliver grain for
sale. See "Government Regulation." The grain business is seasonal coinciding
with the harvest of the principal grains purchased and sold by the Partnership.
During 1995, approximately 62% of the grain sold by the Partnership was
purchased domestically by grain processors and feeders and approximately 38%
was exported. Most of the exported grain was purchased by exporters for
shipment to foreign markets. Some grain is shipped directly to foreign
countries, mainly Canada. Almost all grain shipments are by rail or boat.
Rail shipments are made primarily to grain processors and feeders, with some
rail shipments made to exporters on the Gulf or east coast. All boat shipments
are from the Toledo, Ohio port elevator.
Grain sales are effected on a negotiated basis by the Partnership's
merchandising staff. As with agricultural commodities generally, the volume
and pricing of the Partnership's sales are sensitive to changes in supply and
demand relationships, which in turn are affected by factors such as weather,
crop disease and government programs, including subsidies and acreage
allotments. The Partnership's business also is affected by factors such as
conditions in the shipping industry, currency exchange fluctuations, government
export programs and the relationships of other countries with the United
States. Since the Partnership does not know the ultimate destination of the
grain it sells for export, it is unable to determine the relative importance,
in terms of sales, of the various countries to which grain is shipped by its
customers.
Fixed price purchases and sales of cash grain expose the Partnership to
adverse changes in price. Hedging of these purchase and sales positions
provides protection from the potential adverse changes in price. The
Partnership hedges fixed price purchase and sales transactions through the use
of futures and option contracts with the Chicago Board of Trade ("CBOT"). The
CBOT is a regulated commodity futures exchange that maintains futures markets
for the grains merchandised by the Partnership (mainly corn, wheat and
soybeans). Futures prices are determined by supply and demand.
The Partnership's hedging program is designed to reduce the risk of
changing commodity prices. In that regard, hedging transactions also limit
potential gains from further changes in market prices. The agriculture group's
profitability is primarily derived from margins on grain sold and revenues
generated from other merchandising activities with its customer, not from
hedging transactions.
Purchases of grain can be made the day the grain is delivered to a
terminal or via a forward contract made prior to actual delivery. Sales of
grain are generally made by contract for delivery in a future period. When the
Partnership purchases grain at a fixed price, the purchase is hedged with the
sale of a futures contract on the CBOT. Similarly, when the Partnership sells
grain at a fixed price, the sale is hedged with the purchase of a futures
contract on the CBOT. At the close of business each day, the open inventory
ownership positions as well as open futures and option positions, are marked-
to-market. Gains/Losses in value on the Partnership's owned inventory
positions due to changing prices are netted with and generally off-set by
losses/gains in value on the Partnership's futures positions.
When a futures contract is entered into, an initial margin deposit must be
sent to the CBOT. The amount of the margin deposit is set by the CBOT and
varies by commodity. If the market price of a short futures contract
increases, then an additional margin deposit, called a maintenance margin,
would be required by the CBOT. Similarly, if the price of a long futures
contract decreases, a maintenance margin deposit would be required to be sent
to the CBOT. Subsequent price changes could require additional maintenance
margins or could result in the return of maintenance margins by the CBOT.
Significant changes in market prices, such as occurs when weather conditions
are unfavorable for extended periods, can have an effect on liquidity and
requires the Partnership to maintain appropriate short-term lines of credit.
The Partnership utilizes CBOT option contracts to reduce the potential required
margin deposits in the event of a rapidly rising market.
At any one time the Agriculture Group's purchase contract portfolio may
exceed 100 million bushels for delivery to the Partnership. Because of this
volume, the Partnership relies heavily on its hedging program as the method for
minimizing price risk in its grain inventories and contracts. The Agriculture
Group has adopted a policy which specifies the key controls over the hedging
program. This policy includes a description of the hedging programs, mandatory
review of positions by key management outside of the trading function on a
biweekly basis, daily position limits, modeling of positions for changes in
market conditions, and other internal controls. The Partnership monitors
current market conditions and may expand or reduce the purchasing program in
response to changes in those conditions. In addition, the Partnership reviews
its purchase contracts and the parties to those contracts for delivery risk and
provides appropriate reserves for potential defaults and non-delivery.
The Partnership competes in the sale of grain with other grain merchants,
other private elevator operators and farmer cooperatives which operate elevator
facilities. Competition is based primarily on price, service and reliability.
Some of the Partnership's competitors are also its customers and many of its
competitors have substantially greater financial resources than the
Partnership.
The Partnership's wholesale agricultural fertilizer operations involve
purchasing, storing, formulating, and selling dry and liquid fertilizers;
providing fertilizer warehousing and services to manufacturers and customers;
and wholesale distribution of seeds and various farm supplies. The major
fertilizer ingredients sold by the Partnership are nitrogen, phosphate and
potassium, all of which are readily available from various sources.
The Partnership's wholesale agricultural fertilizer market area primarily
includes Illinois, Indiana, Michigan and Ohio and customers for the
Partnership's agricultural fertilizer products are principally retail dealers.
Sales of agricultural fertilizer products are heaviest in the spring and fall.
The Partnership's aggregate storage capacity for dry fertilizer was 14
million cubic feet at December 31, 1995. The Partnership reserves five million
cubic feet of this space for various fertilizer manufacturers and customers.
The Partnership's aggregate storage capacity for liquid fertilizer at December
31, 1995 was 34 million gallons and six million gallons of this space is
reserved for manufacturers and customers. The agreements for reserved space
provide the Partnership storage and handling fees and, generally, are for one
year and are renewed at the end of each term.
The Partnership operates ten retail farm centers located throughout
Michigan, Indiana and Ohio. These centers, often strategically located at or
near the Partnership's grain or wholesale fertilizer facilities, offer
agricultural fertilizer, custom application of fertilizer, and chemical seeds
and supplies to the farmer.
In its agricultural products business, the Partnership competes with
regional cooperatives; fertilizer manufacturers; multi-state retail/wholesale
chain store organizations; and other independent wholesalers of agricultural
products. Many of these competitors have considerably larger resources than
the Partnership. Competition in the agricultural products business of the
Partnership is based principally on price, location and service.
Retail Group
The Partnership's retail store operations consist of six stores operated
as The Andersons General Stores (hereafter "General Stores"), which are
located in the Columbus, Lima and Toledo, Ohio areas and which serve urban,
rural and suburban customers. Major product categories in the General Stores
include: hardware, home remodeling and building supplies; automotive
accessories and parts; small appliances, electronics and housewares products;
work clothes and footwear; wine, specialty meats and cheeses, baked goods and
produce; pet care products; lawn and garden supplies, nursery stock and
Christmas decorations and trim; toys, sporting goods, bicycles and marine
accessories. The General Store concept features self-selection of a wide range
and variety of brand name, quality merchandise. Each General Store carries
more than 70,000 different items, has over 100,000 square feet of in-store
display space plus 40,000 square feet of outdoor garden center space, and has a
center a isle that features do-it-yourself clinics, special promotions and
varying merchandise displays.
The retail merchandising business is highly competitive. The Partnership
competes with a variety of retail merchandisers, including numerous mass
retailers, department and hardware stores, and farm equipment and supply
companies. The principal competitive factors are quality of product, price,
service and breadth of selection. The Partnership's retail business is
affected by seasonal factors with significant sales occurring during the
Christmas season and in the spring.
Business Development Group
The Partnership produces approximately 800 granular retail and
professional lawn care products for national distribution. The retail granular
products are sold to mass merchandisers, small independent retailers and other
lawn fertilizer manufacturers. The professional granular products are sold
both direct and through distributors to lawn service applicators and to golf
courses. The principal raw materials for the lawn care products are nitrogen,
potash and phosphate, which are primarily purchased from the Partnership's
agriculture group. The lawn care industry is highly seasonal, with the majority
of the sales occurring from early spring to early summer. Competition is based
principally on merchandising ability, service and quality.
The Partnership's Railcar division operates a full service repair shop,
which specializes in repairs, renovations, cleaning and painting of railcars.
In addition the division buys and sells railcars, leases and subleases railcars
and provide s fleet management services. Competition for marketing services is
based primarily on service and access to financing. Repair shop competition is
based primarily on price, quality and location.
The Partnership is one of the largest producers of processed corncob
products in the United States. These products serve the chemical carrier,
animal bedding, industrial and sorbent markets and are distributed throughout
the United States an d Canada and into Europe and Asia. The unique absorption
characteristics of the corncob has led to the development of "sorbent"
products. Sorbents include products made from corncobs as well as synthetic
and other materials and are used to absorb s pilled industrial lubricants and
other waste products. The principal sources for the corncobs are the
Partnership's grain operations and seed corn producers.
The Partnership produces dog and cat foods, which are marketed through a
joint venture partnership. The Partnership is also involved in the operation
of seven auto service centers, a steel fabrication shop and an outdoor power
equipment sales and service shop.
Research and Development
The Partnership's research and development program is mainly concerned
with the development of improved products and processes, primarily lawn care
products and corncob products. Approximately $370,000, $490,000, and $450,000
was expended on research and development during 1995, 1994 and 1993,
respectively.
Employees
All management and labor services are provided to the Partnership by the
employees of the Corporation. The Partnership pays a management fee to the
Corporation for these services. At December 31, 1995, there were 1,187 full-
time and 1,939 part-time or seasonal employees of the Corporation providing
services to the Partnership.
