The Andersons, Inc. (ANDE) 10-Q 2001 Q3 Quarterly report

TABLE OF CONTENTS

FORM 10-Q
Part I. Financial Information
	Item 1. Financial Statements
		Condensed Consolidated Balance Sheets
		Condensed Consolidated Balance Sheets (continued)
		Condensed Consolidated Statements of Operations
		Condensed Consolidated Statements of Cash Flows
		Condensed Consolidated Statements of Shareholders' Equity
		Notes to Condensed Consolidated Financial Statements
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures About Market Risk
Part II. Other Information
Signatures

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2001

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to _________

Commission file number 000-20557

THE ANDERSONS, INC.
(Exact name of registrant as specified in its charter)

OHIO (State of incorporation or organization)	34-1562374 (I.R.S. Employer Identification No.)
480 W. Dussel Drive, Maumee, Ohio (Address of principal executive offices)	43537 (Zip Code)

(419) 893-5050
(Telephone Number)

(Former name, former address and former fiscal year,
if changed since last report.)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  X No     

The registrant had 7,372,700 Common shares outstanding, no par value, at May 1, 2001.

THE ANDERSONS, INC.

INDEX

			Page No.
PART I		FINANCIAL INFORMATION
	Item 1. Financial Statements Condensed Consolidated Balance Sheets –      March 31, 2001, December 31, 2000 and March 31, 20000		3
	Condensed Consolidated Statements of Operations - Three months ended      March 31, 2001 and 2000		5
	Condensed Consolidated Statements of Cash Flows - Three months ended      March 31, 2001 and 2000		6
	Condensed Consolidated Statements of Shareholders’ Equity Three      months ended March 31, 2001 and year ended December 31, 2000		7
	Notes to Condensed Consolidated Financial Statements		8
	Item 2. Management’s Discussion and Analysis of Financial Condition      and Results of Operations		10
	Item 3. Quantitative and Qualitative Disclosures About Market Risk		13
PART II		OTHER INFORMATION
	Item 6. Exhibits and Reports on Form 8-K		15
	Signatures		15

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Part I. Financial Information

Item 1. Financial Statements

The Andersons, Inc

Condensed Consolidated Balance Sheets
(Unaudited)(In thousands)

			March 31		December 31		March 31
			2001		2000		2000
Current assets:
	Cash and cash equivalents		$	6,246	$	13,138	$	6,047
	Accounts and notes receivable
	Trade receivables (net)			63,608		49,769		70,459
		Margin deposits		2		5,706		5,178
				63,610		55,475		75,637
	Inventories:
		Grain		100,475		111,887		91,865
		Agricultural fertilizer and supplies		37,290		26,322		25,931
		Lawn fertilizer and corncob products		37,888		39,810		25,717
		Railcar repair parts		819		1,273		792
		Retail merchandise		36,317		29,866		34,423
		Other		635		548		719
				213,424		209,706		179,447
	Railcars available for sale			9,433		12,719		9,942
	Deferred income taxes			4,113		3,444		5,105
	Prepaid expenses			15,181		8,342		12,322
Total current assets				312,007		302,824		288,500
Other assets:
	Notes receivable (net) and other assets			6,773		8,598		4,984
	Investments in and advances to affiliates			1,109		1,422		975
				7,882		10,020		5,959
Railcar assets leased to others (net)				26,690		22,281		18,929
Property, plant and equipment:
	Land			11,858		11,899		11,885
	Land improvements and leasehold improvements			27,533		27,702		26,699
	Buildings and storage facilities			93,513		93,620		91,382
	Machinery and equipment			119,082		118,724		112,760
	Software			3,225		3,850		3,606
	Construction in progress			2,511		1,878		7,747
				257,722		257,673		254,079
	Less allowances for depreciation and amortization			160,777		159,602		158,227
				96,945		98,071		95,852
			$	443,524	$	433,196	$	409,240

See notes to condensed consolidated financial statements

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The Andersons, Inc

Condensed Consolidated Balance Sheets (continued)
(Unaudited)(In thousands)

