Item 1. Business
(a) General Development of Business
The Andersons (the "Partnership" or "Company") 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 rail cars.
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," "Company" and "The Andersons" include The Andersons and all predecessor and successor 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."
(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, retail farm centers and farmer services.
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 aggregates approximately 67 million bushels.
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 1994, approximately 63% of the grain sold by the Partnership was purchased domestically by grain processors and feeders and approximately 37% 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.
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. The Partnership believes that it is the largest terminal elevator operator in the Maumee/Toledo area and that it accounts for substantial portions of the grain elevator business done in its other principal geographic areas of operations. Some of the Partnership's competitors are also its customers and many of its competitors have substantially greater financial resources than the Partnership.
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 and similar considerations. 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, avoiding unacceptable risk and the potential for significant loss.
The Partnership hedges fixed price purchase and sales transactions through the use of futures 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.
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 fixed price cash positions as well as open futures positions, are marked-to- market. Gains/Losses in value on the Partnership's cash positions from price changes are 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 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 from its grain operation is derived from margins on grain sold and revenues generated from its other merchandising activities with its customers, not from its hedging transactions.
At any one time the Agriculture Group's purchase contract portfolio may approximate 60 million bushels for delivery to the Partnership over the next three years. 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'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 wholesale storage capacity for dry fertilizer is 14 million cubic feet. The Partnership reserves 5 million cubic feet of this space for various fertilizer manufacturers and customers. The Partnership's aggregate storage capacity for liquid fertilizer is 31 million gallons and 6 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 eight 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 addition, farmer services representatives based at the retail farm centers, provide a link between the grain and fertilizer operations and offer assistance with grain marketing and farm financial management.
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. The Partnership believes that it is a strong competitor in these areas.
Retail Group
The Partnership's retail store operations consist of six general stores located in the Columbus, Lima and Toledo, Ohio areas, 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 houseware 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 aisle 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. In each of these areas the Partnership is an effective competitor. Its wide selection of brand names and other quality merchandise is attractively displayed in the Partnership's general stores. Each store is located on landscaped property with ample well- lit parking facilities. The Partnership's retail business is affected by seasonal factors with significant sales occurring during the Christmas season and in the spring.
Other Activities
The Partnership produces more than 1000 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 available 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 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 and 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 spilled 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 repairing, buying, selling and leasing rail cars, the operation of seven auto service centers, a steel fabrication shop, a restaurant 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 $490,000, $450,000, and $380,000 was expended on research and development during 1994, 1993 and 1992, respectively, including materials, salaries and outside consultants. 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, 1994, there were 1,151 full- time and 1,982 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. The Partnership made capital expenditures of approximately $600,000 in 1994 in order to comply with these regulations.
Environmental Proceeding
In 1992, the Partnership was notified by the Ohio Environmental Protection Agency (the "Agency") that a water contamination discharge issue had been referred to the Ohio Attorney General. The issue involved the Partnership's Toledo, Ohio river elevator facility, built during the 1960's and 1970's on low lying land that had, in part, been filled by an unrelated corporation with material from its manufacturing operations. This material was the apparent source of the alleged contamination at issue. In November, 1994, a Consent Order was filed in the Lucas County Court of Common Pleas which resolved the on-going dispute. In addition, the Agency has reserved the right to investigate whether further action will be necessary at the river elevator facility.
Item 2.
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 (2) 6,480,000 Lyons, OH (2) 380,000 Champaign, IL 13,000,000 833,000 Delphi, IN 6,580,000 1,667,000 Clymers, IN (1) 4,400,000 7,600,000 Dunkirk, IN 5,900,000 900,000 Poneto, IN 530,000 4,700,000 Logansport, IN 33,000 3,000,000 Walton, IN 433,000 6,500,000 Albion, MI 2,470,000 Potterville, MI 790,000 White Pigeon, MI 1,730,000 Webberville, MI 2,017,000 3,200,000 67,360,000 14,216,000 30,600,000
(1) Facility leased - lease expires in 1998, provides an option to purchase (2) Facilities leased, option to purchase exercised in 1995
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 owns a seed processing facility in Delta, Ohio. The Partnership also operates eight retail farm centers (six under lease agreements) in Michigan, Indiana and Ohio. Aggregate storage capacity in the eight retail farm centers for liquid fertilizer and dry fertilizer is 1.4 million gallons and 240,000 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 $1,016,000. The general store leases provide for contingent lease payments based on achieved sales volume. With respect to the Brice General Store, see "Item 13. Certain Relationships and Related Transactions - Alshire-Columbus." 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 rail car leasing business, the Partnership owns or leases approximately 1600 rail cars (primarily covered hopper cars) with lease terms ranging from one to ten years and annual lease payments aggregating approximately $4,200,000. The majority of the cars controlled are leased to other companies, although some cars are maintained by the Partnership's Agriculture Division. The Partnership also owns a rail car 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 618 acres of land on which various of the above properties and facilities are located; approximately 363 acres of farmland and land held for future use; approximately 102 acres of improved land in an office/industrial park held for sale; and certain other meeting and recreational facilities, dwellings and parcels. 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 $41,125,000 at December 31, 1994. Additions to property for the years ended December 31, 1994, 1993 and 1992, amounted to $26,300,359, $10,808,521, and $6,590,045, 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.
Item 3. Legal Proceedings
The Partnership is not involved in any material legal proceedings.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
None. PART II
Item 5.
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 March 1, 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.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Liquidity and Capital Resources
Working capital at December 31, 1994 was $57 million, up $10 million from 1993. Cash provided by operating activities was $52 million in 1994 compared to a use of cash in 1993 of $51 million. The increase in cash provided by operating activities led to a decrease in short-term borrowings from $87.9 million at December 31, 1993 to $50 million at December 31, 1994.