Government Regulation
Grain sold by the Partnership must conform to official grade standards
imposed under a federal system of grain grading and inspection administered by
the United States Department of Agriculture ("USDA").
The production levels, markets and prices of the grains which the
Partnership merchandises are materially affected by United States government
programs, including acreage control and price support programs of the USDA.
Also, under federal law, the President may prohibit the export of any product,
the scarcity of which is deemed detrimental to the domestic economy, or under
circumstances relating to national security. Because a portion of the
Partnership's grain sales are to exporters, the imposition of such restrictions
could have an adverse effect upon the Partnership's operations.
The Partnership, like other companies engaged in similar businesses, is
subject to a multitude of federal, state and local environmental protection
laws and regulations including, but not limited to, laws and regulations
relating to air quality, water quality, pesticides and hazardous materials.
The provisions of these various regulations could require modifications of
certain of the Partnership's existing plant and processing facilities and could
restrict future facilities expansion or significantly increase their cost of
operation. Of the Partnership's capital expenditures, approximately $740,000
and $617,000 in 1995 and 1994, respectively, were made in order to comply with
these regulations.
Item 2. Properties
The Partnership's principal agriculture, retail and other properties are
described below. Except as otherwise indicated, all properties are owned by
the Partnership.
Agriculture Facilities
Location Grain Wholesale Fertilizer
Bushel Dry Storage Liquid Storage
Capacity (in cu. ft.) (in. gal.)
Maumee, OH 18,800,000 6,333,000 2,600,000
Toledo, OH 6,300,000 2,000,000 3,000,000
Metamora, OH 6,480,000
Lyons, OH (3) 380,000 47,000 160,000
Champaign, IL 13,000,000 833,000
Delphi, IN 6,580,000 1,000,000
Clymers, IN (1) 4,400,000 7,600,000
Clymers, IN (3) 37,000 480,000
Dunkirk, IN 5,900,000 900,000
Poneto, IN 530,000 5,500,000
North Manchester, IN (3) 23,000 900,000
Logansport, IN 33,000 3,000,000
Walton, IN (3) 433,000 6,500,000
Albion, MI (3) 2,470,000 23,000 40,000
Potterville, MI (3) 790,000 23,000
White Pigeon, MI 1,730,000
Webberville, MI 2,017,000 3,300,000
Litchfield, MI (2)(3) 40,000 252,000
North Adams, MI (2)(3) 20,000 230,000
Union City, MI (3) 20,000 49,500
Munson, MI (3) 33,000 150,000
67,360,000 13,815,000 33,761,500
(1) Facility leased - lease expires in 1998, provides an option to purchase.
(2) Facilities leased.
(3) Facility is or includes a retail farm center.
The grain facilities are mostly concrete and steel tanks, with some flat
storage. The Partnership also owns grain inspection buildings and driers, a
corn sheller plant, maintenance buildings and truck scales and dumps.
Agricultural products properties consist mainly of fertilizer warehouse
and distribution facilities for dry and liquid fertilizers. The Maumee, Ohio
and Walton, Indiana locations have fertilizer mixing, bagging and bag storage
facilities. The Partnership also owns a seed processing facility in Delta,
Ohio. Aggregate storage capacity in the ten retail farm centers located in
Michigan, Indiana and Ohio for liquid fertilizer and dry fertilizer is 8.8
million gallons and 699,000 cubic feet, respectively.
Retail Store Properties
Name Location Sq. Ft.
Maumee General Store Maumee, OH 128,000
Toledo General Store Toledo, OH 134,000
Woodville General Store (1) Northwood, OH 105,000
Lima General Store (1) Lima, OH 103,000
Brice General Store Columbus, OH 140,000
Sawmill General Store Columbus, OH 134,000
Warehouse (1) Maumee, OH 245,000
(1) Leased
The leases for the two General Stores and the warehouse facility are long-
term leases with several renewal options and provide for minimum aggregate
annual lease payments approximating $1 million. The two General Store leases
provide for contingent lease payments based on achieved sales volume. Neither
General Store achieved a sales level triggering contingent lease payments in
1995, 1994 or 1993.
Other Properties
The Partnership owns lawn fertilizer production facilities and automated
pet food production and storage facilities in Maumee, Ohio. It also owns
corncob processing and storage facilities in Maumee, Ohio and Delphi, Indiana.
The Partnership leases a lawn fertilizer production facility, a warehouse
facility and four lawn products sales outlets. In its Railcar leasing
business, the Partnership owns or leases approximately 2,000 railcars
(primarily covered hopper cars) with lease terms ranging from one to ten years
and future minimum lease payments aggregating $22.6 million with future minimum
lease income of $22.4 million. The Partnership also owns a railcar repair
facility, a steel fabrication facility, a service and sales facility for
outdoor power equipment and the Partnership owns or leases seven auto service
centers.
The Partnership's administrative office building is leased at an annual
rental of $696,000 under a net lease expiring in 2000. See "Item 13. Certain
Relationships and Related Transactions - Management Agreement." The
Partnership owns approximately 704 acres of land on which various of the above
properties and facilities are located; approximately 439 acres of farmland and
land held for future use; approximately 11 acres of improved land in an
office/industrial park held for sale; and certain other real estate. The
Partnership also owns or leases a number of switch engines, cranes and other
equipment.
Real properties, machinery and equipment of the Partnership were subject
to aggregate encumbrances of approximately $38 million at December 31, 1995.
Additions to property for the years ended December 31, 1995, 1994 and 1993
amounted to $16 million, $26 million, and $11 million, respectively. See Note
8 to the Partnership's Consolidated Financial Statements for information as to
the Partnership's leases.
The Partnership believes that its properties, including its machinery,
equipment and vehicles, are adequate for its business, well maintained and
utilized, suitable for their intended uses and adequately insured.
Item 3. Legal Proceedings
The Partnership is not involved in any material legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
A special meeting of the partners was held on November 16, 1995, to vote
on a merger of the Partnership into its General Partner. Proxies were
solicited for vote on the proposal to merge the Partnership with and into its
General Partner, change the name of the surviving corporation, create a single
class of common shares, converting current partners capital and shareholders
equity to this new class of common shares and amend the Corporation's Articles
of Incorporation and Code of Regulations. There were 206 affirmative votes on
the merger, four partners voted against the merger and one abstained.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
(a) Because of the form of its organization that includes restrictions
on the transfer of Limited Partnership Interests, there is no market
for the Limited Partnership Interests.
(b) The number of holders of Limited Partnership Interests as of
December 31, 1995, was 218.
(c) The Partnership makes cash distributions and allocations of net
income to Limited Partners, and to the General Partner in accordance
with the terms of the Partnership Agreement. See "Item 6. Selected
Financial Data." As previously noted, certain of the Partnership's
long-term borrowings and line of credit agreements include
provisions that impose minimum levels of working capital and
partnership equity (as defined) and limit the addition of new long-
term debt along with other requirements.
(d) On January 2, 1996, the Partnership merged with and into its General
Partner. Former partners were issued 8.1 million common shares of
The Andersons, Inc. which began trading on the Nasdaq National
Market on February 20, 1996.
<TABLE>
Item 6. Selected Financial Data
<CAPTION>
Year Ended December 31
(in thousands) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Grain sales and revenues $ 660,121 $ 551,836 $ 439,484 $ 440,553 $ 356,898
Fertilizer, retail and other sales 432,288 417,044 356,987 326,768 299,974
Total sales and merchandising revenues 1,092,409 968,880 796,471 767,321 656,872
Operating profit (a) 28,031 29,091 22,640 18,110 12,768
Income from continuing operations 10,120 15,137 11,079 10,130 4,516
Weighted average partners' capital (b) 61,317 52,696 47,405 43,101 41,939
Allocations and distributions per $1,000
of weighted average partners' capital:
Allocation of income from continuing
operations 165 287 234 235 107
Cash distributions 36 21 32 34 34
Tax distributions (c) 70 63 88 10 8
As of December 31
Balance Sheet Data: 1995 1994 1993 1992 1991
Total assets $ 451,415 $340,555 $356,502 $255,501 $290,110
Long-term debt 74,139 71,217 52,259 46,077 48,018
Partners' capital:
General partner 1,102 969 762 623 531
Limited partners 65,156 63,008 54,648 50,497 41,976
$ 66,258 $ 63,977 $ 55,410 $ 51,120 $ 42,507
(a) See Note 12 to the Partnership's Consolidated Financial Statements for the definition of
operating profits.
(b) Weighted average partners' capital represents the average daily outstanding partners' capital
balance, which includes the effects of distributions and investments made during the year.
(c) Tax distributions fluctuate from year to year due to the timing of the distributions, the amount
of partnership taxable income and the amount of the distribution partners elect to receive.
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
Working capital at December 31, 1995 was $58 million, up $1 million from
1994. Cash used in operations was $60 million in 1995 compared to cash
provided by operations in 1994 of $52 million. Cash used to fund operating
activities came from short-term borrowings which increased from $50 million at
December 31, 1994 to $120 million at December 31, 1995.
Accounts receivable increases of $39 million from 1994 to 1995 and
inventory increases of $71 million for the same period accounted for virtually
all of this change. The Partnership's position as a grain merchandiser
requires it to forward contract for purchases of grain and hold grain in
inventory. In order to hedge these positions against changing prices in the
commodity markets, the Company holds futures and option contracts on the
Chicago Board of Trade. These positions, as well as the bushels held in
inventory, are marked to the market price on a daily basis.
