-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BothIm9YVVIxT/vUWuer6iSnObyakLBt7NjbTxA2vxj5cKDAxbAuULuB1GBybhM1 WD3sCdKvhBxPmGV/i1W5zQ== 0000821026-97-000012.txt : 19971114 0000821026-97-000012.hdr.sgml : 19971114 ACCESSION NUMBER: 0000821026-97-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971112 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANDERSONS INC CENTRAL INDEX KEY: 0000821026 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-FARM PRODUCT RAW MATERIALS [5150] IRS NUMBER: 341562374 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-20557 FILM NUMBER: 97714247 BUSINESS ADDRESS: STREET 1: 1200 DUSSEL DRIVE CITY: MAUMEE STATE: OH ZIP: 43537 BUSINESS PHONE: 4198935050 FORMER COMPANY: FORMER CONFORMED NAME: ANDERSONS MANAGEMENT CORP DATE OF NAME CHANGE: 19931119 10-Q 1 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 September 30, 1997 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to _________ Commission file number 000-20557 THE ANDERSONS, INC. (Exact name of registrant as specified in its charter) OHIO 34-1562374 (State of incorporation (I.R.S. Employer Identification No.) or organization) 480 W. Dussel Drive, Maumee, Ohio 43537 (Address of principal executive offices) (Zip Code) (419) 893-5050 (Telephone Number) (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No __ The registrant had 7,939,492 Common shares outstanding, no par value, at November 1, 1997. THE ANDERSONS, INC. INDEX Page No. PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Condensed Consolidated Balance Sheets - September 30, 1997 and December 31, 1996 3 Condensed Consolidated Statements of Operations - Three months and nine months ended September 30, 1997 and 1996 6 Condensed Consolidated Statements of Cash Flows - Nine months ended September 30, 1997 and 1996 7 Notes to Condensed Consolidated Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II. OTHER INFORMATION Item 1. Legal Proceedings 13 Item 6. Exhibits and Reports on Form 8-K 14 Signatures 14 PART I. FINANCIAL INFORMATION Item 1. Financial Statements THE ANDERSONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)(IN THOUSANDS) September 30 December 31 1997 1996 Current assets: Cash and cash equivalents $ 3,946 $ 27,524 Accounts and notes receivable: Trade receivables - net 58,577 73,694 Margin deposits 327 327 ------------------------- 58,904 74,021 Inventories: Grain 61,586 70,762 Agricultural fertilizer and supplies 27,726 21,897 Merchandise 33,117 29,527 Lawn and corn cob products 11,869 17,633 Other 10,067 10,478 ------------------------- 144,365 150,297 Deferred income taxes 1,547 1,864 Prepaid expenses 2,441 3,929 ------------------------- Total current assets 211,203 257,635 Other assets: Notes receivable (net) and other assets 6,587 5,951 Investments in and advances to affiliates 1,111 1,340 ------------------------ 7,698 7,291 Property, plant and equipment: Land 11,292 11,261 Land improvements and leasehold improvements 25,196 24,431 Buildings and storage facilities 84,361 80,669 Machinery and equipment 102,957 99,871 Construction in progress 1,503 1,795 ------------------------- 225,309 218,027 Less allowances for depreciation and amortization 140,948 136,362 ------------------------- 84,361 81,665 ------------------------- $ 303,262 $ 346,591 ========================= See notes to condensed consolidated financial statements. THE ANDERSONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS - (continued) (UNAUDITED)(IN THOUSANDS) September 30 December 31 1997 1996 Current liabilities: Notes payable $ 49,700 $ - Accounts payable for grain 35,072 96,932 Other accounts payable 59,388 75,713 Accrued expenses 8,740 16,981 Current maturities of long-term debt 7,384 6,360 ---------------------------- Total current liabilities 160,284 195,986 Pension and postretirement benefits 2,878 2,804 Long-term debt: Note payable, 7.8%, payable $398 thousand quarterly, due 2004 13,702 14,250 Note payable under revolving credit line, variable rate (6.2% at September 30, 1997) 20,000 16,300 Notes payable, variable rate (6.7% at September 30, 1997), payable $336 quarterly beginning October 1997, due 2004 9,418 9,418 Other notes payable 968 1,036 Industrial development revenue bonds: 6.5%, sinking fund $900 thousand to $1 million payable annually, due 1999 2,900 2,900 Variable rate (5.7% at September 30, 1997), payable $882 thousand annually through 2004 5,470 6,351 Variable rate (4.6% at September 30, 1997), due 2025 3,100 3,100 Debenture bonds, 6.5% to 10%, due 1997 through 2007 18,064 21,030 Other bonds, 4% to 10% 485 543 -------------------------- 74,107 74,928 Less current maturities of long-term debt 7,384 6,360 -------------------------- 66,723 68,568 Deferred income taxes 5,243 5,371 Minority interest 614 613 THE ANDERSONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS - (continued) (UNAUDITED)(IN THOUSANDS) September 30 December 31 1997 1996 Shareholders' equity: Common stock (25,000 shares authorized, stated value $.01 per share, 8,430 shares issued) 84 84 Additional paid-in capital 66,659 66,659 Retained earnings 5,007 7,106 Treasury stock (471 and 70 shares at 9/30/97 and 12/31/96, respectively; at cost) (4,230) (600) ------------------------- 67,520 73,249 ------------------------- $303,262 $346,591 ========================= See notes to condensed consolidated financial statements. THE ANDERSONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)(IN THOUSANDS, EXCEPT PER SHARE DATA) Three Months Nine Months Ended September 30 Ended September 30 1997 1996 1997 1996 Grain sales and revenues $ 80,133 $ 135,328 $ 272,662 $ 490,386 Fertilizer, retail and other sales 79,778 91,261 322,507 336,742 Other income 2,018 1,062 3,715 2,465 ------------------------------------------- 161,929 227,651 598,884 829,593 Cost of grain sales 72,083 127,996 255,948 463,527 Cost of fertilizer, retail and other sales 59,049 68,546 241,939 253,245 ------------------------------------------- 131,132 196,542 497,887 716,772 ------------------------------------------- GROSS PROFIT 30,797 31,109 100,997 112,821 Operating, administrative and general expenses 31,337 31,526 96,842 98,372 Interest expense 1,905 2,592 6,318 11,754 ------------------------------------------- 33,242 34,118 103,160 110,126 ------------------------------------------- INCOME (LOSS) BEFORE INCOME TAXES (2,445) (3,009) (2,163) 2,695 Income tax expense (credit) (Note B) (916) (1,203) (811) 1,851 ------------------------------------------- NET INCOME (LOSS) $ (1,529) $ (1,806) $ (1,352) $ 844 =========================================== Per common share: Earnings (loss) (Note B) $ (0.19) $ (0.21) $ (0.16) $ 0.10 =========================================== Dividends paid $ (0.03) $ -- $ (0.09) $ -- =========================================== Weighted average common shares outstanding 8,124 8,430 8,232 8,430 =========================================== See notes to condensed consolidated financial statements. THE ANDERSONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)(IN THOUSANDS) Nine Months Ended September 30 1997 1996 Operating activities Net income (loss) $ (1,352) $ 844 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 7,485 7,311 Provision for losses on accounts and notes receivable 1,067 3,369 Deferred income tax 190 (1,410) Other (617) (400) Changes in operating assets and liabilities: Trade receivables 14,049 15,544 Inventories 5,932 138,988 Prepaid expenses and other assets 653 1,609 Accounts payable for grain (61,859) (64,294) Other accounts payable and accrued expenses (24,491) (27,578) ------------------------ Net cash provided by (used in) operating activities (58,943) 73,983 Investing activities Purchases of property, plant and equipment (10,084) (7,587) Proceeds from sale of property, plant and equipment 948 514 ------------------------ Net cash used in investing activities (9,136) (7,073) Financing activities Net increase (decrease) in short-term borrowings 49,700 (61,612) Proceeds from issuance of long-term debt 149,182 80,222 Payments of long-term debt (150,004) (86,275) Purchase of common stock for the treasury (4,053) - Proceeds from sale of treasury stock to employees participating in Employee Share Purchase Plan 423 - Dividends paid (747) - Payments to dissenting partners and for fractional shares in merger transaction - (64) ------------------------ Net cash provided by (used in) financing activities 44,501 (67,729) Decrease in cash and cash equivalents (23,578) (819) Cash and cash equivalents at beginning of period 27,524 5,052 ------------------------ Cash and cash equivalents at end of period $ 3,946 $ 4,233 ======================== Noncash financing activity Exchange of employee bonds for common shares $ (275) Exchange of fixed assets for investment in LLC $ 513 See notes to condensed consolidated financial statements. THE ANDERSONS, INC. 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 audited, consolidated financial statements and notes thereto included in The Andersons, Inc. annual report on Form 10-K for the year ended December 31, 1996. Note B - Prior to 1996, the majority of the Company's operations were conducted as a partnership and the income from those operations was included in the individual tax returns of its partners. Since January 2, 1996, the date that The Andersons (the "Partnership") merged into its corporate general partner, income from operations is taxed at the corporate level. In conjunction with the merger, the Company recorded the deferred tax assets and liabilities of the partnership that had not previously been recognized. The net excess of deferred tax liabilities over deferred tax assets ($812 thousand) was recorded in the first quarter of 1996 and included as a component of income tax expense. Note C - In February 1997, the Financial Accounting Standards Board ("FASB") issued Statement No. 128, Earnings per Share, which is required to be adopted on December 31, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements for calculating primary earnings per share, the dilutive effect of stock options will be excluded. This standard will have no impact on the Company's presentation of earnings per share. In addition, the FASB has issued Statement No. 131 (Disclosures about Segments of an Enterprise and Related Information). The new rules change the manner in which operating segments are defined and reported externally to be consistent with the basis on which they are reported and evaluated internally. The impact that this statement will have on the Company has not been