Partners' capital at December 31, 1994 totaled $64 million, up from $55.4 million at December 31, 1993. Net income in 1994 of $15.1 million was added to partners' capital, while partners added $733,675 to their capital accounts at the beginning of the year and withdrew $604,000. During 1994 quarterly cash distributions to partners totaled $1.1 million. This amount decreased from prior years due to partners' election to receive a reduced distribution. In addition, at the end of the year distributions to certain partners and charitable remainder trusts totaled $1.2 million and charitable contributions charged to partners' capital accounts totaled $782,000. Tax distributions to partners during 1994 totaled $3.3 million. An additional tax distribution of $474,000 was paid in January 1995. Quarterly cash distributions in 1995 are expected to be lower than 1994 distributions and 1995 tax distributions are also expected to be lower both as a result of partners electing not to take all of the distributions available to them.
Tax distributions are made to partners for purposes of making federal, state and local tax payments since the taxable income of the Partnership is taxable to the partners and not to the partnership. Tax distributions can fluctuate widely from year to year (see "Item 6. Selected Financial Data") due to changes in the amount and in the components of partnership taxable income due to the timing of required tax payments by partners and due to the elections made by partners to take all, none or a percentage of the tax distribution available to them. Tax distributions and taxable income for the last five years have been as follows:
Taxable Year Distributions Income 1990 $ 278,000 $ 5,313,400 1991 3,700,000 3,880,200 1992 418,000 8,255,300 1993 4,200,000 11,855,970 1994 3,335,000 17,833,000
The 1990 tax distribution was based on 1989 taxable income of $1,559,500. The tax distributions in 1991 were considerably higher due to the increase in taxable income from 1989 to 1990 and due to the implementation of quarterly tax distributions paid to partners in April, June and September. Quarterly tax distributions were made to coincide with the timing of estimated tax payments due by partners. Tax distributions paid in 1992 decreased due to the decrease in taxable income from 1990 to 1991 and due to the quarterly tax payments made in 1991. In 1993, the tax distributions were very high due to the increase in taxable income in 1992, which also impacted the quarterly tax distributions needed by partners to meet their 1993 estimated tax payments. In 1994 tax distributions were lower than 1993 due to elections by partners to take smaller tax distributions.
During 1994 the Partnership issued $639,000 Five-Year and $1.5 million Ten-Year debentures and additional debentures are being offered in 1995. Proceeds from the issuance of the debentures in 1994 were used to fund current maturities of long-term debt and for capital expenditures. The amount of proceeds to be realized in 1995 from the sale of debentures is unknown since the offering is not underwritten. Any proceeds realized will be added to working capital and used for such purposes as the funding of current maturities of long-term debt and for capital expenditures.
The Partnership finances part of its inventories through short-term borrowings under lines of credit which are also used from time to time for other Partnership purposes. Generally, the highest borrowings occur in the spring and are related to payments of grain payables, credit sales of agricultural products related to spring planting and a seasonal peak in credit sales of lawn care products. The amount of borrowings outstanding during the year, and from one year to another, may fluctuate widely depending upon inventory levels, and changes in hedged values which affect maintenance margin requirements. The Partnership has available lines of credit for unsecured short-term debt with banks aggregating $207,000,000. The credit arrangements, the amounts of which are adjusted from time to time to meet the Partnership's needs, are demand notes without termination dates but are reviewed at least annually for renewal. See Note 6 to the Partnership's Consolidated Financial Statements for additional information relating to the lines of credit. The Partnership also has a $20 million long-term revolving line of credit. See Note 7 to the Partnership's Consolidated Financial Statements.
Certain of the Partnership's long-term indebtedness is secured by first mortgages on various facilities of the Partnership. Some of the Partnership's long-term borrowings include provisions that impose minimum levels of working capital and partnership equity (as defined); the addition of new long-term debt; restrict the Partnership from certain sale, lease, merger and consolidation transactions; require the Partnership to be substantially hedged in its grain transactions; and certain other requirements. At December 31, 1994, the Partnership was, and it believes it continues to be, in compliance with all terms and conditions of the secured borrowings and short and long term lines of credit. See Note 7 to the Partnership's Consolidated Financial Statements for further information with respect to long-term financing.
The Partnership periodically utilizes interest rate contracts to manage interest rate risk by locking in rates consistent with projected borrowing needs. There were no open interest rate contracts at December 31, 1994.
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 and long-term needs.
Capital expenditures were approximately $26 million in 1994 and are expected to be approximately $24 million in 1995. Anticipated capital expenditures in 1995 include $4.4 million for grain elevator and retail farm center acquisitions, $2.6 million for additional storage capacity, $3.5 million for store renovations, $5.9 million for plant upgrades and improvements and $2 million for information systems improvements. Funding for capital expenditures in 1995 is expected to come from cash generated from operations and additional long-term debt or new equity. Capital expenditures could be curtailed if necessary.
Results of Operations
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 full year 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 $7.5 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 (margin) 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 increased 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.
Sales in the Agriculture Group were $661.4 million compared to $520.9 million in 1993, while gross profit and operating profit increased $11.7 million and $4.3 million, respectively.
Sales in the Retail Group were $172 million in 1994 compared to $155 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 other businesses of the Partnership also increased. Sales of lawn care products totalled $47.6 million, up $9.5 million from 1993. Volume increased 27%, while average selling prices decreased 5%. Margins were down just a little. 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 the other businesses was up $570,000.