The addition of ten million bushels of storage capacity in 1994 and a more
aggressive purchasing program has significantly increased the Partnership's
portfolio of purchase contracts. Commodity prices, in general, were unusually
high through out 1995 and, as such, the cost to purchase, hedge and carry
inventories required more cash. The Partnership's hedging positions with the
Chicago Board of Trade increased in volume and value and required additional
margin moneys to be forwarded to the brokers holding them. These margin
deposits are classified with accounts receivable for reporting purposes. The
Partnership continues to review the contracts it holds with grain producers and
dealers for non-delivery risk and believes it has adequately reserved for
potential defaults.
In order to finance operations, the Partnership has short-term lines of
credit available of $292 million. At December 31, 1995, $120 million of these
lines were used, an increase of $70 million from the prior year. Because of
the significant availability of short-term funds, cash generated from
operations is often utilized to pay down debt or finance capital improvements
or acquisitions. Cash on hand at December 31, 1995 was $4.1 million, a
decrease of $2 million from 1994. In addition to financing the programs of the
grain division, the short term lines are used to finance inventories and
accounts receivable in other businesses. Typically, borrowings under these
lines are highest in the spring due to seasonal inventory requirements in
several of the Partnership's businesses, credit sales of lawn and agricultural
fertilizer are at their peak and a customary reduction in grain payables due to
customer cash needs and market strategies.
Prior to the merger, the taxable income of the Partnership was included in
the individual tax returns of its partners and was not taxed at the Partnership
level. To make cash available to partners to pay estimated tax payments, the
Partnership made quarterly cash distributions available. Partners could elect
whether to take all, none or a portion of these distributions. All partners
made their final requests for distributions and equity withdrawals prior to the
merger vote and all distributions were made prior to December 31, 1995. The
$2.3 million increase in partners' capital from December 31, 1994 to December
31, 1995 reflects income of $10.1 million, withdrawals and distributions of
$6.1 million and charitable contributions of $1.7 million.
Because of its significant short-term borrowings, the Partnership
periodically utilizes interest rate contracts to manage interest rate risk by
converting variable rates on short-term borrowings to intermediate-term fixed
rates, consistent with projected borrowing needs. At December 31, 1995, the
Partnership had three $10 million interest rate swap agreements, maturing in
1996, that converted variable rates to fixed rates ranging from 5.815% to
5.87%. Because these rates approximated the actual variable rates, the effect
on 1995 interest expense was not significant.
During 1995, the Partnership invested $11.9 million in capital additions
and improvements. The Partnership also used $1.4 million to purchase the
outstanding stock of the Metamora Elevator Company, Inc., whose facilities it
had previously leased. In 1996, the Partnership anticipates capital
expenditures of approximately $13 million, including $1.5 million for Retail
Farm Center expansion, $2.5 million for renovations to two General Stores, $2.3
million for additional storage capacity and $2.4 million for plant upgrades and
improvements. Funding for these expenditures is expected to come from cash
generated from operations and additional long-term debt. Capital expenditures
could be curtailed if necessary.
Certain of the Partnership's long-term debt is secured by first mortgages
on various facilities. In addition, some of the long-term borrowings include
provisions that impose minimum levels of working capital and equity,
limitations on additional debt and require the Partnership to be substantially
hedged in its grain transactions.
The Partnership's liquidity is enhanced by the fact that grain inventories
are readily marketable and the Maumee and Toledo, Ohio elevators serve as
delivery points for Chicago Board of Trade contracts. In the opinion of
management, the Partnership's liquidity is adequate to meet short-term and
long-term needs.
Results of Operations
Years ended December 31, 1995 and 1994:
Net income in 1995 decreased to $10 million from $15 million in 1994.
Gross profit increased by $4 million or 3%. Operating, administrative and
general expenses were up $3.5 million or about 3%. Included in this amount is
an increase of $3.8 million or 5% in the management fee paid to the general
partner. Most of the management fee increase was for salaries, wages and
benefits. The Agriculture Group acquired additional facilities during 1994, and
1995 reflects a full year of operating expenses for those locations. Operating
profit decreased by $1.1 million.
Grain sales and merchandising revenues were $660.1 million in 1995
compared to $551.8 million in 1994, a 10% increase. Sales of grain commodities
were up $110 million. Bushels sold increased almost 20% and the average
selling price per bushel increased from $3.44 to $3.75. Cents per bushel sold
increased 33%. Merchandising revenues decreased from $25.5 million in 1994 to
$23.8 million in 1995. Storage income was down $2.1 million due to the
increased sales and resulting lower stocks. Drying and mixing income was down
$1.8 million during 1995, due to better quality crops than those of the
preceding crop years. Gross profit on grain sales and merchandising revenues
was up $4.2 million or 11%.
Sales of wholesale fertilizer were up $1.7 million or 1% and retail
fertilizer sales and sales of other agricultural products were up $6.7 million
or 27% due to a full year of operations in the added retail facilities.
Wholesale fertilizer tonnage decreased by 10% and the average selling price
increased 13%. Gross profit on wholesale fertilizer was unchanged and retail
and other gross profit increased approximately $1 million or 12%. In 1994,
wholesale fertilizer gross profit included a $1.6 million gain from the 1994
liquidation of phosphate inventories purchased in 1993 when the market price of
phosphate was depressed.
As a Group, Agriculture sales were $796.8 million in 1995 compared to
$678.3 million in 1994, gross profit increased $5.2 million and operating
profit decreased $2 million.
Sales in the Retail Group were $168 million in 1995 compared to $169
million in 1994. Sales in the Columbus stores were down $3.4 million and sales
in the Toledo stores were up $2 million. Sales in the Lima store were up
$500,000. Margins increased by about 2%. Operating profit in the Retail Group
was down slightly.
Sales in the Business Development Group of the Partnership also increased.
Sales of lawn care products totaled $49.6 million, up $2 million from 1994.
Volume decreased 3%, while average selling prices increased 5%. Margins were
down 8% due to increased raw material prices. Sales of corn cob products were
$15.7 million compared to $14.6 million in 1994. Volume was down slightly.
Railcar gross profit increased $267,000 or 6% from 1994. Sales from the
Partnership's auto service centers were down slightly. Sales from the
Partnership's outdoor power equipment and service shop and fabrication shop
also decreased from 1994. Operating profit in the Business Development Group
was up $1.1 million, the majority of which related to the sale of excess real
estate.
Years ended December 31, 1994 and 1993:
Net income in 1994 increased to $15 million from $11 million in 1993.
Gross profit increased by $19 million or 15%. Operating, administrative and
general expenses were up $13 million or about 11%, including an increase of
$7.3 million (11%) in the management fee paid to the general partner. Most of
the management fee increase was for salaries, wages and benefits. Additional
facilities in the Agriculture Group added approximately $5 million to salaries,
wages and benefits and a fully ear of operation at the Lima General Store added
more than $1 million to salaries, wages and benefits in the Retail Group.
Operating profit increased by $6.5 million.
Grain sales and merchandising revenues were $551.8 million compared to
$439.5 million in 1993, a 26% increase. Sales of grain commodities were up
$110 million. Bushels sold increased almost 20% and the average selling price
per bushel increased from $3.25 to $3.44. Cents per bushel sold increased 19%.
Merchandising revenues increased from $23.2 million in 1993 to $25.5 million in
1994. Storage income was up $3.6 million, while basis income was down $1.4
million due to a larger than expected wheat and corn crop. Drying and mixing
income was down $2 million during 1994, due in part to a better quality 1993
corn crop and 1994 wheat crop than those of the preceding crop years. Gross
profit on grain sales and merchandising revenues was up $4.3 million or 13%.
Sales of wholesale fertilizer were up $22.8 million or 26% and retail
fertilizer sales and sales of other agricultural products were up $7.6 million
or 45%. Wholesale fertilizer tonnage increased by 11% and the average selling
price increase d 6%. Gross profit on wholesale fertilizer increased $5.3
million or 64% while retail and other agricultural products gross profit
increased $2.1 million or 26%. Approximately one-half of the wholesale
fertilizer 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 appreciated significantly and the
Partnership liquidated its inventory position.
Sales in the Agriculture Group were $678.3 million compared to $540.3
million in 1993, while gross profit and operating profit increased $11.7
million and $4.3 million, respectively.
Sales in the Retail Group were $169 million in 1994 compared to $153
million in 1993. Sales in the Columbus stores were up $4.4 million and sales
in the Toledo stores were up $3 million. Sales in the Lima store which opened
in September 1993 were up $10 million. Margins increased by about 3%.
Operating profit in the Retail Group was up $2.7 million.
Sales in the Business Development Group of the Partnership also increased.
Sales of lawn care products totaled $47.6 million, up $9.5 million from 1993.
Volume increased 27%, while average selling prices decreased 5%. Margins were
down slightly. Sales of corn cob products were $14.6 million compared to $14.2
million in 1993. Volume was down in corn cob products and up in sorbent
products. Railcar leasing activity doubled from 1993 and sales and repairs of
railcars also increased. Sales from the Partnership's auto service centers
were up, as were steel fabrication sales. Sales from the Partnership's outdoor
power equipment and service shop also improved. Operating profit in this Group
was down approximately $800,000.