		March 31			December 31			March 31
		2001			2000			2000
Current liabilities:
	Notes payable	$	114,600		$	71,300		$	88,800
	Accounts payable for grain		31,673			67,468			32,417
	Other accounts payable		92,820			84,045			95,690
	Accrued expenses		12,431			15,625			15,869
	Current maturities of long-term debt		10,391			9,126			4,447
Total current liabilities			261,915			247,564			237,223
Deferred income			2,668			3,166			3,374
Pension and post-retirement benefits			3,785			3,684			3,347
Long-term debt, less current maturities			78,251			80,159			73,003
Deferred income taxes			9,347			8,787			7,429
Minority interest			—			—			229
Shareholders equity
	Common shares (25,000 shares authorized; stated value of $.01 per share; 8,430 shares issued)		84			84			84
	Additional paid-in capital		66,417			66,488			67,131
	Treasury shares (1,037, 1,070 and 836 shares at 3/31/01, 12/31/00 and 3/31/00, respectively; at cost)		(9,510	)		(9,852	)		(7,895	)
	Accumulated other comprehensive income		(1,120	)		—			(144	)
	Unearned compensation		(212	)		(78	)		(259	)
	Retained earnings		31,899			33,194			25,718
			87,558			89,836			84,635
		$	443,524		$	433,196		$	409,240

See notes to condensed consolidated financial statements

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The Andersons, Inc.

Condensed Consolidated Statements of Operations
(Unaudited)(In thousands, except Per Share Data)

			Three Months ended
			March 31
			2001			2000
Sales and merchandising revenues			$	220,232		$	204,607
Cost of sales and merchandising revenues				185,117			169,553
Gross profit				35,115			35,054
Operating, administrative and general expenses				33,351			32,457
Interest expense				3,614			2,676
Other income:
	Other income			584			1,011
	Gain on insurance settlement			338			—
	Gain on sale of business			—			907
Income (loss) before income taxes and cumulative effect of accounting change				(928	)		1,839
Income tax expense (benefit)				(298	)		617
Income (loss) before cumulative effect of accounting change				(630	)		1,222
Cumulative effect of accounting change, net of income tax benefit				(185	)		—
Net income (loss)			$	(815	)	$	1,222
Per common share:
		Basic earnings (loss)	$	(0.11	)	$	0.16
		Diluted earnings (loss)	$	(0.11	)	$	0.16
		Dividends paid	$	0.065		$	0.060
Weighted average shares outstanding-basic				7,371			7,670
Weighted average shares outstanding-diluted				7,371			7,674

See notes to condensed consolidated financial statements.

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The Andersons, Inc.

Condensed Consolidated Statements of Cash Flows
(Unaudited)(In thousands)

			Three Months ended
			March 31
			2001			2000
Operating Activities
Net income (loss)			$	(815	)	$	1,222
Adjustments to reconcile net income (loss) to net cash used in operating activities:
	Cumulative effect of accounting change, net of income tax benefit			185			—
	Depreciation and amortization			3,539			3,094
	Gain on insurance settlement			(338	)		—
	Gain on sale of business; property, plant and equipment; and railcars			(94	)		(951	)
	Deferred income taxes			12			(777	)
	Other			24			24
Cash provided by operations before changes in operating assets and liabilities				2,513			2,612
Changes in operating assets and liabilities:
		Accounts and notes receivable		(8,064	)		(24,593	)
		Inventories		(3,718	)		(18,357	)
		Prepaid expenses and other assets		(6,289	)		(5,334	)
		Accounts payable for grain		(35,795	)		(36,465	)
		Other accounts payable and accrued expenses		7,271			16,467
Net cash used in operating activities				(44,082	)		(65,670	)
Investing activities
Purchases of property, plant and equipment				(1,996	)		(4,855	)
Purchase of railcars				(3,491	)		(5,469	)
Proceeds from sale of railcars				1,880			19
Proceeds from sale of property, plant and equipment				274			134
Proceeds from insurance settlement				338			—
Proceeds from sale of business				—			2,048
Net cash used in investing activities				(2,995	)		(8,123	)
Financing activities
Net increase in short-term borrowings				43,300			43,800
Proceeds from issuance of long-term debt				1,086			45,050
Payments of long-term debt				(1,729	)		(45,886	)
Change in overdrafts				(2,086	)		12,723
Proceeds from sale of treasury shares to employees				267			321
Dividends paid				(480	)		(465	)
Purchase of common shares				(173	)		(1,317	)
Net cash provided by financing activities				40,185			54,226
Decrease in cash and cash equivalents				(6,892	)		(19,567	)
Cash and cash equivalents at beginning of period				13,138			25,614
Cash and cash equivalents at end of period			$	6,246		$	6,047

See notes to condensed consolidated financial statements.