Years ended December 31, 1993 and 1992:
Income from continuing operations was $11 million in 1993 compared to $10 million in 1992. Operating, administrative and general expenses were up $12 million or about 12%. Included is an increase of $5.7 million (10%) in the management fee paid to the general partner. The more significant items comprising the increase are additional salaries, wages and benefits for a new general store, as well as an expanded work force in several other operating areas and additional cash profit sharing and management performance payments as a result of improved net income. The management fee also increased as a result of the Corporation's adoption of Statement of Financial Accounting Standard No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions." The Corporation has elected to recognize the $8.4 million of accrued benefits as of January 1, 1993 (transition obligation) prospectively as a component of annual postretirement benefit cost over approximately 20 years. The additional annual cost incurred by the Corporation and passed on to the Partnership as part of the management fee was approximately $850,000 for 1993. By major business segment the results were as follows:
Grain sales and merchandising revenues were $439.5 million compared to $440.6 million in 1992. Sales of grain commodities were down $7.5 million or 2%. Bushels sold increased 2% and the average selling price per bushel decreased 4% from $3.39 to $3.25. Cents per bushel sold (margin) decreased 11%. Most of these changes were a result of an increase in yields in 1993 as well as an improvement in the quality of the crops in the eastern corn belt. Merchandising revenues were up $6.4 million. Income earned in 1993 from holding owned grain was up from the depressed levels in 1992, due in part to the effects of the floods in 1993 and to a shortage of wheat in the first half of 1993. Income from drying and blending grain was also up in 1993, with most of the increase coming in the first six months of the year. This is a result of the high moisture content in the 1992 corn crop carried into 1993 and due to the depressed level of drying and blending income in the first six months of 1992. Gross profit on grain sales and merchandising revenues was up $5.7 million or 20%.
Sales of wholesale fertilizer were up $11.6 million or 11% and retail fertilizer sales and sales of other agricultural products were down $800,000 or 5%. Wholesale fertilizer tonnage increased by 19% and the average selling price decreased 3%. Gross profit on wholesale fertilizer increased $1.4 million or 16% while retail and other agricultural products gross profit increased $400,000 or 7%.
Sales in the Agriculture Group were $520.9 million compared to $517.6 million in 1992, while gross profit and operating profit increased $7.5 million and $2.9 million, respectively.
Sales in the retail group were $155 million in 1993, up 4% from 1992. Sales in the Columbus market were up 5%, sales in the Toledo market were down 2% and sales from a new store opened in Lima, Ohio, in the fourth quarter of 1993 accounted for the remainder of the sales increase. Gross profit was up about $1.2 million, or 3%, as a result of the sales increase along with a small decrease in margins due to the competitive pressures in the retail market. As a result of a $3.7 million (10%) increase in operating expenses, due to increased advertising and the costs associated with opening the new general store, operating profit decreased from $4 million in 1992 to $1.6 million in 1993.
Sales in the other businesses of the Partnership also increased. Sales of lawn products totalled $38 million, up 7% from 1992. Volume increased 2% and average selling prices increased 5%. Margins were up about 11%. In the industrial products area sales were $14.2 million, up 1%. Sales of sorbent products were up, due to volume increases, and sales of corncob products were down, due to a decrease in volume. Sales from the Partnership's auto service centers were up, as were steel fabrication sales. Railcar leasing activity improved, while railcar repairs for external customers were down due to utilizing the shop capacity for repairs to cars owned by the Partnership. Sales from the Partnership's outdoor power equipment and service shop were $4 million. In total, the operating profits of lawn and corn cob products and other businesses of the Partnership improved by $440,000.
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.
Item 8. Financial Statements and Supplementary Data
Report of Independent Auditors
Partners The Andersons
We have audited the accompanying consolidated balance sheets of The Andersons (a partnership) and subsidiaries as of December 31, 1994 and 1993, and the related consolidated statements of income, cash flows and changes in partners' capital for each of the three years in the period ended December 31, 1994. 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, 1994 and 1993, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1994, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedule when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
/s/ Ernst & Young LLP ERNST & YOUNG LLP Toledo, Ohio February 6, 1995
The Andersons and Subsidiaries Consolidated Statements of Income
Year ended December 31 1994 1993 1992 Grain sales and revenues $551,836,287 $439,483,762 $440,553,476 Fertilizer, retail and other sales 400,922,131 336,973,308 312,613,276 Other income 2,608,671 3,763,737 3,834,457 955,367,089 780,220,807 757,001,209
Cost of grain sales and revenues 513,893,485 405,889,171 412,623,606 Cost of fertilizer, retail and other sales 292,258,780 244,254,571 227,130,480 806,152,265 650,143,742 639,754,086 Gross profit 149,214,824 130,077,065 117,247,123 Operating, administrative and general expenses (Note 2) 125,682,788 112,829,334 100,791,991 Interest expense 8,394,606 6,168,371 6,325,440 134,077,394 118,997,705 107,117,431 Income from continuing operations 15,137,430 11,079,360 10,129,692 Discontinued operations (Note 3): Loss from discontinued operations (396,177) Loss on sale of discontinued operations (2,097,767) Net income $ 15,137,430 $ 11,079,360 $ 7,635,748
Net income (loss) was allocated to: General partner: From continuing operations $ 218,844 $ 145,526 $ 124,871 From discontinued operations - - (30,743) 218,844 145,526 94,128 Limited partners: From continuing operations 14,918,586 10,933,834 10,004,821 From discontinued operations (2,463,201) 14,918,586 10,933,834 7,541,620 $ 15,137,430 $ 11,079,360 $ 7,635,748
Net income (loss) allocation per $1,000 of partners' capital: Weighted average capital for allocation purposes $ 52,696,376 $ 47,405,022 $ 43,101,473 Allocation per $1,000: From continuing operations $ 287 $ 234 $ 235 From discontinued operations (58) $ 287 $ 234 $ 177
See accompanying notes.