Impact of Inflation:
Although inflation has slowed in recent years, it is still a factor in the
economy and the Partnership continues to seek ways to cope with its impact. To
the extent permitted by competition, the Partnership passes increased costs on
through increased selling prices. Grain inventories are valued at the current
replacement market price and substantially all purchases and sales of grain are
hedged as a result of buying or selling commodity futures contracts.
Consequently, grain inventories and cost of goods sold are not directly
affected by inflation but rather by market supply and demand. If adjusted for
inflation, net income would be lower than reported due primarily to increased
depreciation costs resulting from the replacement costs associated with
property, plant and equipment.
Item 8. Financial Statements and Supplementary Data
Report of Independent Auditors
Board of Directors
The Andersons, Inc.
We have audited the accompanying consolidated balance sheets of The Andersons
(a partnership) and subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of income, cash flows and changes in partners'
capital for each o f the three years in the period ended December 31, 1995. Our
audits also included the financial statement schedule listed in the index at
Item 14(a). These financial statements and schedule are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of The
Andersons and subsidiaries at December 31, 1995 and 1994, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1995, in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial statement
schedules, when considered in relation to the basic financial statements taken
as a whole, present fairly in all material respects the information set forth
therein.
/s/ ERNST & YOUNG LLP
February 2, 1996
Toledo, Ohio
The Andersons and Subsidiaries
Consolidated Statements of Income
(dollars in thousands, except net income Year ended December 31
allocation per $1,000 partners' capital) 1995 1994 1993
Grain sales and revenues $ 660,121 $ 551,836 $ 439,484
Fertilizer, retail and other sales 432,288 417,044 356,987
Other income 5,107 2,609 3,764
1,097,516 971,489 800,235
Cost of grain sales and revenues 617,933 513,893 405,889
Cost of fertilizer, retail and other sales 326,242 308,381 264,269
944,175 822,274 670,158
Gross profit 153,341 149,215 130,077
Operating, administrative and general expenses 129,202 125,683 112,829
Interest expense 14,019 8,395 6,169
143,221 134,078 118,998
Net income $ 10,120 $ 15,137 $ 11,079
Net income was allocated to:
General partner $ 160 $ 219 $ 145
Limited partners 9,960 14,918 10,934
$ 10,120 $ 15,137 $ 11,079
Net income allocation per $1,000 of
partners' capital:
Weighted average capital
for allocation purposes $ 61,317 $ 52,696 $ 47,405
Allocation per $1,000 $ 165 $ 287 $ 234
See accompanying notes.
The Andersons and Subsidiaries
Consolidated Balance Sheets
December 31
(in thousands) 1995 1994
Assets
Current assets:
Cash and cash equivalents $ 4,163 $ 6,187
Accounts receivable:
Trade accounts, less allowance for doubtful
accounts of $3,514 in 1995; $2,292 in 1994 68,362 45,529
Margin deposits 20,753 7,034
89,115 52,563
Inventories 269,930 198,635
Prepaid expenses 1,486 899
Total current assets 364,694 258,284
Other assets:
Notes receivable and other assets, less allowance
for doubtful notes receivable of $1,277 in 1995;
$717 in 1994 4,189 3,083
Investments in and advances to affiliates 670 1,592
4,859 4,675
Property, plant and equipment 81,862 77,596
$451,415 $340,555
Liabilities and partners' capital
Current liabilities:
Notes payable $120,267 $ 50,000
Accounts payable for grain 94,084 83,844
Other accounts payable 70,825 51,362
Amounts due General Partner 4,760 4,701
Accrued expenses 8,448 7,708
Current maturities of long-term debt 8,029 3,615
Total current liabilities 306,413 201,230
Amounts due General Partner 2,929 3,060
Long-term debt 74,139 71,217
Deferred income taxes 675 --
Minority interest 1,001 1,071
Partners capital:
General partner 1,102 969
Limited partners 65,156 63,008
66,258 63,977
$451,415 $340,555
See accompanying notes.
The Andersons and Subsidiaries
Consolidated Statements of Cash Flows
Year ended December 31
(in thousands) 1995 1994 1993
Operating activities
Net income $ 10,120 $15,137 $11,079
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 9,316 8,101 7,109
Gain on sale of property, plant and equipment (2,568) (161)
(1,108) Provision for losses on accounts and
notes receivable 2,229 2,683 910
Amortization of deferred gain - (44) (386)
Payments to minority interests (162) (222) (166)
Minority interest in net income of subsidiaries 92 189 236
Changes in operating assets and liabilities:
Accounts receivable (38,773) 10,483 (32,110)
Inventories (71,295) 12,389 (61,138)
Prepaid expenses and other assets 919 (1,006) (1,256)
Accounts payable for grain 10,240 132 18,967
Other accounts payable and accrued expenses 20,077 4,451 6,720
Net cash provided by (used in) operating
activities (59,805) 52,132 (51,143)
Investing activities
Purchases of property, plant and equipment (11,894) (22,663) (10,808)
Acquisition of business (1,427) - -
Proceeds from sale of property, plant and equipment 1,242 848 1,697
(Advances to) payments received from affiliates 517 (640) 150
Proceeds from sale of investment - 1,679 -
Net cash used in investing activities (11,560) (20,776) (8,961)
Financing activities
Net increase (decrease) in short-term borrowings 68,578 (37,900) 64,150
Proceeds from issuance of long-term debt 56,570 35,509 22,753
Payments of long-term debt (49,616) (20,145) (17,440)
Payments to partners and other deductions from
capital accounts (7,527) (7,304) (7,212)
Capital invested by partners 1,336 734 424
Net cash provided by (used in) financing activities 69,341 (29,106) 62,675
Increase (decrease) in cash and cash equivalents (2,024) 2,250 2,571
Cash and cash equivalents at beginning of year 6,187 3,937 1,366
Cash and cash equivalents at $ 4,163 $ 6,187 $ 3,937
end of year
Noncash investing and financing activities:
Acquisition of business:
Working capital - other than cash $ 90
Property, plant and equipment 4,096
Short and long-term debt assumed (2,070)
Other long-term liabilities assumed (689)
Net cash expended $ 1,427
Donation of land to charity $ 1,648
Notes received in sale of land $ 2,431
Assumption of long-term debt in purchase of
property, plant and equipment $ 5,217
See accompanying notes.
The Andersons and Subsidiaries
Consolidated Statements of Changes in Partners' Capital
(in thousands) Year ended December 31
1995 1994 1993
General partner capital
Balance at beginning of year $ 969 $ 762 $ 623
Amounts credited (charged) to capital:
Net income for the year 160 219 145
Charitable contributions (27) (12) (6)
133 207 139
Balance at end of year $ 1,102 $ 969 $ 762
Limited partners' capital
Balance at beginning of year $ 63,008 $ 54,649 $ 50,497
Amounts credited (charged) to capital:
Net income for the year 9,960 14,918 10,934
Increase in invested capital 1,336 734 424
Charitable contributions (1,675) (771) (477)
Withdrawals (2,072) (1,759) (828)
Distributions (5,401) (4,763) (5,901)
2,148 8,359 4,152
Balance at end of year $ 65,156 $ 63,008 $ 54,649
Total partners' capital--at end of year $ 66,258 $ 63,977 $ 55,411
See accompanying notes.
The Andersons and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 1995
1. Significant Accounting Policies
Principles of Consolidation and Related Matters
The consolidated financial statements include the accounts of The Andersons
(the Partnership) and its subsidiaries. All material intercompany accounts and
transactions have been eliminated in consolidation. Other affiliated entities
are not material.
Estimates and Assumptions
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Partnership considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents. The carrying value of
these assets approximate their fair value.
Securities
Management determines the appropriate classification of debt securities at
the time of purchase and reevaluates such designation as of each balance sheet
date. Debt securities are classified as held-to-maturity when there is positive
intent and ability to hold the securities to maturity. Held-to-maturity
securities are stated at amortized cost.
Marketable equity securities and debt securities not classified as held-to-
maturity are classified as available-for-sale. Available-for-sale securities
are carried at fair value, with the unrealized gains and losses, net of tax,
reported in a separate component of partners' capital.
Inventories
Inventories of grain are hedged to the extent practicable and are valued on the
basis of replacement market prices prevailing at the end of the year. Such
inventories are adjusted for the amount of gain or loss (based on year-end
market price quotations) on open grain contracts at the end of the year.
Contracts in the commodities futures market, maintained for hedging purposes,
are valued at market at the end of the year and income or loss to that date is
recognized. Grain contracts maintained for other merchandising purposes are
valued in a similar manner and net margins from these transactions are included
in grain sales and revenues.
All other inventories are stated at the lower of cost or market. Cost is
determined by the average cost method.
Property, Plant and Equipment
Land, buildings and equipment are carried at cost. Depreciation is provided
over the estimated useful lives of the individual assets principally by the
straight-line method.
Accounts Payable for Grain
The liability for grain purchases on which price has not been established
(delayed price), has been computed on the basis of replacement market at the
end of the year, adjusted for the applicable premium or discount.
Revenue Recognition
Sales of grain and other products are recognized at the time of shipment.
Revenues from merchandising activities are recognized as open contracts are
marked to market or as services are provided.
Income Taxes
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. At December 31, 1995 and 1994, the Partnership's net assets
for financial reporting purposes were approximately $0.7 million and $1.8
million, respectively, greater than their corresponding tax bases, as a
result of temporary differences in when revenues and expenses are recognized
for financial reporting purposes and in determining taxable income.
