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, 1995
[ ] 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
transfer restrictions contained in the partnership agreement, 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 -
March 31, 1995 and December 31, 1994. . . . . . . . . . . . . . .3
Condensed Consolidated Statements of Income -
Three months ended March 31, 1995 and 1994. . . . . . . . . . . .5
Condensed Consolidated Statements of Cash Flows -
Three months ended March 31, 1995 and 1994. . . . . . . . . . . .6
Notes to Condensed Consolidated Financial Statements. . . . . . . .7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . . . .8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . 10
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE ANDERSONS
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
March 31 December 31
1995 1994
CURRENT ASSETS
Cash and cash equivalents $ 790,624 $ 6,186,695
Accounts Receivable:
Trade accounts - net 57,926,366 55,157,316
Margin deposits 8,012,297 7,034,058
65,938,663 62,191,374
Inventories:
Grain 111,827,468 113,554,519
Agricultural fertilizer and supplies 30,567,779 21,110,719
Merchandise 38,793,663 32,240,845
Lawn and corn cob products 17,255,273 20,992,385
Other 13,692,072 10,736,558
212,136,255 198,635,026
Prepaid expenses 1,392,933 899,268
TOTAL CURRENT ASSETS 280,258,475 267,912,363
OTHER ASSETS
Investments in and advances to affiliates 1,244,322 1,591,673
Notes receivable (net) and other assets 3,192,798 3,083,583
TOTAL OTHER ASSETS 4,437,120 4,675,256
PROPERTY, PLANT AND EQUIPMENT
Land 13,051,374 13,063,330
Land improvements and leasehold
improvements 22,577,115 22,569,686
Buildings and storage facilities 71,814,401 71,700,138
Machinery and equipment 87,919,079 87,308,030
Construction in progress 2,462,145 1,387,362
197,824,114 196,028,546
Less allowances for depreciation and
amortization 119,912,794 118,432,043
NET PROPERTY, PLANT AND EQUIPMENT 77,911,320 77,596,503
$362,606,915 $350,184,122
NOTE: The balance sheet at December 31, 1994 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)
March 31 December 31
1995 1994
CURRENT LIABILITIES
Notes payable $121,400,000 $ 50,000,000
Accounts payable for grain 29,887,160 83,843,840
Other accounts payable 53,722,850 60,990,810
Amounts due General Partner 5,199,966 4,700,699
Accrued expenses 7,507,683 7,708,295
Current maturities of long-term debt 5,384,000 3,615,000
TOTAL CURRENT LIABILITIES 223,101,659 210,858,644
LONG-TERM DEBT
Note payable, 7.84%, payable
quarterly, ($75,000 through 10/97,
$398,000 thereafter) due 2004 14,775,000 14,850,000
Note payable, variable rate (7.6875%
at 3/31/95) payable $800,000
annually, due 1997 6,000,000 6,000,000
Notes payable relating to revolving
credit facility, variable rate
(7.1% at 3/31/95), due 1996 10,000,000 10,000,000
Note payable, variable rate (6.9375%
at 3/31/95), payable monthly
through 7/5/96 4,523,579 4,661,089
Other notes payable 793,063 795,686
Industrial development revenue bonds:
6.5% due 1999 4,400,000 4,400,000
Variable rate (6.03% at 3/31/95),
due 1995 to 2004 8,114,000 8,114,000
Variable rate (3.879% at 3/31/95),
due 2025 3,100,000 3,100,000
Debenture bonds:
9.2% to 10%, due 1995 and 1996 6,087,000 6,088,000
6.5% to 8%, due 1997 to 2000 5,680,000 5,530,000
10% due 1997 and 1998 2,117,000 2,117,000
10% due 2000 and 2001 2,742,000 2,742,000
7.5% to 8.7%, due 2002 to 2005 5,715,000 5,590,000
Other bonds, 4% to 10% 855,695 844,533
74,902,337 74,832,308
Less current maturities of long-term debt 5,384,000 3,615,000
TOTAL LONG-TERM DEBT 69,518,337 71,217,308
AMOUNT DUE GENERAL PARTNER 3,274,554 3,059,742
MINORITY INTEREST 979,221 1,070,878
PARTNERS' CAPITAL
General partner 998,462 969,376
Limited partners 64,734,682 63,008,174
TOTAL PARTNERS' CAPITAL 65,733,144 63,977,550
$362,606,915 $350,184,122
NOTE: The balance sheet at December 31, 1994 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 March 31
1995 1994
Grain sales and revenues $104,774,101 $132,669,980
Fertilizer, retail and other sales 98,235,499 86,028,579
Other income 583,921 645,771
203,593,521 219,344,330
Cost of grain sales and revenues 93,773,281 125,116,012
Cost of fertilizer, retail and
other sales 73,520,178 62,741,785
167,293,459 187,857,797
GROSS PROFIT 36,300,062 31,486,533
Operating, administrative and
general expenses 31,235,697 27,300,216
Interest expense 3,141,696 2,100,950
34,377,393 29,401,166
NET INCOME - Note B $ 1,922,669 $ 2,085,367
Allocation of income:
To general partner $ 29,086 $ 28,938
To limited partners 1,893,583 2,056,429
$ 1,922,669 $ 2,085,367
Income allocation per $1,000 of
partners' capital:
Weighted average capital for
allocation purposes - Note C $ 64,079,086 $ 54,901,354
Income allocation per $1,000 $ 30 $ 38
See notes to condensed consolidated financial statements.
