UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to _____
Commission file number 2-55070
THE ANDERSONS
(Exact name of registrant as specified in its charter)
OHIO 34-4437884
(State of incorporation (I.R.S. Employer
or organization) Identification No.)
480 W. Dussel Drive, Maumee, Ohio 43537
(Address of principal executive offices) (Zip Code)
(419) 893-5050
(Telephone Number)
Not applicable
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
The registrant is a limited partnership and has no voting stock. Because of
its form or organization, that includes transfer restrictions, there is no
market for any partnership interest in the registrant.
THE ANDERSONS
INDEX
Page No.
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets -
June 30, 1994 and December 31, 1993 . . . . . . . 3
Condensed Consolidated Statements of Income -
Three months ended June 30, 1994 and 1993 . . . . 5
Condensed Consolidated Statements of Income -
Six months ended June 30, 1994 and 1993 . . . . . 6
Condensed Consolidated Statements of Cash Flows -
Six months ended June 30, 1994 and 1993 . . . . . 7
Notes to Condensed Consolidated Financial Statements. . .8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . .12
Signatures. . . . . . . . . . . . . . . . . . . . . .12
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE ANDERSONS
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
June 30 December 31
1994 1993
CURRENT ASSETS
Cash and cash equivalents $ 15,145,124 $ 3,936,955
Accounts Receivable:
Trade accounts - net 48,924,202 60,036,382
Margin deposits - 15,320,979
48,924,202 75,357,361
Inventories:
Grain 49,321,145 135,346,670
Agricultural products 12,226,187 16,170,908
Merchandise 35,622,199 32,497,574
Lawn products and corn cob products 15,374,276 20,579,022
Supplies and other 8,052,380 6,429,477
120,596,187 211,023,651
Prepaid expenses 976,517 858,941
TOTAL CURRENT ASSETS 185,642,030 291,176,908
OTHER ASSETS
Investments in and advances to affiliates 1,158,880 942,053
Investments and other assets 3,064,043 3,965,729
TOTAL OTHER ASSETS 4,222,923 4,907,782
PROPERTY, PLANT AND EQUIPMENT
Land 12,424,490 9,457,460
Land improvements and leasehold
improvements 21,313,091 19,378,810
Buildings and storage facilities 68,677,450 62,022,387
Machinery and equipment 82,567,398 80,141,615
Construction in progress 1,727,199 1,707,564
186,709,628 172,707,836
Less allowances for depreciation and
amortization 115,147,729 112,290,748
NET PROPERTY, PLANT AND EQUIPMENT 71,561,899 60,417,088
$261,426,852 $356,501,778
NOTE: The balance sheet at December 31, 1993 has been derived from the audited
financial statements at that date.
See notes to condensed consolidated financial statements.
THE ANDERSONS
CONDENSED CONSOLIDATED BALANCE SHEETS - (continued)
(UNAUDITED)
June 30 December 31
1994 1993
CURRENT LIABILITIES
Notes payable $ 36,500,000$ 87,900,000
Accounts payable for grain 16,715,297 83,712,076
Other accounts payable 50,964,690 58,896,317
Amounts due General Partner 6,233,392 4,173,287
Accrued expenses 6,682,205 7,496,181
Current maturities of long-term debt 2,180,000 1,992,000
TOTAL CURRENT LIABILITIES 119,275,584 244,169,861
LONG-TERM DEBT
Note payable, 7.84%, payable quarterly,
due 2004 15,000,000 -
Note payable, 6.1875%, payable $800,000
annually, due 1997 6,400,000 6,800,000
Notes payable relating to revolving credit
facility, variable rate (5.2875% at
6/30/94), due 1996 10,000,000 7,500,000
Note payable, variable rate (5.1875% at
6/30/94) payable monthly
through 7/5/96 4,982,959 -
Other notes payable 302,665 888,409
Industrial development revenue bonds:
6.5% due 1999 5,000,000 5,000,000
Variable rate (4.86% at 6/30/94),
due 1995 to 2004 8,114,000 8,114,000
Variable rate (2.51% at 6/30/94),
due 2025 3,100,000 3,100,000
Debenture bonds:
9.2% to 11.4%, due 1995 and 1996 7,566,000 7,586,000
6.5% to 7.2%, due 1997 to 1999 5,224,000 4,894,000
10% to 10.5%, due 1997 and 1998 2,849,000 2,849,000
10% due 2000 and 2001 2,742,000 2,774,000
7.5% to 8.5%, due 2002 to 2004 4,460,000 4,061,000
Other bonds, 4% to 9.6% 799,464 684,711
76,540,088 54,251,120
Less current maturities of
long-term debt 2,180,000 1,992,000
TOTAL LONG-TERM DEBT 74,360,088 52,259,120
AMOUNT DUE GENERAL PARTNER 2,642,021 2,413,041
DEFERRED GAIN 19,079 1,145,151
MINORITY INTEREST 948,534 1,103,892
PARTNERS' CAPITAL
General partner 933,405 761,839
Limited partners 63,248,141 54,648,874
TOTAL PARTNERS' CAPITAL 64,181,546 55,410,713
$261,426,852 $356,501,778
NOTE: The balance sheet at December 31, 1993 has been derived from the audited
financial statements at that date.