The Andersons and Subsidiaries Consolidated Balance Sheets
December 31 1994 1993 Assets Current assets: Cash and cash equivalents (Note 10) $ 6,186,695 $ 3,936,955 Accounts receivable: Trade accounts, less allowance for doubtful accounts of $2,292,000 in 1994; $1,178,000 in 1993 55,157,316 60,036,382 Margin deposits (Note 10) 7,034,058 15,320,979 62,191,374 75,357,361 Inventories (Note 4) 198,635,026 211,023,651 Prepaid expenses 899,268 858,941 Total current assets 267,912,363 291,176,908
Other assets: Notes receivable and other assets, less allowance for doubtful notes receivable of $717,000 in 1994 3,083,583 3,965,729 Investments in and advances to affiliates 1,591,673 942,053 4,675,256 4,907,782 Property, plant and equipment (Notes 5 and 7) 77,596,503 60,417,088 $350,184,122 $356,501,778 Liabilities and partners' capital Current liabilities: Notes payable (Note 6) $ 50,000,000 $ 87,900,000 Accounts payable for grain 83,843,840 83,712,076 Other accounts payable 60,990,810 58,896,317 Amounts due General Partner (Note 2) 4,700,699 4,173,287 Accrued expenses 7,708,295 7,496,181 Current maturities of long-term debt 3,615,000 1,992,000 Total current liabilities 210,858,644 244,169,861
Amounts due General Partner (Note 2) 3,059,742 2,413,041 Long-term debt (Note 7) 71,217,308 52,259,120
Deferred gain 1,145,151 Minority interest 1,070,878 1,103,892 Partners' capital: General partner 969,376 761,839 Limited partners 63,008,174 54,648,874 63,977,550 55,410,713 $350,184,122 $356,501,778
See accompanying notes.
The Andersons and Subsidiaries Consolidated Statements of Cash Flows
Year ended 1994 1993 1992 Operating activities Net income $15,137,430 $11,079,360 $ 7,635,748 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 8,101,058 7,109,223 7,010,579 Provision for losses on accounts and notes receivable 2,682,904 909,724 763,677 Payments to minority interests (222,052) (166,198) (132,896) Minority interest in net income of subsidiaries 189,038 236,224 154,392 Gain on sale of property, plant and equipment (160,988) (1,107,707) (1,645,421) Amortization of deferred gain (43,823) (385,956) (373,238) Loss on sale of discontinued operations - - 1,582,630 Equity in undistributed loss of affiliates - - 4,255 Changes in operating assets and liabilities: Accounts receivable 10,483,083 (32,109,849) (5,866,574) Inventories 12,388,625 (61,137,730) 37,905,112 Prepaid expenses and other assets (1,006,667) (1,255,649) (501,424) Accounts payable for grain 131,764 18,966,696 (3,086,492) Other accounts payable and accrued expenses 4,451,416 6,719,097 5,074,170 Net cash provided by (used in) operating activities 52,131,788 (51,142,765) 48,524,518
Investing activities Purchases of property, plant and equipment (22,663,348) (10,808,521) (6,590,045) Proceeds from sale of investment 1,679,215 - - Proceeds from sale of property, plant and equipment 848,408 1,696,989 2,586,539 (Advances to) payments received from affiliates (640,000) 149,999 5,145 Proceeds from sale of discontinued operations - - 1,299,340 Net cash used in investing activities (20,775,725) (8,961,533) (2,699,021)
Financing activities Net increase (decrease) in short-term borrowings (37,900,000) 64,150,000 (45,330,000) Proceeds from issuance of long-term debt 35,508,820 22,753,656 16,022,652 Payments of long-term debt (20,144,550) (17,439,855) (17,887,109) Payments to partners and other deductions from capital accounts (7,304,268) (7,212,084) (3,177,162) Capital invested by partners 733,675 423,630 4,153,500 Net cash provided by (used in) financing activities (29,106,323 62,675,347 (46,218,119)
Increase (decrease) in cash and cash equivalents 2,249,740 2,571,049 (392,622) Cash and cash equivalents at beginning of year 3,936,955 1,365,906 1,758,528 Cash and cash equivalents at end of year $ 6,186,695 $ 3,936,955 $ 1,365,906
Noncash investing and financing activities: Assumption of long-term debt in purchase of property, plant and equipment $ 5,216,918
See accompanying notes.
The Andersons and Subsidiaries Consolidated Statements of Changes in Partners' Capital
Year ended December 31 1994 1993 1992 General partner capital Balance at beginning of year $ 761,839 $ 622,659 $ 531,322 Amounts credited (charged) to capital: Net income for the year 218,844 145,526 94,128 Charitable contributions (11,307) (6,346) (2,791) 207,537 139,180 91,337 Balance at end of year $ 969,376 $ 761,839 $ 622,659
Limited partners' capital Balance at beginning of year $54,648,874 $50,497,148 $41,976,399 Amounts credited (charged) to capital: Net income for the year 14,918,586 10,933,834 7,541,620 Increase in invested capital 733,675 423,630 4,153,500 Charitable contributions (770,809) (476,772) (223,623) Withdrawals (1,759,072) (827,573) (899,793) Distributions (4,763,080) (5,901,393) (2,050,955) 8,359,300 4,151,726 8,520,749 Balance at end of year $63,008,174 $54,648,874 $50,497,148
Total partners' capital--at end of year $63,977,550 $55,410,713 $51,119,807
See accompanying notes.
The Andersons and Subsidiaries Notes to Consolidated Financial Statements December 31, 1994
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.
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
The Partnership adopted Statement of Financial Accounting Standards No. 115 "Accounting for Certain Investments in Debt and Equity Securities" in 1994. There was no cumulative effect as a result of the adoption.
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 sales and merchandising 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, 1994 and 1993, the Partnership s net assets for financial reporting purposes were approximately $1,800,000 and $3,800,000, 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.