THE ANDERSONS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months
Ended March 31
OPERATING ACTIVITIES 1995 1994
Net income $ 1,922,669 $ 2,085,367
Adjustments to reconcile net income
to net cash used in operating
activities:
Depreciation and amortization 2,179,685 1,878,894
Amortization of deferred gain - (34,283)
Minority interest in net income of
subsidiaries (43,207) (6,078)
Payments to minority interests (48,450) (222,052)
Provision for losses on receivables,
investments and other assets 199,746 90,320
Gain on sale of property, plant and
equipment (37,997) (227,730)
Changes in operating assets
and liabilities:
Accounts receivable (3,947,035) 13,461,532
Inventories (13,501,229) 20,258,206
Prepaid expenses and other assets (571,105) (395,028)
Accounts payable for grain (53,956,680) (64,512,873)
Other accounts payable and
accrued expenses (6,754,493) 2,532,081
NET CASH USED IN OPERATING ACTIVITIES (74,558,096) (25,091,644)
INVESTING ACTIVITIES
Purchases of property, plant, equipment (2,464,617) (2,302,893)
Proceeds from sale of property, plant
and equipment 73,688 404,183
Payments from (advances to) affiliates 250,000 (665,000)
NET CASH USED IN INVESTING ACTIVITIES (2,140,929) (2,563,710)
FINANCING ACTIVITIES
Net increase in short-term borrowings 71,400,000 25,500,000
Proceeds from issuance of long-term debt 10,293,009 5,562,215
Payments of long-term debt (10,222,980) (3,088,201)
Payments to partners and other deductions
from capital accounts (1,243,575) (1,586,784)
Capital invested by partners 1,076,500 733,675
NET CASH PROVIDED BY FINANCING ACTIVITIES 71,302,954 27,120,905
DECREASE IN CASH AND CASH EQUIVALENTS (5,396,071) (534,449)
Cash and cash equivalents at beginning
of year 6,186,695 3,936,955
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 790,624 $ 3,402,506
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, 1994.
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 of the Registrant 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 periods ended March 31, 1995 and 1994 are the
allocations which would have been made had such periods constituted
an entire fiscal year.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
Partners' capital in The Andersons (the "Partnership") at March 31, 1995
was $65.7 million, up $1.8 million from December 31, 1994. Net income in the
first quarter added $1.9 million to partners' capital and new equity of
$1,077,000 was received at the beginning of the quarter. Decreases to
partners'capital included distributions to partners of $693,000 and equity
withdrawals of $550,000. Additional quarterly cash distributions of
approximately $224,000 are expected to be paid beginning in June 1995. A
final 1994 tax distribution of approximately $1.8 million was paid in April
1995 and a quarterly tax distribution of approximately $799,000 was also paid
in April. Additional quarterly tax distributions of approximately the same
amount are expected to be paid beginning in June 1995. The remaining cash and
tax distributions are discretionary and can be discontinued or eliminated if
operating results are insufficient to warrant payment. Withdrawals of capital
in 1995 are not expected to be significant.
Short-term lines of credit available at December 31, 1994 were $207
million. Because the Partnership actively manages the payment of fees on its
available lines of credit, it reduced those few lines on which fees are
charged during the first quarter. Total available lines at March 31, 1995
were $167 million. Typically, the Partnership's highest borrowing occurs in
the first quarter due to seasonal inventory requirements in several of the
Partnership's businesses, credit sales in the lawn products and agricultural
fertilizer and supply business and a customary reduction in grain payables due
to customer cash needs and market strategies. The Partnership's liquidity is
enhanced by the fact that grain inventories are readily marketable. In
management's opinion, the Partnership's liquidity is adequate to meet short-
term and long-term needs.