See notes to condensed consolidated financial statements.
THE ANDERSONS
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months
Ended June 30
1994 1993
REVENUES
Sales and merchandising revenues $230,377,134 $180,342,636
Other income 654,152 860,423
231,031,286 181,203,059
COSTS AND EXPENSES
Cost of sales and revenues 187,973,777 146,379,738
Operating, administrative and
general expenses 31,053,598 27,145,287
Interest expense 1,963,720 1,556,329
220,991,095 175,081,354
NET INCOME - Note B $ 10,040,191 $ 6,121,705
Allocation of income:
To general partner $ 142,628 $ 79,947
To limited partners 9,897,563 6,041,758
$ 10,040,191 $ 6,121,705
Income allocation per $1000 of
partners' capital:
Weighted average capital for
allocation purposes - Note C $ 52,799,040 $47,476,674
Income per $1000 $ 190 $ 129
See notes to condensed consolidated financial statements.
THE ANDERSONS
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Six Months
Ended June 30
1994 1993
REVENUES
Sales and merchandising revenues $449,075,693 $327,966,359
Other income 1,299,923 1,674,073
450,375,616 329,640,432
COSTS AND EXPENSES
Cost of sales and revenues 375,831,574 268,054,371
Operating, administrative and
general expenses 58,353,814 53,026,805
Interest expense 4,064,670 2,987,445
438,250,058 324,068,621
NET INCOME - Note B $ 12,125,558 $ 5,571,811
Allocation of income:
To general partner $ 171,566 $ 73,185
To limited partners 11,953,992 5,498,626
$ 12,125,558 $ 5,571,811
Income allocation per $1000 of
partners' capital:
Weighted average capital for
allocation purposes - Note C $ 53,843,514 $ 48,996,839
Income per $1000 $ 225 $ 114
See notes to condensed consolidated financial statements.
THE ANDERSONS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months
Ended June 30
1994 1993
OPERATING ACTIVITIES
Net income $12,125,558 $ 5,571,811
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization 3,889,750 3,472,317
Amortization of deferred gain (37,463) (192,978)
Minority interest in net income of
subsidiaries 66,694 40,593
Payments to minority interests (222,052) (156,658)
Provision for losses on receivables,
investments and other assets 169,883 208,763
Gain on sale of property, plant and
equipment (222,866) (249,168)
Changes in operating assets and
liabilities:
Accounts receivable 26,263,276 (3,678,413)
Inventories 90,427,464 33,326,020
Prepaid expenses (171,152) (305,549)
Accounts payable for grain (66,996,779) (42,677,971)
Other accounts payable and
accrued expenses (5,473,358) (14,562,696)
Other assets (827,969) (561,571)
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 58,990,986 (19,765,500)
INVESTING ACTIVITIES
Purchases of property, plant and equipment (12,554,592) (3,428,636)
Proceeds from sale of property, plant
and equipment 815,236 461,185
Proceeds from sale of investment 1,679,215 -
Advances to affiliates (40,000) (802,385)
NET CASH USED IN INVESTING ACTIVITIES (10,100,141) (3,769,836)
FINANCING ACTIVITIES
Net (decrease) increase in short-term
borrowings (51,400,000) 23,650,000
Proceeds from issuance of long-term debt 23,368,369 18,097,744
Payments of long-term debt (6,296,319) (10,588,009)
Payments to partners and other deductions
from capital accounts (4,088,401) (4,767,283)
Capital invested by partners 733,675 250,860
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES (37,682,676) 26,643,312
INCREASE IN CASH AND CASH EQUIVALENT 11,208,169 3,107,976
Cash and cash equivalents at beginning of
year 3,936,955 1,365,906
CASH AND CASH EQUIVALENTS AT END OF PERIOD $15,145,124 $ 4,473,882
Noncash Investing and Financing Activities:
Assumption of long-term debt in purchase
of property, plant and equipment $ 5,216,918 $ -
See notes to condensed consolidated financial statements.
THE ANDERSONS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note A - In the opinion of management, all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation
of the results of operations for the periods indicated have been
made.
The accompanying unaudited condensed consolidated financial
statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the
Partnership's annual report on Form 10-K for the year ended
December 31, 1993.