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The Andersons, Inc

Condensed Consolidated Statements of Shareholders' Equity
(Unaudited) (In thousands)

											Accumulated
					Additional						Other
			Common		Paid-in			Treasury			Comprehensive			Unearned			Retained
(in thousands)			Shares		Capital			Shares			Income			Compensation			Earnings			Total
Balances at January 1, 1999			$	84	$	67,227		$	(7,158	)	$	(144	)	$	(158	)	$	24,954		$	84,805
	Net income																	10,078			10,078
	Other comprehensive income:
		Minimum pension liability, net of $96 income taxes										144									144
	Comprehensive income																				10,222
	Issuance of shares to complete acquisition					(643	)		643												—
	Stock awards, stock option exercises, and other shares issued to employees and directors					(96	)		607						(148	)					363
	Amortization of unearned compensation														228						228
	Purchase of treasury shares								(3,944	)											(3,944	)
	Dividends declared ($.245 per common share)																	(1,838	)		(1,838	)
Balance at December 31, 2000				84		66,488			(9,852	)		—			(78	)		33,194			89,836
	Net loss																	(815	)		(815	)
	Other comprehensive income (loss):
		Cumulative effect										(1,172	)								(1,172	)
		Other										52									52
	Comprehensive loss																				(1,935	)
	Stock awards, stock option exercises, and other shares issued to employees and directors					(71	)		515						(177	)					267
	Amortization of unearned compensation														43						43
	Purchase of treasury shares								(173	)											(173	)
	Dividends declared ($.065 per common share)																	(480	)		(480	)
Balance at March 31, 2001			$	84	$	66,417		$	(9,510	)	$	(1,120	)	$	(212	)	$	31,899		$	87,558

     See notes to condensed consolidated financial statements.

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The Andersons, Inc.

Notes to Condensed Consolidated Financial Statements

Note A –	In the opinion of management, all adjustments necessary for a fair presentation of the results of operations for the periods indicated, have been made.
	The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. A balance sheet as of March 31, 2000 was included as the Company operates in several seasonal industries.
	The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in The Andersons, Inc. Annual Report on Form 10-K for the year ended December 31, 2000.
Note B –	Certain amounts in the balance sheet as of March 31, 2000 and income statement and cash flow for the period ended March 31, 2000 have been reclassified to conform to the March 31, 2001 presentation. These reclassifications had no effect on net income or shareholders’ equity as previously presented. These reclassifications were made for the 2000 annual report to shareholders and are now being reflected in the 2000 quarterly financial statements.
Note C –	The Company recorded a transition adjustment of $305 thousand ($185 thousand after-tax) as a result of adopting Financial Accounting Standards Board Statement No. 133, as amended, “Accounting for Derivative Instruments and Hedging Activities” on January 1, 2001. This adjustment was made to write down open interest rate contracts to their market value. The Company also de-recognized assets of $1.2 million and moved them to Other Comprehensive Income. These assets represented deferred net losses on the settlement of treasury rate locks, entered into for the purpose of hedging the interest rate component of firm commitment lease transactions. The deferred losses will be recognized in interest expense over the term of the underlying leases.
	While the Company considers all of its derivative positions effective economic hedges of specified risks, the Company does not designate or account for its open contracts as hedges. Changes in the market value of derivative contracts (both interest and commodity) are recognized currently in income The Company’s policy is to also recognize changes in the market value of grain inventories and related forward contracts currently in income. Interest expense increased by approximately $.1 million for the first quarter as a result of marking open derivative contracts to market and recognizing deferred net losses on treasury rate locks.

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Note D – Segment Information

Results of Operations – Segment Disclosures
			(in thousands)
First Quarter, 2001	Agriculture		Processing			Rail			Retail			Other			Total
Revenues from external customers	$	137,512	$	42,246		$	7,971		$	32,503		$	—		$	220,232
Inter-segment sales		1,042		570			238			—			—			1,850
Other income		188		97			10			135			154			584
Gain on insurance settlement		338		—			—			—			—			338
Interest expense (credit)(a)		1,889		1,117			543			532			(467	)		3,614
Operating income (loss)		3,329		(243	)		(295	)		(2,993	)		(726	)		(928	)
Identifiable assets		209,713		108,986			41,226			66,026			17,573			443,524