The Partnership sold $277,000 of new Five-Year and Ten-Year debentures in
the first quarter. Although the Partnership does not anticipate additional
sales in the second quarter, it may offer bonds in the future.
On May 1, 1995, subsequent to the period covered by this Report, The
Andersons Management Corp., an Ohio corporation and the sole general partner
of the Partnership (the "General Partner"), filed a Registration Statement on
Form S-4 (File No. 33-58963) with the Securities and Exchange Commission with
respect to a proposed merger of the Partnership with and into the General
Partner and certain other related matters. The primary purpose of the
proposed merger and certain of the related matters is to permit a public
offering of common shares of the General Partner, as the surviving entity, at
a date to be determined by the General Partner. The General Partner currently
anticipates that, if the merger is approved by the shareholders of the General
Partner and the limited partners of the Partnership, the public offering will
occur in the fall of 1995.
Capital expenditures, primarily equipment, totaled $2.5 million in the
first quarter of 1995 and are expected to be approximately $24 million for the
calendar year. Additional expenditures anticipated in 1995 include $2 million
for the purchase of a grain facility currently under lease, $1.5 million for
retail farm center acquisitions, $2.6 million for additional storage capacity,
$1.9 million for general store renovations and $1.4 million for information
systems improvements. The Partnership expects to fund these capital
expenditures from cash generated from operations and additional long-term debt
or new equity. If these funding sources are not sufficient, capital
expenditures will be curtailed.
Results of Operations
Comparison of the Partnership's three months ended March 31, 1995 with the
three months ended March 31, 1994
Net income in the first quarter of 1995 was $1.9 million, slightly less
than the 1994 first quarter income of $2.1 million. Revenues were $204
million, down from $219 million in the first quarter of 1994. Interest
expense was up due to an increase in short-term and long-term debt and higher
interest rates. Operating, administrative and general expenses were up 14.4%,
with most of the increase coming from expanded operations, including two new
grain facilities and two new ag fertilizer facilities opened after the first
quarter of 1994.
The Agriculture Group (including grain and agricultural fertilizer and
supplies) experienced a 12% decrease in sales and merchandising revenues from
1994 but a 32% increase in gross profit. Sales of grains were $99 million in
the first quarter of 1995, down $28 million from the first quarter of 1994.
The average selling price was $3.17 per bushel, down from $4.04 per bushel in
the first quarter of last year. This decrease in price reflects a reduction
in the percent of soybean bushels to total bushels sold as soybean prices are
approximately twice that of corn and wheat. The number of bushels sold
increased by 90% and margins were also up. The income earned from holding
owned grain increased by $300,000 from the level of income experienced in
1994. Drying and mixing income decreased slightly. Storage income was down
5% in the first quarter and this trend should continue into the second quarter
as bushels held in storage at the end of the quarter were two-thirds that of a
year ago. Overall, merchandising revenues were up 2% from last year. Gross
profit from the grain area was up $3.4 million or 46% in the first quarter of
1995 due to the large increase in volume of bushels sold and a smaller
increase in margins.
In agricultural fertilizer and supply, sales were $36 million, up $8
million from a year ago. Wholesale sales of fertilizer products accounted for
almost all of the sales increase. Volume was up 14% and selling prices were
up 13%. Margins were down slightly in the first quarter of 1995 due to
increased material costs. Retail sales were up $1.2 million due primarily to
the opening of three new retail farm centers. Sales of agricultural supplies
were down approximately $400,000. Gross profit on sales of agricultural
products was up 9% for the quarter due primarily to the wholesale volume
increase.
Sales in the retail area were $31 million in the first quarter of 1995
compared to $31.6 million last year. Sales in the Columbus market were
unchanged and sales in the Toledo market were up 1%. Sales in the Lima store
were down 1.6%. As a result of a 3% increase in margins, gross profit in the
retail area was up 1%.
Sales of lawn care products were $19 million, up $3 million from the
first quarter of last year. Tons sold increased by about 11% while average
selling prices increased by about 8%. Increased material costs, however,
limited the gross profit increase to 3%. In the industrial products area,
sales were up 20% from the first quarter of 1994 and volume was up about 4%.
Gross profit was up 18% due to the volume and sales increase and a shift in
product mix. Average sales price increased 10%. In other businesses, sales
were unchanged from the prior year. Gross profit in the other businesses was
up about 16% due primarily to the rail division.
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 March 31, 1995.
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: May 12, 1995 By /s/Richard P. Anderson
Richard P. Anderson
President and Chief Executive
Officer
Date: May 12, 1995 By /s/Richard R. George
Richard R. George
Corporate Controller (Principal
Accounting Officer)