Preopening Expenses
Preopening expenses are charged to income when incurred.
Advertising
Advertising costs are expensed when incurred. Advertising expense of $3.6
million, $4.2 million and $3.9 million is included in operating,
administrative and general expense in 1995, 1994 and 1993, respectively.
Income Allocations and Cash Distributions to Partners
The Partnership Agreement reflects each partner's capital account as of the
beginning of each year. Partners' capital, used in determining the allocation
of net income or loss to each partner, is weighted to reflect cash and tax
distributions made to partners and additional investments made by partners
during the year. The general partner and each limited partner receive the same
allocation of net income or loss per one thousand dollars of partners' capital.
All distributions to Partners for the 1995 fiscal year were accrued or paid
prior to the merger (See Note 3).
Partners may elect to receive quarterly cash distributions as declared by the
general partner. Partners may also elect to receive quarterly tax distributions
and an annual tax distribution.
Charitable Contributions
Provision is made in the Partnership Agreement for contributions to various
charitable, educational and other not-for-profit institutions. It is the
policy of the Partnership to account for charitable contributions as charges to
partners' capital, and they are not deducted in determining Partnership net
income.
Reclassifications
Certain amounts in the 1994 and 1993 financial statements have been
reclassified to conform with the 1995 presentation. These reclassifications
had no effect on net income.
2. Transactions with General Partner
The Andersons Management Corp. (the Corporation) is the sole general partner
of the Partnership and provides all management and labor services to the
Partnership. In exchange for providing these services, the Corporation
charges the Partnership a management fee equal to: a) the salaries and cost
of all employee benefits and other normal employee costs, paid or accrued for
services performed by the Corporation's employees on behalf of the Partnership,
b) reimbursable expenses incurred by the Corporation in connection with its
services to the Partnership, or on the Partnership's behalf, and c) an amount
based on an achieved level of return on partners' capital to cover the
Corporation's general overhead and to provide an element of profit to the
Corporation.
Employee benefit costs include the cost of pension and other postretirement
benefits. In 1993, the Corporation changed its method of accounting for
postretirement health insurance benefits. The Corporation now accrues for
the cost of providing these benefits during the employees' working career
rather than recognizing the cost of these benefits as claims are paid. The
Corporation has elected to recognize the accrued benefits earned by employees
as of January 1, 1993 (transition obligation) prospectively, which
means this cost will be recognized as a component of annual postretirement
benefit costs over a period of approximately 20 years. The change in the
method of accounting for these benefits increased management fees charged to
the Partnership by approximately $0.9, $0.8 and $0.8 million for 1995, 1994 and
1993, respectively.
The Partnership generally pays the Corporation for salaries and employee
benefits as those costs are paid by the Corporation. Amounts owed to the
Corporation relating to postretirement benefits that will not be paid within
one year have been classified as a long-term liability.
The Partnership leases office space from the Corporation under a lease
expiring December 31, 2005. The net lease payments amounted to $0.7, $0.6 and
$0.5 million in 1995, 1994 and 1993, respectively.
The components of the management fee and rent incurred by the Partnership
consisted of the following:
Year Ended December 31
(in thousands) 1995 1994 1993
Salaries and wages $56,012 $53,726 $47,707
Employee benefits 17,235 15,674 14,619
Rent for office space and other
reimbursable expenses 867 804 641
Achieved level of return 87 191 140
of the Partnership
Totals $74,201 $70,395 $63,107
3. Merger with General Partner
On January 2, 1996, the Partnership merged with and into the Corporation and
the Partnership was dissolved. Partners received one share of the
Corporation's common stock for each $8 of their capital account book value.
This resulted in the issuance of 8,136,788 shares to former partners.
Concurrent with the merger, the name of the Corporation was changed to The
Andersons, Inc. The merger has been accounted for as a reorganization of
entities under common control similar to a pooling of interests. All future
financial statements will be combined and historical periods restated to give
effect to the merger.
Presented below is a condensed balance sheet as of January 2, 1996 (the date of
the merger) and a condensed statement of income for the years ended December
31, 1995, 1994 and 1993 showing the effect of the merger had it been
consummated at the beginning of the period.
Condensed Balance Sheet (in thousands)
January 2, 1996
Assets
Current assets $ 371,342
Property, plant and equipment - net 81,862
Other noncurrent assets 5,245
$ 458,449
Liabilities
Current liabilities $ 309,578
Long-term obligations 76,792
Other noncurrent liabilities 4,327
390,697
Minority interest 1,001
Shareholders' equity 66,751
$ 458,449
Condensed Statements of Income (in thousands)
Year ended December 31
1995 1994 1993
Net sales and revenues $1,092,410 $ 968,880 $ 796,471
Other income 5,320 2,758 3,874
1,097,730 971,638 800,345
Cost of sales and revenues 944,176 822,274 670,158
153,554 149,364 130,187
Operating, general and
administrative expenses 129,347 125,798 112,939
Interest expense 14,019 8,395 6,168
143,366 134,193 119,107
Net income-historical 10,188 15,171 11,080
Pro forma income tax expense 3,915 5,886 4,094
Pro forma net income $ 6,273 $ 9,285 $ 6,986
The Partnership's net income was includable in the federal income tax returns
of its partners and therefore it did not pay federal income taxes. The
Partnership's operations will be included in the Corporation's U.S. federal
income tax return effective January 2, 1996. This table includes separate
unaudited pro forma net income which reflect the pro forma adjustments to
present income taxes on the basis on which they will be reported in future
periods.
4. Inventories
Major classes of inventory are as follows:
December 31
(in thousands) 1995 1994
Grain $186,989 $113,555
Agricultural fertilizer and supplies 19,602 21,111
Merchandise 29,909 32,241
Lawn and corn cob products 21,729 20,992
Other 11,701 10,736
$269,930 $198,635
5. Property, Plant and Equipment
The components of property, plant and equipment are as follows:
December 31
(in thousands) 1995 1994
Land $ 11,179 $ 13,063
Land improvements and leasehold improvements 23,926 22,570
Buildings and storage facilities 78,210 71,700
Machinery and equipment 97,970 87,308
Construction in progress 972 1,387
212,257 196,028
Less allowances for depreciation
and amortization 130,395 118,432
$ 81,862 $ 77,596
6. Banking and Credit Arrangements
The Partnership has available lines of credit for unsecured short-term debt
with banks aggregating $292 million. The credit arrangements, the amounts of
which are adjusted from time to time to meet the Partnership's needs, do not
have termination dates but are reviewed at least annually for renewal. The
terms of certain of these lines of credit provide for annual commitment fees.
The following information relates to borrowings under short-term lines of
credit during the years indicated.
(in thousands, except for interest rate) 1995 1994 1993
Maximum borrowed $195,500 $127,600 $100,500
Average daily amount borrowed (total of
daily borrowings divided by number of
days in period) 118,382 72,183 60,404
Average interest rate (computed by
dividing interest expense by average
daily amount outstanding) 6.55% 5.03% 4.15%
7. Long-Term Debt
Long-term debt consists of the following:
December 31
(in thousands) 1995 1994
Note payable, 7.84%, payable $75 thousand
quarterly through October 1997, and $398
thousand quarterly thereafter, due 2004 $14,550 $14,850
Notes payable relating to revolving credit
facility 20,000 10,000
Notes payable, variable rate (6.9375 % at
December 31, 1995), payable $ 336 thousand
quarterly beginning October 1997, due 2004 9,418 10,661
Other notes payable 1,101 796
Industrial development revenue bonds:
6.5%, sinking fund paid annually, due 1999 3,700 4,400
Variable rate (5.80 % at December 31, 1995),
due in annual installments of $881 thousand
through 2004 7,233 8,114
Variable rate (5.30 % at December 31, 1995),
due 2025 3,100 3,100
Debenture bonds:
9.2% to 10%, due 1996 5,868 6,088
6.5% to 8%, due 1997 through 1999 5,815 5,530
10%, due 1997 and 1998 2,117 2,117
10%, due 2000 and 2001 2,704 2,742
7.5% to 8.7%, due 2002 through 2004 5,689 5,590
Employee bonds, variable rate (12.38% at December
31, 1995) 304 233
Other bonds, 4% to 9.6% 569 611
82,168 74,832
Less current maturities 8,029 3,615
$74,139 $71,217
The Partnership has a $20 million revolving line of credit with a bank which
bears interest based on the LIBOR rate (6.725% at December 31, 1995).
Borrowings under this agreement totalled $20 million at December 31, 1995. The
revolving line of credit agreement expires on July 1, 1997.
The variable rate notes payable, the notes payable due in quarterly
installments and the industrial development revenue bonds are collateralized by
first mortgages on certain facilities and related property with a book value
aggregating approximately $24 million.
The various underlying loan agreements, including the Partnership's revolving
line of credit, contain certain provisions which require the Partnership to,
among other things, maintain minimum working capital of $32 million and net
Partnership equity (as defined) of $43 million, limit the addition of new
long-term debt and limit its unhedged grain position to 2 million bushels. The
partnership was in compliance with these covenants at December 31, 1995.
The aggregate annual maturities, including sinking fund requirements, through
2000 of long-term debt are as follows: 1996--$8 million; 1997--$26 million,
1998--$8 million; 1999--$6 million and 2000--$4 million.
Interest paid (including short-term lines of credit) amounted to $13 million,
$8 million and $5 million in 1995, 1994 and 1993, respectively.