Note B - No provision has been made for federal income taxes on the
Partnership's net income since such amounts are includable in the
federal income tax returns of its partners.
Provision for federal income taxes is made on the net income or
loss of the Partnership's corporate subsidiaries, but is
insignificant.
Note C - The Partnership Agreement reflects each partner's invested capital
as of the beginning of each year. Partners' capital used in
determining the allocation of net income per $1,000 of partners'
capital is weighted to reflect cash distributions made to partners
during the year. The indicated allocations for the three-month
and six-month periods ended June 30, 1994 and 1993 are the
allocations which would have been made had such period constituted
an entire fiscal year.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources:
Working capital at June 30, 1994 was $66 million, up $19 million from
December 31, 1993. Cash and cash equivalents were higher than normal as the
proceeds from the issuance of $15 million in long-term debt to fund capital
expenditures as noted below, were received on June 30. Inventories decreased
by $90 million, with grain inventories accounting for $86 million of the
decrease. A decrease in grain inventories from December 31 to June 30 is
normal, due to the seasonality of the grain business. Grain inventory
balances are generally near the high point of the year on December 31,
following the fall harvest, and the balances at June 30 are generally near the
low point of the year prior to the wheat harvest. Grain payables also
decreased from the December 31 balance, which is also normal as the amount
owed for grain decreases as the grain inventory balance decreases. At June
30, 1994, as a result of decreases in grain future prices during the second
quarter, the Partnership did not have any margin deposits with the Chicago
Board of Trade. Short-term notes payable have decreased due to the reduced
working capital requirements and due to an increase in long-term borrowings.
At June 30, 1994, partners' capital totaled $64.2 million, up $8.8
million from December 31, 1993. Increases to capital included net income of
$12.1 million and new capital of $734,000, received at the beginning of the
year. Decreases to partners' capital included distributions to partners of
$3.5 million and capital withdrawals of $604,000. Quarterly cash
distributions of approximately $325,000 are expected to be paid in September
and December of 1994. Quarterly tax distributions of approximately $590,000
are expected to be paid in September 1994 and January 1995. The cash and tax
distributions are discretionary and can be discontinued or eliminated if
operating results are insufficient to warrant payment. Further withdrawals
of capital in 1994 are not expected to be significant.
In the first six months of 1994 the Partnership purchased two general
stores that had previously been leased. Capital expenditures over the last
half of 1994 are expected to total approximately $10 million, and include the
purchase of three agricultural products facilities subject to a lease expiring
during the year, renovations to two general stores, a raw material
pre-processing and storage facility for corncobs and additional storage space
at two grain locations. To fund the capital expenditures, the Partnership
assumed a $5.2 million note payable in the purchase of one of the general
stores and increased long-term borrowings by an additional $15 million at the
end of the second quarter.
The Partnership is currently offering Five-Year and Ten-Year debentures
for sale. Through August 1, 1994, the Partnership sold $1 million of the new
debentures. The amount of proceeds to be realized in 1994 from the sale of
the debentures is unknown since the offering is not underwritten.
At June 30, 1994, the Partnership had used its entire $10 million
long-term revolving line of credit. Subsequently, the borrowing was reduced
to zero and this line continues to be available if needed. Short-term lines
of credit were increased during 1994 and currently total $202 million. The
highest borrowing against the short-term lines was $127.6 million and occurred
in January. At June 30, 1994 the outstanding balance was $36.5 million. The
Partnership's liquidity is enhanced by the fact that grain inventories are
readily marketable. In management's opinion, the Partnership's liquidity is
adequate to meet short-term and long-term needs.
Results of Operations:
Three Months Ended June 30, 1994 and 1993:
Net income in the second quarter of 1994 was $10 million, compared to
$6.1 million in the second quarter of 1993. Sales and merchandising revenues
were up $50 million and gross profit was up $8.4 million, a 25% increase.
Interest expense was up, due to higher interest rates and an increase in both
short-term and long-term borrowings. Operating, administrative and general
expenses were up 14.4%, with most of the increase coming from expanded
operations including a new general store opened in the fall of 1993 and two
grain and agricultural products businesses leased beginning in the second
quarter of 1994.
Sales in the grain area were $94 million in the second quarter of 1994,
up $29 million from a year ago. The average selling price was $3.55 per
bushel up from $2.81 per bushel in the second quarter of last year. Bushels
sold increased by 3 million, or about 13%, with the majority of the increase
coming from the additional facilities leased in the second quarter of 1994 as
noted above. Margins on grain sales were up from a year ago. Merchandising
revenues were up about $700,000, with increases in storage income, income
earned from holding owned grain and income earned from providing grain
marketing services to farmers. Drying and mixing income decreased in the
second quarter of 1994 from the higher than normal income experienced in the
second quarter of 1993. Gross profit in the grain area was up $1.5 million
or about 30%.