Deferred Gain
Through January 31, 1994, the deferred portion of a gain from the sale and leaseback of a retail store was being amortized into income over the ten-year leaseback period by the straight-line method. On February 1, 1994 the store was reacquired and the remaining deferred gain was recorded as a component of the reacquisition cost.
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 $1,000 of partners' capital.
Partners may elect to receive quarterly cash distributions as declared by the general partner. Partners may also elect to receive quarterly tax distributions or an annual tax distribution. Final 1994 tax distributions of approximately $5,200,000 may be paid to partners in 1995 from the year end partners' capital balances upon each Partner's election.
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 1993 and 1992 financial statements have been reclassified to conform with the 1994 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 $840,000 and $850,000 for 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 May 1, 2000. The net lease payments amounted to $635,714, $529,982 and $516,344 in 1994, 1993 and 1992, respectively.
The components of the management fee and rent incurred by the Partnership consisted of the following:
Year ended December 31 1994 1993 1992 Salaries and wages $53,726,460 $47,706,731 $43,356,247 Employee benefits 15,673,685 14,619,453 13,426,059 Rent for office space and other reimbursable expenses 803,830 641,491 516,344 Achieved level of return of the Partnership 190,880 139,656 89,618 Totals $70,394,855 $63,107,331 $57,388,268
3. Discontinued Operations
In April 1992, the Partnership decided to dispose of its pet products distribution business, which was represented by a majority investment in B&R Pet Supplies, Inc. (B&R). During 1992, the Partnership sold the operations of B&R for approximately $1,300,000, which resulted in a loss of $1,582,630. Losses from operations from April 1, 1992 to the date of sale amounted to $515,137. This transaction has been accounted for as a discontinued operation.
Sales from discontinued operations were approximately $9,780,000 for the year ended December 31, 1992.
4. Inventories
Major classes of inventory are as follows:
December 31 1994 1993 Grain $113,554,519 $135,346,670 Agricultural fertilizer and supplies 21,110,719 16,170,908 Merchandise 32,240,845 32,497,574 Lawn and corn cob products 20,992,385 20,579,022 Other 10,736,558 6,429,477 $198,635,026 $211,023,651
5. Property, Plant and Equipment
The components of property, plant and equipment are as follows:
December 31 1994 1993 Land $ 13,063,330 $ 9,457,460 Land improvements and leasehold improvements 22,569,686 19,378,810 Buildings and storage facilities 71,700,138 62,022,387 Machinery and equipment 87,308,030 80,141,615 Construction in progress 1,387,362 1,707,564 196,028,546 172,707,836 Less allowances for depreciation and amortization 118,432,043 112,290,748 $ 77,596,503 $ 60,417,088
6. Banking and Credit Arrangements
The Partnership has available lines of credit for unsecured short-term debt with banks aggregating $207,000,000. 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.
1994 1993 1992
Maximum borrowed $127,600,000 $100,500,000 $104,000,000 Average daily amount borrowed (total of daily borrowings divided by number of days in period) 72,182,603 60,404,384 50,341,667 Average interest rate (computed by dividing interest expense by average daily amount outstanding) 5.03% 4.15% 5.20%
7. Long-Term Debt
Long-term debt consists of the following:
December 31 1994 1993 Note payable, 7.84%, payable $75,000 quarterly through October 1997, and $398,000 quarterly thereafter, due 2004 $14,850,000 $ - Notes payable relating to revolving credit facility 10,000,000 7,500,000 Note payable, variable rate (7.625% at December 31, 1994), payable $800,000 annually, due 1997 6,000,000 6,800,000 Note payable, variable rate (6.9375% at December 31, 1994), payable $72,470 monthly including interest, due 1996 4,661,089 - Other notes payable 795,686 888,409 Industrial development revenue bonds: 6.5%, due 1999 4,400,000 5,000,000 Variable rate (5.695% at December 31, 1994), due in annual installments of $881,000 in 1995 through 2004 8,114,000 8,114,000 Variable rate (5.85% at December 31, 1994), due 2025 3,100,000 3,100,000 Debenture bonds: 9.2% to 11.4%, due 1995 and 1996 6,088,000 7,586,000 6.5% to 8%, due 1997 through 1999 5,530,000 4,894,000 10% to 10.5%, due 1997 and 1998 2,117,000 2,849,000 10%, due 2000 and 2001 2,742,000 2,774,000 7.5% to 8.7%, due 2002 through 2004 5,590,000 4,061,000 Employee bonds, variable rate (18% at December 31, 1994) 233,312 59,581 Other bonds, 4% to 10% 611,221 625,130 74,832,308 54,251,120 Less current maturities 3,615,000 1,992,000 $71,217,308 $52,259,120
The Partnership has a $20,000,000 revolving line of credit with a bank which bears interest based on the LIBOR rate (4.345% at December 31, 1994). Borrowings under this agreement totalled $10,000,000 at December 31, 1994. The revolving line of credit expires on July 1, 1997.
The variable rate notes payable, the note payable due in quarterly installments and the industrial development revenue bonds are collateralized by first mortgages on certain facilities and related property with a cost aggregating approximately $80,640,000.
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 $32,000,000 and net Partnership equity (as defined) of $43,000,000, limit the addition of new long-term debt, and limit its unhedged grain position to 2,000,000 bushels.
The aggregate annual maturities, including sinking fund requirements, through 1999 of long-term debt are as follows: 1995--$3,615,000; 1996--$22,895,000; 1997--$10,388,000, 1998--$7,125,000 and 1999--$4,230,000.