First Quarter, 2000	Agriculture		Processing		Rail		Retail			Other			Total
Revenues from external customers	$	125,046	$	35,409	$	6,473	$	35,190		$	2,489		$	204,607
Inter-segment sales		1,192		659		240		—			—			2,091
Other income		266		92		136		106			411			1,011
Gain on sale of business		—		—		—		—			907			907
Interest expense (credit)(a)		1,638		606		313		458			(339	)		2,676
Operating income (loss)		1,415		1,701		481		(2,169	)		411			1,839
Identifiable assets		211,592		75,650		36,746		65,194			20,058			409,240

(a) The Other category of interest expense includes net interest income at the company level, representing rate differential between the interest rate on which interest is allocated to the operating segments and the actual rate at which borrowings were made.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Comparison of the three months ended March 31, 2001 with the three months ended March 31, 2000:

      Sales and merchandising revenues for the three months ended March 31, 2001 totaled $220.2 million, an increase of $15.6 million, or 8%, from the first quarter of 2000. Sales in the Agriculture Group were up $10.1 million, or 9%. Grain sales were up $9.3 million, or 11%, due to a 14% increase in the volume of bushels sold partially offset by a 2% decrease in the weighted average price per bushel sold. Fertilizer sales were up $0.7 million or 2% due to an 8% increase in the weighted average price per ton sold partially offset by a 5% reduction in volume. Merchandising revenues in the Agriculture Group were up $2.4 million, or 27%, due primarily to basis appreciation of the grain inventories. Storage income dropped from the first quarter of 2000 levels, but was still a significant portion of the merchandising revenues. Grain inventories on hand at March 31, 2001 were 62.6 million bushels, of which 18 million bushels were stored for others. This compares to 66.8 bushels on hand at March 31, 2000, of which 30 million bushels were stored for others. There were no changes in the number of Agriculture Group facilities operated in the period under review, but an additional 0.8 million bushels of covered storage capacity was added to existing grain facilities during 2000.

      The Processing Group had a $6.8 million, or 19% increase in sales. The majority of this increase, or $6.4 million, was in the professional business of the lawn fertilizer division and represents a 40% increase in tons sold resulting primarily from the addition of the U.S. ProTurf® product line acquired from The Scotts Company on May 31, 2000. The Processing Group realized a 13% increase in the average price per ton, primarily related to this same product line acquisition. The lawn consumer business experienced a modest sales increase while the lawn industrial business was down 7% on lower volume. The cob-based businesses experienced a 16% increase in sales due to improvements in both volume and price.

      The Rail Group had a $1.5 million, or 23%, increase in sales. The Rail Group completed sales of railcars totaling $1.9 million in the first quarter of 2001 as compared to no sales completed in the first quarter of 2000. Shop sales and lease income were down due to general market conditions.

      The Retail Group had a $2.7 million, or 8%, decrease in sales in the first quarter of 2001 when compared to the first quarter of 2000. All but one of the stores experienced decreases which resulted from high cold-weather sales in January 2000 and delayed spring sales in March 2001. Weather in March 2000 was very mild and allowed the Retail Group to get an early start on the spring selling season. This weather pattern was not repeated in 2001.

      The Company completed the sale of its interest in The Andersons – Tireman Auto Centers (“Tireman”) on March 31, 2000. Included in the first quarter 2000 sales for the Company are Tireman sales of $2.5 million.

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      Gross profit for 2001 totaled $35.1 million, an increase of less than 1%. The Agriculture Group had a $2.2 million, or 13%, increase resulting primarily from increases in merchandising revenues in the grain division. The wholesale fertilizer division also experienced an increase in gross profit while farm center division gross profit was down slightly.

      Gross profit for the Processing Group increased $0.1 million, or 1%. Coupled with the significant sales increase in the Group was a significant increase in the cost of key raw materials that could not be passed on to the customer in the consumer and industrial lawn businesses. The professional lawn business and the cob business did experience increases in gross profit.

      Gross profit in the Rail Group decreased $0.1 million, or 4%. This was due primarily to the decrease in demand for railcars and resulted in reduced margins on both lease transactions and outright sales.

      Gross profit in the Retail Group decreased $0.6 million, or 7%, from the first quarter of 2000. Margins were relatively unchanged but the decrease in sales resulted in the gross profit drop.

      Included in the Company’s first quarter 2000 gross profit is $1.5 million from the first quarter operations of Tireman.

      The 2001 first quarter includes a nonrecurring gain of $0.3 million related to an insurance settlement at its Albion, Michigan facility. The 2000 first quarter includes a nonrecurring gain of $0.9 million related to Tireman divestiture.