8. Leases
The Partnership and subsidiaries lease certain equipment and real property
under operating leases, including rail cars which the Partnership subleases to
third parties. Net rental expense under operating leases was as follows:
(in thousands) 1995 1994 1993
Total rental expense $11,165 $8,442 $7,095
Less rental income from subleases 6,235 2,805 1,320
Net rental expense $ 4,930 $5,637 $5,775
Future minimum rentals for all noncancelable operating leases and
future rental income from subleases are as follows:
Future Future
Minimum Sublease
(in thousands) Rentals Income
1996 $ 10,124 $ 6,627
1997 8,470 5,608
1998 7,319 5,334
1999 4,849 3,071
2000 2,783 840
Future years 7,675 1,053
$ 41,220 $ 22,533
9. Commitments and Risk Management
The Partnership has, in the normal course of its business, entered into
contracts to purchase and sell grain inventories and has interest in other
commodity contracts requiring performance in future periods. Contracts for
purchase of grain inventories from producers generally relate to the current or
future crop years for delivery periods quoted by regulated commodity exchanges.
Contracts for sale of grain inventories to processors and other consumers
generally do not extend beyond one year. The terms of these contracts are
consistent with industry practice.
The Partnership utilizes futures and option contracts that are traded on a
regulated exchange to hedge its net price exposure from grain inventories held
and firm commitments to purchase or sell grain inventories and to limit its
cash requirements for margin calls in the event of rising market prices. The
Partnership's policy is to hedge its net price exposure and at December 31,
1995, nearly 100% of the Partnership's grain inventories held and firm
commitments under forward contracts were hedged with futures contracts. All
grain inventories held, firm commitments under forward contracts and futures
contracts are marked to market on a daily basis.
The Partnership periodically utilizes interest rate contracts to manage
interest rate risk by converting the variable interest rates on its short-term
borrowings to intermediate term fixed rates. Income or expense associated with
interest rate swap agreements is recognized on the accrual basis over the life
of the swap agreement as a component of interest expense. At December 31,
1995, the Partnership was participating in three interest rate swap agreements,
each with a notional amount of $10 million. The interest rate swaps expire in
March and June of 1996 and convert variable interest rates to fixed rates of
5.815% to 5.87%. The effect of the interest rate swaps on the Partnership's
interest expense was not significant in 1995. The Partnership incurred $53
thousand and $93 thousand of additional interest expense from participating in
interest rate swaps in 1994 and 1993, respectively.
10. Securities
The following is a summary of held-to-maturity securities which mature within
one year as of December 31, 1995 and 1994:
Gross Gross
(in thousands) Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
December 31, 1995
Margin deposits--
U.S. Treasury securities $5,131 $8 $83 $5,056
December 31, 1994
Cash equivalent--
commercial paper $4,700 $- $ - $4,700
Margin deposits--
U.S. Treasury securities 3,902 1 - 3,903
$8,602 $1 $ - $8,603
11. Fair Values of Financial Instruments
The fair values of the Partnership's financial instruments, consisting of cash
equivalents, margin deposits, investments in and advances to affiliates and
long and short-term debt, approximate their carrying values since the
instruments either provide for short terms to maturity or interest at variable
rates based on market indexes or, in the case of investments in affiliates, the
investments are being carried on the equity method which approximate fair
value. Certain long-term notes payable and the Partnership's debenture bonds
bear fixed rates of interest and terms of five or ten years. Based upon
current interest rates offered by the Partnership on similar bonds and rates
currently available to the Partnership for long-term borrowings with similar
terms and remaining maturities, the Partnership believes its long-term debt
instruments outstanding at December 31, 1995 and 1994, have fair values as
follows:
(in thousands) Carrying Fair
Amount Value
1995:
Debenture bonds $22,257 $22,251
Long-term notes payable 59,911 60,513
$82,168 $82,764
1994:
Debenture bonds $22,144 $22,189
Long-term notes payable 52,688 51,316
$74,832 $73,505
12. Business Segments
The Partnership operates three business segments: Agriculture Group, Retail
Group and Business Development Group. The Agriculture Group includes grain
merchandising, operation of terminal grain elevator facilities, and
distribution of agricultural products, primarily fertilizer. The Retail Group
includes operation of retail stores and a distribution center. The Business
Development Group includes production and distribution of lawn and corn cob
products, railcar leasing and repair and the marketing of the Partnership's
excess real estate as well as other, smaller businesses.
In 1995, the Partnership realigned its segments, moving some smaller divisions
to the Business Development Group to reflect the management structure
and development cycle of these businesses. Prior to 1994 the Partnership
reported its Agriculture businesses as two segments: Grain Operations
and Agricultural Products. The Partnership elected to combine these operations
into a single business segment based upon the similarities in the customer
bases and geographic markets. Prior years segment information has been
restated.
The segment information includes the allocation of expenses shared by one or
more segments. Although management believes such allocations are reasonable,
the operating information does not necessarily reflect how such data might
appear if the segments were operated as separate businesses.
Year Ended December 31
(in thousands) 1995 1994 1993
Sales and revenues:
Agriculture Group:
Sales to unaffiliated customers $796,754 $678,316 $540,254
Intersegment sales 6,630 3,106 2,979
Merchandising revenue and other income 28,090 29,623 28,001
831,474 711,045 571,234
Retail Group:
Sales to unaffiliated customers 168,051 169,009 152,627
Other income 282 113 118
168,333 169,122 152,745
Business Development Group:
Sales to unaffiliated customers 100,402 92,965 76,535
Intersegment sales 929 870 730
Other income 3,296 765 1,875
104,627 94,600 79,140
Other income 641 698 825
Eliminations--intersegment sales (7,559) (3,976) (3,709)
Total sales and revenues $1,097,516 $971,489 $800,235
Operating profit:
Agriculture Group $ 16,920 $ 18,901 $ 14,571
Retail Group 4,392 4,596 1,640
Business Development Group 6,719 5,594 6,429
Total operating profit 28,031 29,091 22,640
Other income 451 492 620
Interest expense (14,019) (8,395) (6,169)
General expenses (4,343) (6,051) (6,012)
Income from continuing operations $ 10,120 $ 15,137 $ 11,079
Identifiable assets:
Agriculture Group $ 321,045 $207,833 $244,065
Retail Group 61,296 64,135 56,067
Business Development Group 62,313 59,881 50,438
General 6,761 8,706 5,932
Total assets $ 451,415 $340,555 $356,502
Depreciation and amortization expense:
Agriculture Group $ 4,186 $ 3,391 $ 3,252
Retail Group 2,771 2,567 1,914
Business Development Group 1,960 1,789 1,627
General 399 354 316
Total depreciation and amortization
expense $ 9,316 $ 8,101 $ 7,109
Capital expenditures:
Agriculture Group $ 10,072 $ 6,689 $ 3,773
Retail Group 2,749 12,981 4,164
Business Development Group 2,536 5,995 2,738
General 633 635 133
Total expenditures $ 15,990 $ 26,300 $ 10,808
Intersegment sales are made at prices comparable to normal, unaffiliated
customer sales. Operating profit is sales and merchandising revenues plus
interest and other income attributable to the operating area less operating
expenses, excluding interest and general expenses. Identifiable assets
by segment include accounts receivable, inventories, advances to suppliers,
property, plant and equipment and other assets that are directly identified
with those operations. General assets consist of cash, investments, land
and buildings and equipment associated with administration and Partnership
services, and other assets not directly identified with segment operations.
No unaffiliated customer accounted for more than 10% of sales and revenues in
1995, 1994 or 1993. Grain sales for export to foreign markets amounted to
approximately $194 million, $130 million and $88 million in 1995, 1994 and
1993, respectively.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The Partnership is managed by the Corporation acting in its capacity as
sole General Partner. The Board of Directors of the Corporation has overall
responsibility for the management of the Corporation's affairs, including its
responsibilities as General Partner of the Partnership. Day-to-day operating
decisions, relative to the Partnership, have been delegated by the Board to the
Corporation's Chief Executive Officer. The directors and executive officers of
the Corporation are:
Name Age Position
Thomas H. Anderson 72 Director; Chairman of the Board (1)
Richard P. Anderson 66 Director; President and Chief Executive
Officer (1)
Christopher J. Anderson 41 Vice President Business Development
Group
Daniel T. Anderson 40 Director; General Merchandise Manager
Retail Group
Donald E. Anderson 69 Director (2)
Michael J. Anderson 44 Director; Vice President and General
Manager Retail Group (1)
Richard M. Anderson 39 Director; Vice President and General
Manager Industrial Products Group (3)
John F. Barrett 47 Director (1)(2)
Joseph L. Braker 45 Vice President and General Manager
Agriculture Group
Dale W. Fallat 51 Director; Vice President Corporate
Services
Richard R. George 46 Corporate Controller and Principal
Accounting Officer
Paul M. Kraus 63 Director (2)
Peter A. Machin 48 Vice President and General Manager Lawn
Products Group
Beverly J. McBride 54 General Counsel and Corporate
Secretary
Rene C. McPherson (4) Director
Donald M. Mennel 77 Director (1)(3)
David L. Nichols 54 Director (1)(3)
Janet M. Schoen 36 Director
Gary L. Smith 50 Corporate Treasurer
(1) Member of Nominating Committee
(2) Member of Compensation Committee
(3) Member of Audit Committee
(4) Deceased February, 1996
Thomas H. Anderson was named Chairman of the Board when the General Partner was
formed in 1987. He formerly held the position of Manager-Company Services of
The Andersons for several years, was named Senior Partner in 1987 and served as
a general partner of The Andersons and a member of its Managing Committee from
1947 through 1987.