Interest paid (including short-term lines of credit) amounted to $8,175,747, $5,425,491 and $6,595,883 in 1994, 1993 and 1992, 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 rent expense under operating leases was as follows:
1994 1993 1992 Total rent expense $8,442,535 $7,095,276 $7,400,356 Less rental income from subleases 2,805,440 1,320,544 1,312,205 Net rental expense $5,637,095 $5,774,732 $6,088,151
Future minimum rentals for all noncancelable operating leases and future rental income from subleases are as follows:
Future Future Minimum Sublease Rentals Income 1995 $ 7,803,420 $ 4,132,351 1996 6,281,504 3,505,671 1997 5,172,363 3,104,040 1998 4,661,835 2,863,620 1999 3,319,158 1,229,235 Future years 3,386,948 157,390 $30,625,228 $14,992,307
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 and other commodities 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 and other commodities 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 contracts that are traded on a regulated futures exchange to hedge its net price exposure from grain inventories held and firm commitments to purchase or sell grain inventories and other commodities. The Partnership's policy is to hedge its net price exposure and at December 31, 1994, 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 variable interest rates on its short-term borrowings to short-term fixed interest rates. The notional amounts of these contracts are based upon the Partnership's projected short-term borrowing needs. Additional interest expense incurred in holding these instruments was $52,695, $92,545 and $1,783 in 1994, 1993 and 1992, respectively. There were no open interest rate contracts at December 31, 1994.
10. Securities
The following is a summary of held-to-maturity securities which mature within one year as of December 31, 1994 and 1993:
Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value December 31, 1994 Cash equivalent--commercial paper $4,700,000 $ - $ - $4,700,000 Margin deposits--U.S. Treasury securities 3,902,567 929 - 3,903,496 $8,602,567 $ 929 $ - $8,603,496
December 31, 1993 Cash equivalent--U.S. Treasury securities $3,936,955 $ - $ - $3,936,955 Margin deposits--U.S. Treasury securities 4,731,172 - 15,015 4,716,187 $8,668,127 $ - $15,015 $8,653,142
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, 1994 and 1993, have fair values as follows:
Carrying Fair Amount Value Debenture bonds $22,144,000 $22,189,000 Long-term notes payable 52,688,000 51,316,000 $74,832,000 $73,505,000
Debenture bonds $22,241,000 $23,750,000 Long-term notes payable 32,010,000 31,993,000 $54,251,000 $55,743,000
12. Segments of Business
The Partnership operates three business segments: Agriculture, Retail Stores and Other. Agriculture includes grain merchandising, operation of terminal grain elevator facilities, and distribution of agricultural products, primarily fertilizer. Other includes production and distribution of lawn and corn cob products and rail car leasing and repair.
Prior to 1994 the Partnership reported its agriculture business 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.
Segment information for 1993 and 1992 has been restated to conform with the 1994 presentation.
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 1994 1993 1992 Revenues: Agriculture: Sales to unaffiliated customers $661,369,917 $520,890,521 $517,598,783 Intersegment sales 3,105,953 2,978,856 2,709,350 Merchandising revenue and other income 30,446,394 27,350,033 20,007,958 694,922,264 551,219,410 540,316,091 Retail stores: Sales to unaffiliated customers 172,337,256 155,424,855 149,090,921 Other income 112,763 118,337 82,344 172,450,019 155,543,192 149,173,265 Other: Sales to unaffiliated customers 89,636,688 71,668,255 64,976,326 Intersegment sales 877,903 730,135 819,310 Other income 440,107 678,710 553,502 90,954,698 73,077,100 66,349,138 Other income 1,023,964 4,090,096 4,691,375 Eliminations--intersegment sales (3,983,856) (3,708,991) (3,528,660) Total revenues $955,367,089 $780,220,807 $757,001,209
Operating profit: Agriculture $ 18,900,530 $ 14,571,601 $ 9,720,038 Retail stores 4,290,252 1,639,953 4,062,370 Other 5,529,419 4,958,651 4,517,401 Total operating profit 28,720,201 21,170,205 18,299,809
Other income 863,147 2,090,567 2,533,177 Interest expense (8,394,606) (6,168,371) (6,325,440) General expenses (6,051,312) (6,013,041) (4,377,854) Income from continuing operations $ 15,137,430 $ 11,079,360 $ 10,129,692
Identifiable assets: Agriculture $217,462,318 $244,064,853 $168,917,991 Retail stores 64,551,540 56,558,711 48,174,786 Other 53,720,115 44,091,096 29,021,506 General assets 14,450,149 11,787,118 9,386,354 Total assets $350,184,122 $356,501,778 $255,500,637
Depreciation and amortization expense: Agriculture $ 3,390,835 $ 3,252,151 $ 3,364,773 Retail stores 2,602,692 1,957,190 1,882,966 Other 1,699,610 1,512,000 1,211,566 General 407,921 387,882 551,274 Total depreciation and amortization expense $ 8,101,058 $ 7,109,223 $ 7,010,579
Capital expenditures: Agriculture $ 6,688,988 $ 3,772,771 $ 2,420,837 Retail stores 12,985,881 4,228,566 728,538 Other 5,537,036 2,209,646 2,917,100 General 1,088,454 597,538 523,570 Total expenditures $ 26,300,359 $ 10,808,521 $ 6,590,045
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 held for investment, land and buildings and equipment associated with administration and Partnership services, assets of discontinued operations and other assets not directly identified with segment operations.
An unaffiliated customer accounted for grain operations sales of $85,900,000 in 1992. No unaffiliated customer accounted for more than 10% of sales and merchandising revenues in 1994 or 1993. Grain sales for export to foreign markets amounted to approximately $129,700,000 and $88,300,000, and $101,300,000 in 1994, 1993 and 1992, respectively.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
PART III
Item 10.