In the agricultural products area, sales were $52.7 million, up $8.9
million from a year ago. Most of the increase came from retail sales, with
about one half of the retail sales increase coming from the additional
facilities leased in the second quarter of 1994. Wholesale sales of
fertilizer products were up $1.5 million, as average selling prices were up
7% and volume was down 2%. Margins on wholesale sales were up. Gross profit
in the agricultural products area was up $3.8 million or about 50%. The
increase in retail sales and the improved margins on wholesale sales
contributed to this increase. However, the largest gross profit increase came
from the liquidation in 1994 of phosphate inventories purchased in 1993 when
the market price of phosphate was depressed. In 1994 the market price of
phosphate appreciated significantly and the Partnership liquidated its
inventory, with most of the activity occurring in the second quarter.
Sales in the retail area were $50.6 million in the second quarter of
1994 compared to $45.1 million in the same period last year. Sales in the
Columbus market were up 7% and sales in the Toledo market were up about 1%.
The new store in Lima, Ohio, accounted for the remainder of the sales
increase. As a result of the sales increase and an increase in margins, gross
profit in the retail area was up $2.4 million, a 19% increase.
Sales of lawn care products were $16.2 million, up $2.4 million from
the second quarter of last year. Tons sold increased by 20%, while average
selling prices decreased by 4%. Gross profit was up 9%, due to the volume
increase. In the industrial products area sales were even with the same
period a year ago and gross profit was down 7%. In the other businesses of
the Partnership, sales and gross profit were up.
Six Months Ended June 30, 1994 and 1993:
Net income in the first six months of 1994 was $12.1 million, compared
to $5.6 million in the same period last year. Sales and merchandising
revenues were up $121 million and gross profit was up $13 million, a 22%
increase. Interest expense was up $1 million, as both short-term and
long-term borrowings have increased and interest rates have also increased.
Operating, administrative and general expenses were up 10%, with most of the
increase coming from expanded operations.
Sales in the grain area were $221 million in the first six months of
1994, up $77 million from a year ago. The average selling price was $3.82 per
bushel up from $2.98 per bushel a year ago. The number of bushels sold
increased by about 20% and the margins on grain sales also increased. Storage
income was up in the first six months of 1994 and this trend should continue
into the third quarter as there were 12 million bushels of grain held in
storage at June 30, 1994 compared to 5 million bushels at June 30, 1993.
Drying and mixing income decreased in 1994, however, income in 1993 was higher
than normal due to the high moisture content of the 1992 corn crop. A
significant increase was experienced in the revenue generated from grain
marketing services provided to farmers. This service is relatively new for
the Partnership and has been well received. Overall, merchandising revenues
were up about $700,000 and gross profit from the grain area was up about $1.4
million, a 12% increase.
In the agricultural products area, sales were $80.7 million, up $18.8
million from a year ago. Wholesale sales of fertilizer products were up $11
million, as volume was up 15% and average selling prices were up 5%. Margins
were also up in the first six months of 1994. The increase in retail sales
in the second quarter of 1994, noted above, resulted in an $8.4 million
increase in retail sales in the first six months of 1994. Like the second
quarter, gross profit in the agricultural products area was up in the first
six months of 1994 by $5.6 million, an increase of more than 50%. As noted
in the discussion above for the second quarter, a significant part of the
gross profit increase was the result of the liquidation of phosphate
inventories at appreciated prices. The increase in wholesale sales and
margins and the increase in retail sales also contributed to the gross profit
increase.
Sales in the retail area were $82.2 million in the first six months of
1994 compared to $70.5 million last year. Sales in the Columbus market were
up 9% and sales in the Toledo market were up about 1%. The new store in Lima,
Ohio, accounted for the remainder of the sales increase. As a result of the
sales increase and an increase in margins, gross profit in the retail area was
up $4.3 million or 22%.
Sales of lawn care products were $32.5 million, up $6.6 million from
the first six months of last year. Tons sold increased by 32%, while average
selling prices decreased by 6%. Gross profit was up $1.5 million, due to the
volume increase as margins were down. In the industrial products area sales
were down 2% from the same period a year ago and gross profit was down 10%.
In the other businesses, sales and gross profit were up.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K. There were no reports on Form 8-K for
the three months ended June 30, 1994.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE ANDERSONS
(Registrant)
By THE ANDERSONS MANAGEMENT CORP.
(General Partner)
Date: August 12, 1994 By /s/Richard P. Anderson
Richard P. Anderson
President and Chief Executive
Officer
Date: August 12, 1994 By /s/Richard R. George
Richard R. George
Corporate Controller (Principal
Accounting Officer)