Richard P. Anderson has been a Director of the General Partner since its
inception in 1987. He is also a director of Centerior Energy Corporation and
First Mississippi Corp. He served as Managing Partner of The Andersons from
1984 to 1987 and he was named Chief Executive Officer in 1987, after serving as
a general partner of The Andersons and a member of its Managing Committee from
1947 through 1987.
Christopher J. Anderson began full-time employment with the Partnership in
1983. He held several positions in the Grain Group, including Planning Manager
and Administrative Services Manager, until 1988. Mr. Anderson returned to the
Company in 1990 in his present position, after having formed and operated a
private consulting business from 1988 to 1990.
Daniel T. Anderson was elected a Director in 1990. He began full-time
employment with The Andersons in 1979. Mr. Anderson served in various
positions in the Retail Group since 1984, including Store Manager and Retail
Operations Manager assuming the position of General Merchandise Manager for the
Retail Group in 1990.
Donald E. Anderson was in charge of scientific research for the Partnership
since 1980. He also served as a general partner of The Andersons from 1947
through 1987. Mr. Anderson retired in 1992.
Michael J. Anderson began his employment with The Andersons in 1978, serving in
several capacities in the Grain Group and holding the position of Vice
President and General Manager Grain Group from 1990 to February 1994. He was
named Vice President and General Manager of the Retail Group in February 1994
and has served as a Director of the General Partner since 1988.
Richard M. Anderson has served as a Director since 1988. He began his
employment with The Andersons in 1986 as Planning Analyst and was named the
Manager of Technical Development in 1987. Mr. Anderson assumed his present
position in 1990.
John F. Barrett was elected a Director of the General Partner in 1992. He has
served in various capacities at The Western and Southern Life Insurance
Company, including Executive Vice President and Chief Financial Officer and
President and Chief Operating Officer, and currently serves as Chief Executive
Officer. Mr. Barrett is also a director of Cincinnati Bell, Inc. and Fifth
Third Bancorp.
Joseph L. Braker began his employment with the Partnership in 1968. He held
several positions within the Grain area and in 1988, he was named Group Vice
President, Grain. In 1990, he was named Vice President and General Manager Ag
Products Group an d in February 1994 he was named Vice President and General
Manager Agriculture Group. He served as a general partner of The Andersons
from 1985 to 1987.
Dale W. Fallat has served as a Director of the General Partner since its
inception in 1987. He began his employment with The Andersons in 1967 and in
1988 was named Senior Vice President Law and Corporate Affairs. He assumed his
present position i n 1990. Mr. Fallat served as a general partner of The
Andersons from 1983 through 1987 and a member of its Managing Committee in 1986
and 1987.
Richard R. George began his employment with the Partnership in 1976 and has
served as Controller since 1979.
Paul M. Kraus has been a limited partner of the Partnership since 1965 and has
served as a Director of the General Partner since 1988. He has been a member
of the Toledo, Ohio law firm of Marshall & Melhorn since 1962.
Peter A. Machin began his employment with The Andersons in the Lawn Products
Group in 1987 as Sales Manager of Professional Products. He was promoted to
Sales and Marketing Manager in 1988 and assumed his present position in 1990.
Beverly J. McBride began employment with The Andersons in 1976. She has served
as Assistant General Counsel, Senior Counsel and since 1987 as General Counsel
and Corporate Secretary.
Rene C. McPherson was a Director of the General Partner since 1988. He also
served as a Director of Mercantile Stores Company, Inc. and Milliken and
Company. He retired in 1980 as Chairman of the Board and Chief Executive
Officer of Dana Corporation. From 1980 to 1983, Mr. McPherson was Dean of the
Graduate School of Business at Stanford University. He retired from the Boards
of Banc One Corporation, Dow Jones and Company, Inc., and Westinghouse Electric
Corporation, in 1995. Mr. McPherson passed away in February, 1996.
Donald M. Mennel was elected as a Director in 1990. He is retired Chairman of
the Board and Chief Executive Officer of The Mennel Milling Company, and began
a private law practice in 1986.
David L. Nichols has agreed to begin serving in 1995 as a Director of the
General Partner. He has served in various capacities with Mercantile Stores
Company, Inc. and is currently Chairman and Chief Executive Officer, a position
he has held since 1 992.
Janet M. Schoen is a former school teacher, and a full-time homemaker. She was
elected a Director of the General Partner in 1990.
Gary L. Smith began employment with the Partnership in 1980. He has served as
Treasurer since 1985.
Donald E., Richard P. and Thomas H. Anderson are brothers; Paul M. Kraus is a
brother-in-law. Christopher J. and Daniel T. Anderson are sons of Richard P.
Anderson and Janet M. Schoen is a daughter of Thomas H. Anderson. Michael J.
and Richard M. Anderson are nephews of the three brothers.
Item 11. Executive Compensation
The Corporation provides all management services to the Partnership
pursuant to a Management Agreement entered into between the Partnership and the
Corporation as further described under "Item 13. Certain Relationships and
Related Transactions - Management Agreement." The fee paid to the Corporation
includes an amount equal to the salaries and cost of all employee benefits, and
other normal employee costs, paid or accrued on behalf of the Corporation's
employees who are engaged in furnishing services to the Partnership. The
following table sets forth the compensation paid by the Corporation to the
Chief Executive Officer and the four highest paid executive officers.
Summary Compensation Table
Annual Compensation
All Other
Name and Position Year Salary Bonus Compensation (a)
Richard P. Anderson 1995 $363,333 $ 60,000 $4,620
President and Chief 1994 335,000 202,500 4,620
Executive Officer 1993 308,333 150,000 4,497
Thomas H. Anderson 1995 245,000 35,000 4,620
Chairman of the Board 1994 226,667 125,000 4,620
1993 206,669 90,000 4,497
Joseph L. Braker 1995 235,876 45,000 4,620
Vice President and General 1994 224,071 150,000 4,620
Manager Agriculture Group 1993 194,634 70,000 4,497
Michael J. Anderson 1995 211,628 20,000 4,620
Vice President and General 1994 200,765 100,000 4,620
Manager Retail Group 1993 161,962 100,000 4,497
Larry Rigel 1995 173,840 -- 4,620
Former Vice President 1994 171,981 25,000 4,620
Marketing 1993 162,558 15,000 4,497
(a) Corporation's matching contributions to its 401(k) retirement plan.
Pension Plans
The Corporation has a Defined Benefit Pension Plan (the "Pension Plan")
which covers substantially all employees who work greater than 1,000 hours
annually. Benefits are payable annually upon retirement at age 65 or older. A
discount of six percent per year is applied for retirement before age 65. The
annual benefit is equal to the employees years of service multiplied by (a) 1%
of average compensation (for five highest consecutive years out of the last ten
years of service) plus (b) 0.5% of average compensation in excess of the Social
Security covered compensation. The compensation covered by the Pension Plan is
equal to the employees' base pay plus bonus, which in the Summary Compensation
Table is the executive's salary and bonus, but beginning in 1989, was limited
by the Internal Revenue Code to $200,000, adjusted for inflation, and beginning
in 1994 is limited to $150,000, also be adjusted for inflation. Each of the
named executives has eight years of credited service.
In addition, the Corporation has a Supplemental Retirement Plan (the
"Supplemental Plan") which is a non-qualified deferred compensation plan
designed to cover all employees (primarily executives) who are participants in
the Pension Plan and whose salary exceeds the 1994 Internal Revenue Code limit.
Benefits under this Supplemental Plan are calculated exactly as in the Pension
Plan but without the Internal Revenue Code limit and then the Pension Plan
benefit is subtracted to determine t he Supplemental Plan benefit.
The table below reflects the total benefits that an employee would receive
under the Pension Plan and the Supplemental Plan for the indicated average
compensation and years of service upon retirement at age 65 and election of a
single life annuity.
Average Approximate Annual Retirement Benefit Based
Five-Year Upon the Indicated Years of Service
Compensation 5 Years 10 Years 15 Years 25 Years 30 Years
$ 50,000 $ 3,100 $ 6,200 $ 9,300 $ 15,500 $ 18,600
100,000 6,900 13,700 20,600 34,300 41,100
150,000 10,600 21,200 31,800 53,000 63,600
200,000 14,400 28,700 43,100 71,800 86,100
250,000 18,100 36,200 54,300 90,500 108,600
300,000 21,900 43,700 65,600 109,300 131,100
350,000 25,600 51,200 76,800 128,000 153,600
400,000 29,400 58,700 88,100 146,800 176,100
450,000 33,100 66,200 99,300 165,500 198,600
500,000 36,900 73,700 110,600 184,300 221,100
Directors' Fees
Directors who are not employees of the Corporation and who are not members
of the Anderson family receive an annual retainer of $15,000. Directors who
are not employees of the Corporation receive a fee of $1,000 for each Board
Meeting attended. There are three committees of the Board of Directors: the
Audit Committee; the Nominating Committee; and the Compensation Committee. The
chairpersons of these committees receives a retainer of $3,000 provided they
are not an employee of the Corporation. Members of the committees, including
chairpersons, who are not employees of the Corporation receive $750 for each
meeting attended.