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 71 Chairman of the Board (1)* (2)* (3)* Richard P. Anderson 65 Director; President and Chief Executive Officer (1)* (2)* (3)* Christopher J. Anderson 40 Vice President Business Development Group (3) Daniel T. Anderson 39 Director; General Merchandise Manager Retail Group (3) Donald E. Anderson 68 Director; Science Advisor (1) Michael J. Anderson 43 Director; Vice President and General Manager Retail Group (2) Richard M. Anderson 38 Director; Vice President and General Manager Industrial Products Group (2) John F. Barrett 45 Director Joseph L. Braker 44 Vice President and General Manager Agriculture Group (2) Dale W. Fallat 50 Director; Vice President Corporate Services (2) Richard R. George 45 Corporate Controller and Principal Accounting Officer (3) Paul M. Kraus 62 Director (1) Peter A. Machin 47 Vice President and General Manager Lawn Products Group (1) Beverly J. McBride 53 General Counsel and Corporate Secretary (2) Rene C. McPherson 70 Director (2) Donald M. Mennel 76 Director (1) (3) Larry D. Rigel 53 Vice President Marketing (1) Janet M. Schoen 35 Director (2) Gary L. Smith 49 Corporate Treasurer (1)
(1) Member of Nominating and Advisory Committee (2) Member of Compensation Committee (3) Member of Audit Committee * Denotes Ex-officio member
Thomas H. Anderson - Held the position of Manager-Company Services of The Andersons for several years and was named Senior Partner in 1987. When the Corporation was formed in 1987, he was named Chairman of the Board. He served as a General Partner of The Andersons and a member of its Managing Committee from 1947 through 1987.
Richard P. Anderson - He was Managing Partner of The Andersons from 1984 to 1987 when he was named Chief Executive Officer. Served as a General Partner of The Andersons and a member of its Managing Committee from 1947 through 1987 and has been a Director of the Corporation since its inception in 1987. He is also a director of Centerior Energy Corporation, First Mississippi Corp. and N-Viro, International Corp.
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 when he formed a private consulting business. He returned to the Company in 1990 in his present position.
Daniel T. Anderson - Began full-time employment with The Andersons in 1979. He has served in various positions in the Retail Group since 1984, including Store Manager and Retail Operations Manager. In 1990, he assumed the position of General Merchandise Manager for the Retail Group. He was elected a Director in 1990.
Donald E. Anderson - In charge of scientific research for the Partnership since 1980, he semi-retired in 1992. He served as a General Partner of The Andersons from 1947 through 1987 and has served the Corporation as a Director since its inception in 1987.
Michael J. Anderson - Began his employment with The Andersons in 1978. He has served in several capacities in the Grain Group and he held the position of Vice President and General Manager Grain Group from 1990 to February 1994 when he was named Vice President and General Manager of the Retail Group. He has served as a Director of the Corporation since 1988.
Richard M. Anderson - Began his employment with The Andersons in 1986 as Planning Analyst and was named the Manager of Technical Development in 1987. In 1990, he assumed his present position. He has served as a Director since 1988.
John F. Barrett - 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. He is a director of Cincinnati Bell, Inc. and Fifth Third Bancorp. He was elected a Director of the Corporation in 1992.
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 and 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 - 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 in 1990. He served as a General Partner of The Andersons from 1983 through 1987 and a member of its Managing Committee in 1986 and 1987. He has served as a Director of the Corporation since its inception in 1987.
Richard R. George - Began his employment with the Partnership in 1976 and has served as Controller since 1979.
Paul M. Kraus - General partner in the law firm of Marshall & Melhorn. He has been a Director of the Corporation since 1988.
Peter A. Machin - Began his employment with The Andersons in the Lawn Products Group in 1987 as Sales Manager of Professional Products. In 1988 he was promoted to Sales and Marketing Manager and assumed his present position in 1990.
Beverly J. McBride - Began her 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 - He has been a Director of the Corporation since 1988 and currently serves as a director of BancOne Corporation, Dow Jones & Company, Inc., Mercantile Stores Company, Inc., Milliken & Company, and Westinghouse Electric Corporation.
Donald M. Mennel - Retired Chairman of the Board and Chief Executive Officer of The Mennel Milling Company. He began a private law practice in 1986. Elected as a Director in 1990.
Larry D. Rigel - Began his employment with the Partnership in 1966. From 1987 to February 1994 was in charge of the Partnership's Retail operations and currently serves as Vice President Marketing for the Company.
Janet M. Schoen - A former school teacher, she is currently a full-time homemaker. She was elected a Director of the Corporation in 1990.
Gary L. Smith - Began his employment with the Partnership in 1980 and 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.
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 1994 $335,000 $202,500 $4,620 President and Chief 1993 308,333 150,000 4,497 Executive Officer 1992 286,666 60,000 4,300
Thomas H. Anderson 1994 226,667 125,000 4,620 Chairman of the Board 1993 206,669 90,000 4,497 1992 190,004 35,000 4,364
Joseph L. Braker 1994 224,071 150,000 4,620 Vice President and General 1993 194,634 70,000 4,497 Manager Agriculture Group 1992 181,408 30,000 4,364
Michael J. Anderson 1994 200,765 100,000 4,620 Vice President and General 1993 161,962 100,000 4,497 Manager Retail Group 1992 146,978 30,000 4,364
Larry Rigel 1994 171,981 25,000 4,620 Vice President Marketing 1993 162,558 15,000 4,497 1992 151,924 30,000 4,364
(a) Corporation's matching contributions to its 401(k) retirement plan.
Pension Plan
The Corporation has a Defined Benefit Pension Plan (the "Pension Plan") which covers substantially all permanent and regular part-time employees. The amounts listed in the table below 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 pension benefits are based on a single-life annuity and have been reduced for Social Security covered compensation. The compensation covered by the Pension Plan is equal to the employees' base pay, which in the Summary Compensation Table is the executive's salary, 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, which will also be adjusted for inflation in future years. Each of the named executives has seven years of credited service.