      Operating, administrative and general expenses for 2001 totaled $33.3 million, a $0.9 million, or 3%, increase from the first quarter of 2000. The increase relates primarily to the additional costs of the ProTurf® product line in the Processing Group and inflationary increases offset by expenses no longer incurred for the operations of Tireman. Full-time employees increased 2% from the first quarter of 2000, with most of the growth occurring in the Processing Group due to the ProTurf® product line acquisition.

      Interest expense for 2001 was $3.6 million, a $0.9 million, or 35%, increase from 2000. Average daily short-term borrowings increased 18% from the first quarter of 2000 while the average daily short-term interest rate increased only slightly from 6.45% for the first quarter of 2000 to 6.48% for the first quarter of 2001. In addition, the Company increased its outstanding long-term debt (including current maturities) 14% from March 31, 2000 to March 31, 2001.

      The pretax loss of $0.9 million for the first quarter of 2001 was $2.7 million lower than the pretax income of $1.8 million in 2000. Included in these results is a non-recurring gain in the first quarter of 2001 of $0.3 million from an insurance settlement

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and a $0.9 million non-recurring gain in the first quarter of 2000 from the sale of its Tireman interest. An income tax benefit of $0.3 million was provided using the Company’s expected 2001 annual rate of 32.1%. The rate used for the first quarter 2000 expense provision was 33.5%. The actual 2000 tax rate was 29.8%.

      An adjustment to recognize the cumulative effect of adopting Financial Accounting Standards Board No. 133, “Accounting for Derivative Instruments and Hedging Activities”, as amended, (“SFAS 133”) was made in the first quarter of 2001. This adjustment of $.2 million was made to recognize the after-tax impact of valuing certain of the Company’s interest rate contracts to their fair value as of January 1, 2001.

      As a result of the above, net income for the first quarter of 2001 decreased $2.0 million. The basic and diluted loss per share of $0.11 for the first quarter of 2001 compares to a basic and diluted earnings per share of $0.16 in the first quarter of 2000.

Liquidity and Capital Resources

      The Company’s operations (before changes in operating assets and liabilities) provided cash of $2.5 million in the first quarter of 2001, a decrease of $.1 million from the same quarter of 2000. Net working capital at March 31, 2001 was $50.1 million, a decrease of $5.1 million and $1.2 million from December 31, 2000 and March 31, 2000, respectively.

      The Company has significant short-term lines of credit available to finance working capital, primarily inventories and accounts receivable. Lines of credit available at March 31, 2001 were $175.0 million. The Company had drawn $114.6 million on its short-term lines of credit at March 31, 2001. Peak short-term borrowing in the quarter was $125.0 million on March 15, 2001. Typically, the Company’s highest borrowing occurs in the spring due to seasonal inventory requirements in the fertilizer and retail businesses, credit sales of fertilizer and a customary reduction in grain payables due to cash needs and the market strategies of grain customers.

      The Company utilizes interest rate contracts to manage a portion of its interest rate risk on both its short- and long-term debt and lease commitments. At March 31, 2001, the Company owned a long interest rate swap that converts variable-rate debt to fixed-rate debt. The Company also holds various open short-term and long-term interest rate caps; the market value (less than $0.1 million) is included in other assets. Finally, the Company has moved the unamortized values of its long-term closed interest rate caps to other comprehensive income consistent with the SFAS 133 adoption.

      A quarterly cash dividend of $.065 per common share was paid in the first quarter of 2001. A cash dividend of $.065 per common share was declared on April 2, 2001 and was paid on April 23, 2001. Cash dividends of $0.06 per common share were paid quarterly in 2000. The Company made income tax payments of $0.1 million in the first quarter and expects to make payments totaling approximately $3.1 million for the remainder of 2001. During the first quarter of 2001, the Company repurchased

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approximately 20 thousand of its common shares on the open market at an average price of $8.49 per share and issued approximately 54 thousand shares to employees under its share compensation plans.

      Total capital spending for 2001 is expected to approximate $16.0 million and includes $1.5 million for purchase options on railcars, $2.0 million for improvements to existing and additional storage in the Agriculture Group, $0.5 million for a dryer in the Agriculture Group, $1.7 million for Processing Group manufacturing and warehouse improvements and $0.4 million for facility improvements in the Rail Group. The remaining amount of $9.9 million will be spent on numerous assets and projects; no single such project is expected to cost more than $0.3 million. In addition, the Company expects to spend up to $5.3 million for the purchase of railcars that may then be sold, financed off-balance sheet or capitalized.