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee is an employee of the Corporation.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) No Limited Partner beneficially owned as much as 5% of the
Partnership's total capital, prior to the merger.
Item 13. Certain Relationships and Related Transactions
Management Agreement
The Corporation provides all personnel and management services to the
Partnership pursuant to a Management Agreement. The fee paid to the
Corporation for its services is an amount equal to (a) the salaries and cost of
all employee benefits, and other normal employee costs, paid or accrued on
behalf of the Corporation's employees who furnish services to the Partnership,
(b) reimbursable expenses incurred by the Corporation in connection with its
services to the Partnership, or on the Partnership's behalf, and (c) an amount
equal to $5,000 for each 1% of return on partners' capital up to a 15% annual
return on partners' capital, plus $7,500 for each 1% of return on partners'
capital between 15% and 25%, plus $10,000 for each 1% of re turn on partners'
capital greater than a 25% annual return to cover that part of the
Corporation's general overhead which is attributable to Partnership services
and to provide an element of profit to the Corporation. The management fee
incurred by the Partnership in 1995 totaled $74.2 million. See Note 2 to the
Partnership's Consolidated Financial Statements. Management believes that the
amount of the management fee paid to the Corporation is as favorable to the
Partnership as it would be if paid to an unaffiliated third party providing
similar management services. In this connection, approximately 85% of the
limited partners in the Partnership are also shareholders in the Corporation
and no one may own shares in the Corporation unless they are a limited partner
in the Partnership. In addition to the fee payable to the Corporation, the
Management Agreement also provides for certain other customary terms and
conditions, including termination rights, and requires the Corporation to make
its books and records available to the Partnership for inspection at reasonable
times.
Sublease Arrangement
The office building utilized by the Partnership is leased by the
Corporation from an unaffiliated lessor under a net lease expiring in 2000.
The Partnership subleases approximately 90% of the building from the
Corporation and pays the Corporation rent for the space it occupies. Under the
terms of the sublease, the Partnership also is responsible for insurance,
utilities, taxes, general maintenance, snow removal, lawn care and similar
upkeep expenses for the entire building. The Corporation reimburses the
Partnership for management and maintenance of the building, including the space
it does not occupy. The amount paid by the Partnership to the Corporation for
the portion of the building occupied by the Partnership is designed to
reimburse the Corporation for its equivalent cost under the Corporation's
lease. In 1995, the rental payments made by the Partnership to the
Corporation, net of the reimbursement for management and maintenance of the
building was $692,918, which is included in the total management fee referred
to under "Management Agreement" above. See Note 2 to the Partnership's
Consolidated Financial Statements.
PART IV
Item 14. Financial Statement Schedules and Reports on Form 8-K
(a) (1) The following consolidated financial statements of the registrant are
included in Item 8:
Page
Report of Independent Auditors.............................. 14
Consolidated Statements of Income - years ended
December 31, 1995, 1994 and 1993.......................... 15
Consolidated Balance Sheets - December 31, 1995 and 1994.... 16
Consolidated Statements of Cash Flows - years ended
December 31, 1995, 1994 and 1993.......................... 17
Consolidated Statements of Changes in Partners' Capital
- years ended December 31, 1995, 1994 and 1993............ 18
Notes to Consolidated Financial Statements.................. 19
(2) The following consolidated financial statement schedule is included
in Item 14(d):
II. Consolidated Valuation and Qualifying Accounts - years
ended December 31, 1995, 1994 and 1993...................... 42
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable, and therefore have
been omitted.
(3) Exhibits:
3(a) Certificate of Limited Partnership filed by the Partnership
on January 9, 1995 with the Secretary of the State of Ohio
(Incorporated by reference to the Partnership's 1994 Annual
Report on Form 10-K.)
3(b) The Andersons Partnership Agreement, dated as of April 1,
1995. (Incorporated by reference to Registration Statement
No. 33-58963.)
4(a) Form of Indenture dated as of October 1, 1985, between the
Registrant and Ohio Citizens Bank, as Trustee. (Incorporated
by reference to Exhibit 4(a) in Registration Statement No.
33-819.)
4(b)(i) The Fifteenth Supplemental Indenture dated as of January 2,
1995, between The Andersons, Inc. and Fifth Third Bank of
Northwestern Ohio, N.A., successor Trustee to an Indenture
between The Andersons and Ohio Citizens Bank, dated as of
October 1, 1985. (Incorporated by reference to The
Andersons, Inc. Form 10-K dated December 31, 1995.)
10(a) Management Performance Program.* (Incorporated by reference
to Exhibit 10(a) to the Partnership's Form 10-K dated
December 31, 1990.)
10(f) Management Agreement between The Andersons and The Andersons
Management Corp., effective as of January 1, 1988.
(Incorporated by reference to Exhibit 10(f) in Registration
Statement No. 33-13538.)
10(h) Business Property Sublease effective January 1, 1993, between
The Andersons Management Corp. and The Andersons.
(Incorporated by Reference to Exhibit 10(h) in Registration
Statement 33-42680.)
22 Subsidiaries of The Andersons.
28 Anderson Foundation Declaration of Trust, as amended.
(Incorporated by reference to Exhibit 28 to Registrants Form
10-K dated December 31, 1992.)
* Management contract or compensatory plan.
The Partnership agrees to furnish to the Securities and Exchange
Commission a copy of any long-term debt instrument or loan agreement that it
may request.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the last quarter of the
year.
(c) Exhibits:
The exhibits listed in Item 14(a)(3) of this report, and not
incorporated by reference, follow "Financial Statement Schedule"
referred to in (d) below.
(d) Financial Statement Schedule:
The financial statement schedule listed in 14(a)(2) follows
"Signatures".
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, in Maumee, Ohio,
on the 28th day of March, 1996.
THE ANDERSONS (Registrant)
By The Andersons, Inc.
(Former General Partner)
By /s/Richard P. Anderson
Richard P. Anderson
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons as Directors of the
General Partner and on behalf of the Registrant on the 28th day of March, 1996.
Signature Title* Signature Title*
/s/Richard P. Anderson Director Director
Richard P. Anderson John F. Barrett
/s/Daniel T. Anderson Director /s/Dale W. Fallat Director
Daniel T. Anderson Dale W. Fallat
Director /s/Paul M. Kraus Director
Donald E. Anderson Paul M. Kraus
/s/Michael J. Anderson Director Director
Michael J. Anderson Donald M. Mennel
/s/Richard M. Anderson Director Director
Richard M. Anderson David L. Nichols
/s/Thomas H. Anderson Director Director
Thomas H. Anderson Janet M. Schoen
*Titles with The Andersons, Inc.
The former Limited Partners who became shareholders of The Andersons, Inc.
will receive proxy statements for that entity approximately April 22, 1996. An
annual report to shareholders of The Andersons, Inc. will also be distributed
to them.
<TABLE>
SCHEDULE II - CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
THE ANDERSONS AND SUBSIDIARIES
<CAPTION>
Additions
Balance at Charged to Charged to Balance
Beginning Costs and Other Accounts Deductions at End
Description of Period Expenses -Describe - Describe of Period
Allowance for doubtful
accounts receivable:
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1995 $2,292,000 $2,220,830 $ -0- $ 998,830 (1) $3,514,000
Year ended December 31, 1994 1,178,000 2,682,904 -0- 1,568,904 (1) 2,292,000
Year ended December 31, 1993 775,000 909,724 -0- 506,724 (1) 1,178,000
Allowance for doubtful
notes receivable:
Year ended December 31, 1995 $ 727,000 $ 550,000 $ -0- $ -0- (1) $1,277,000
Year ended December 31, 1994 -0- 727,000 -0- -0- (1) 727,000
Year ended December 31, 1993 -0- -0- -0- -0- (1) -0-
(1) Uncollectible accounts written off, net of recoveries
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000006474
<NAME> THE ANDERSONS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 4163000
<SECURITIES> 0
<RECEIVABLES> 92629000
<ALLOWANCES> 3514000
<INVENTORY> 269930000
<CURRENT-ASSETS> 364694000
<PP&E> 212257000
<DEPRECIATION> 130395000
<TOTAL-ASSETS> 451415000
<CURRENT-LIABILITIES> 306413000
<BONDS> 74139000
0
0
<COMMON> 0
<OTHER-SE> 66258000
<TOTAL-LIABILITY-AND-EQUITY> 451415000
<SALES> 1092409000
<TOTAL-REVENUES> 1097516000
<CGS> 944175000
<TOTAL-COSTS> 944175000
<OTHER-EXPENSES> 129202000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14019000
<INCOME-PRETAX> 10120000
<INCOME-TAX> 0
<INCOME-CONTINUING> 10120000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10120000
<EPS-PRIMARY> .165
<EPS-DILUTED> 0
</TABLE>
SUBSIDIARIES OF THE ANDERSONS
Subsidiary State of Organization
The Andersons White Pigeon Terminal (a limited Ohio
partnership of which The Andersons is the sole
general partner)
The Andersons Investment Services Corp. Ohio
(a corporation owned 100% by The Andersons)
The Andersons and Toledo Tire - Tireman Ohio
Auto Centers (a joint venture partnership)
Fischer-Andersons, Inc., dba Jones Wheel Horse Ohio
Metamora Elevator Company, Inc. (a corporation Ohio
100% owned by The Andersons)