Average Approximate Annual Retirement Benefit Based Five-Year Upon the Indicated Years of Service Compensation 5 Years 10 Years 15 Years 25 Years $ 50,000 $ 3,142 $ 6,284 $ 9,427 $ 15,711 100,000 6,892 13,784 20,677 34,461 150,000 10,642 21,284 31,927 53,211 200,000 14,392 28,784 43,177 71,961 250,000 18,142 36,284 54,427 90,711
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 and Advisory Committee; and the Compensation Committee. The chairman of these committees receives a retainer of $3,000 provided they are not an employee of the Corporation, and members of the committees who are not employees of the Corporation receive $750 for each meeting attended.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee includes the following executive officers and directors: Michael J. Anderson, Richard M. Anderson, Richard P. Anderson (ex officio), Thomas H. Anderson (ex officio), Dale W. Fallat, Joseph L. Braker, Beverly J. McBride, Rene C. McPherson (chairman), and Janet M. Schoen. In addition, Charles E. Gallagher, Director of Personnel, is an ex officio member of the committee.
Certain Transactions - Alshire-Columbus:
The Partnership and certain of the directors and executive officers of the Corporation were limited partners in Alshire-Columbus Limited Partnership ("Alshire-Columbus"), an Ohio limited partnership, which owned the Partnership's Brice General Store in Columbus, Ohio. The store was leased to the Partnership by Alshire-Columbus at an annual base rental of $732,000.
The Partnership contributed the land, at its cost ($1,367,000), for its original limited partner interest. The other limited partners of Alshire- Columbus contributed $1,450,000, representing 35 limited partnership units. None of the directors and executive officers of the Corporation or their family members owned more than one limited partnership unit, except for Richard P. Anderson, who owned two units.
In the aggregate, 8 3/4 units were owned by directors and executive officers of the Corporation, and their family members owned an additional four units. The general partner of Alshire-Columbus experienced difficulties in refinancing the real property after the original seven year term of their note. During 1994, The Andersons obtained an independent appraisal of the property valued at $8.5 million and made an offer to purchase the property for that price. The initial lease term was scheduled to expire in 2000. The limited partners of Alshire-Columbus accepted the purchase offer from The Andersons. According to the partnership agreement, upon the sale of the real estate The Andersons received a preferential distribution from the proceeds of the sale equal to the original cost of the land contributed by The Andersons. The remaining proceeds from the sale, after payment of the debt and return of capital to limited partners, was distributed according to the partnership agreement which was 75% to the limited partners; 24% to The Andersons, as original limited partner; and 1% to the general partner. Each limited partner received approximately $33,400 per unit held from the proceeds of the sale.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) No Limited Partner beneficially owns as much as 5% of the Partnership's total capital. As of March 1, 1995, the descendants of Harold and Margaret Anderson, founders of the Partnership, beneficially held Partnership capital in the aggregate amount of $45,849,956, constituting 72% of the Partnership's total capital of $64,029,765 as of that date. All capital amounts as of March 1, 1995 are before the allocation of Partnership income for 1995. The Anderson family members also own a total of 80% of the Class A (non-voting) Shares and 78% of the outstanding Class B (voting) Shares of the Corporation.
(c) The Partnership knows of no arrangements which may at a subsequent date result in a change in control of the Partnership.
Item 13.
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 return 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 1994 totaled $70,394,855. 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 1994, the rental payments made by the Partnership to the Corporation, net of the reimbursement for management and maintenance of the building was $635,714, which is included in the total management fee referred to under "Management Agreement" above. See Note 2 to the Partnership's Consolidated Financial Statements.
Alshire-Columbus
See "Item 11. Executive Compensation - Compensation Committee Interlocks and Insider Participation - Certain Transactions - Alshire- Columbus."
PART IV
Item 14.
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, 1994, 1993 and 1992.......................... 15 Consolidated Balance Sheets - December 31, 1994 and 1993.... 16 Consolidated Statements of Cash Flows - years ended December 31, 1994, 1993 and 1992.......................... 17 Consolidated Statements of Changes in Partners' Capital - years ended December 31, 1994, 1993 and 1992............ 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, 1994, 1993 and 1992.................... 34
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.
3(b) The Andersons Partnership Agreement, dated as of January 1, 1994. (Incorporated by reference to the Partnership's Form 10-K dated December 31, 1993.)
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 Thirteenth Supplemental Indenture dated as of January 1, 1994, between The Andersons 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 Partnership's Form 10-K dated December 31, 1993.)
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. (Incorporated by Reference to the Partnership's Form 10-K dated December 31, 1993.)
23 Consent of Independent Auditors
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 Schedules" referred to in (d) below.
(d) Financial Statement Schedules:
The financial statement schedules listed in 14(a)(2) follow "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 23rd day of March, 1995.
THE ANDERSONS (Registrant)
By The Andersons Management Corp. (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 23rd day of March, 1995.
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 Director Donald E. Anderson Paul M. Kraus
/s/Michael J. Anderson Director Director Michael J. Anderson Rene C. McPherson
/s/Richard M. Anderson Director /s/Donald M. Mennel Director Richard M. Anderson Donald M. Mennel
/s/Thomas H. Anderson Director Director Thomas H. Anderson Janet M. Schoen
*Titles with The Andersons Management Corp.
No proxy statement of the Partnership is furnished to Limited Partners. Audited financial statements will be distributed to Limited Partners at a later date.
EXHIBIT INDEX THE ANDERSONS
Exhibit Number
3(a) Certificate of Limited Partnership filed by the Partnership January 9, 1995 with the Secretary of the State of Ohio.
23 Consent of Independent Auditors