      Certain of the Company’s long-term debt is secured by first mortgages on various facilities or is collateralized by railcar assets. In addition, some of the long-term borrowings include provisions that impose minimum levels of working capital and equity, impose limitations on additional debt and require that grain inventory positions be substantially hedged. The Company was in compliance with all of these provisions at March 31, 2001.

      The fact that grain inventories are readily marketable and the availability of short-term lines of credit enhance the Company’s liquidity. In the opinion of management, the Company’s liquidity is adequate to meet short-term and long-term needs.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

      The market risk inherent in the Company’s market risk-sensitive instruments and positions is the potential loss arising from adverse changes in commodity prices and interest rates as discussed below.

Commodity Prices

      The availability and price of agricultural commodities are subject to wide fluctuations due to unpredictable factors such as weather, plantings, government (domestic and foreign) farm programs and policies, changes in global demand created by population growth and higher standards of living, and global production of similar and competitive crops. To reduce price risk caused by market fluctuations, the Company follows a policy of hedging its inventories and related purchase and sale contracts. The instruments used are readily marketable exchange-traded futures contracts that are designated as hedges. The market value of exchange-traded futures contracts used for hedging has a high but not perfect correlation to the underlying market value of grain inventories and related purchase and sales contracts. The less correlated portion of inventory and purchase and sale contract market value (known as basis) is much less volatile than that of exchange-traded futures and tends to follow historical patterns. The Company manages this less volatile risk using its daily grain position report to constantly

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monitor its position relative to price changes in the market. To a lesser degree, the Company uses exchange-traded option contracts, also designated as hedges. The changes in market value of such contracts have a high correlation to the price changes of the hedged commodity. The Company’s accounting policy for these hedges, as well as the underlying inventory positions and purchase and sale contracts, is to mark them to the market price daily and include gains and losses in the statement of income in sales and merchandising revenues.

      A sensitivity analysis has been prepared to estimate the Company’s exposure to market risk of its commodity position (exclusive of basis risk). The Company’s daily net commodity position consists of inventories, related purchase and sale contracts and exchange-traded contracts. The fair value of the position is a summation of the fair values calculated for each commodity by valuing each net position at quoted futures market prices. Market risk is estimated as the potential loss in fair value resulting from a hypothetical 10% adverse change in such prices. The result of this analysis, which may differ from actual results, is as follows:

(in thousands)	March 31		December 31
	2001		2000
Net long (short) position	$	1,529	$	26
Market risk		153		3

Interest Rates

      The fair value of the Company’s long-term debt is estimated using quoted market prices or discounted future cash flows based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. In addition, the Company has off-balance sheet interest rate contracts established as hedges. The fair value of these contracts is estimated based on quoted market termination values. Market risk, which is estimated as the potential increase in fair value resulting from a hypothetical one-half percent decrease in interest rates, is summarized below:

	March 31		December 31
(in thousands)	2001		2000
Fair value of long-term debt and interest rate contracts	$	87,908	$	88,414
Fair value less than carrying value		812		1,294
Market risk		137		594

Forward Looking Statements

      The preceding Management’s Discussion and Analysis contain various “forward-looking statements” which reflect the Company’s current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties, including but not limited to those identified below, which could cause actual results to differ materially from historical results or those anticipated. The words “believe,” “expect,” “anticipate,” “will” and similar expressions identify forward-looking statements. Readers are cautioned not to place

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undue reliance on these forward-looking statements, which speak only as of their dates. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The following factors could cause actual results to differ materially from historical results or those anticipated: weather; supply and demand of commodities including grains, fertilizer and other basic raw materials; market prices for grains and the potential for increased margin requirements; competition; economic conditions; risks associated with acquisitions; interest rates; and income taxes.

Part II. Other Information

Item 6. Exhibits and Reports on Form 8-K

      (b) Reports on Form 8-K. No reports on Form 8-K were filed during the quarter ended March 31, 2001.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		THE ANDERSONS, INC. (Registrant)
Date:	May 14, 2001	By /s/Michael J. Anderson
		Michael J. Anderson President and Chief Executive Officer
Date:	May 14, 2001	By /s/Richard R. George
		Richard R. George Vice President and Controller (Principal Accounting Officer

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