fully determined. The new rules are effective for periods beginning after December 15, 1997. Note D - Significant Accounting Policy - Commodity and Interest Rate Contracts. For the purpose of hedging its market price risk exposure on grain owned and related forward grain purchase and sale contracts, the Company holds commodity contracts in the form of futures and options contracts for corn, soybeans and wheat. The Company accounts for all commodity contracts and the underlying grain inventories and forward grain contracts using a daily mark to the market method. Company policy limits the Company's unhedged grain position. Grain inventories in the Company's balance sheet are comprised of the current market value of these commodity contracts and the current market value of grain inventory and forward grain contracts. Gains and losses in the value of commodity contracts (whether due to changes in commodity prices or due to sale, maturity, or extinguishment of the commodity contract) and grain inventories and related forward grain contracts are included in Grain Sales and Merchandising Revenues in the statement of operations. The Company also periodically enters into interest rate contracts to manage interest rate risk. Income or expense associated with these interest rate contracts is recognized on the accrual basis over the life of the agreement as a component of interest expense, except in the case of interest rate caps where the cost of the contract is included in expense at the time of purchase. The fair market value of interest rate contracts is not recognized in the balance sheet. Item 2. Management's Discussion and Analysis of Financial Condition and Operations Results of Operations Comparison of the three months ended September 30, 1997 with the three months ended September 30, 1996: Sales and revenues for the three months ended September 30, totaled $162 million, a decrease of $66 million or 28.9% from the 1996 third quarter sales and revenues of $228 million. The Agriculture Group had a total decrease in sales and revenues of $63 million, with a $55 million decrease in grain sales and revenue. This decrease is due to a 14% decrease in bushels shipped and a 34% decrease in the average price of a bushel sold. The grain business began 1997 with less grain available for sale than in prior years because of a poor 1996 fall harvest in certain of the primary growing areas served by the Company. A good 1997 wheat crop in the Company's primary growing area and expectations for much improved corn and soybean crops in those same areas (as compared to the prior two harvests) should provide the Company significant bushels to handle in the fourth quarter of 1997. Wholesale fertilizer also had decreased sales and revenues of $6.1 million, or 23%, due primarily to a 22% decrease in volume. The retail farm centers experienced sales and revenue decreases of $1.8 million or 35.5%. The Retail Group experienced a 5.5% decrease in sales. All stores have been impacted by competition in their respective markets. The original store, located in Maumee, Ohio is undergoing a major renovation which may also have impacted sales. The Processing & Manufacturing Group had a $1.3 million or 7% decrease in sales. The processing business (lawn fertilizer and industrial products) had the largest sales decrease of $4.8 million or 39%. Of this decrease, $2.3 million represented combined 1996 sales and revenues of the Sorbents business that was sold in the fourth quarter of 1996 and four lawn fertilizer retail businesses that are no longer being operated by the Company. The remainder of the decrease resulted from lower volume in both businesses. The manufacturing division had a $3.1 million or 100% sales increase. Gross profit for the three months ended September 30, 1997 totaled $30.8 million, a decrease of $0.3 million or 1% from the 1996 third quarter gross profit of $31.1 million. The Agriculture Group contributed a gross profit increase of 2%, with the grain division up 9.8%, wholesale fertilizer up 1% and retail farm centers down 39%. Gross profit on sales in the Retail Group was down $0.9 million or 7.6%. The Processing and Manufacturing Group also experienced a decrease of $0.6 million or 8.6%. The processing division posted a $1.2 million or 28% decrease, the manufacturing division gross profit was up $0.3 million or 28% and the ventures division gross profit was up $0.3 million or 18%. However, when excluding the 1996 gross profit related to the businesses no longer operated (as described previously), the Processing and Manufacturing Group showed an increase of less than $0.1 million or 1%. Operating, administrative and general expenses for the third quarter of 1997 totaled $31.3 million, a decrease of $0.2 million or 0.6% from the third quarter of 1996. The decrease relates primarily to 1996 expenses of the businesses not in operation in 1997. Interest expense for the third quarter of 1997 was $1.9 million, a $0.7 million decrease from the third quarter of 1996. This interest expense decrease was due to a $36 million or 52% decrease in average short-term borrowings from the third quarter of 1996. Short-term borrowings are used to fund working capital needs. A $20 million or 30% reduction in average grain inventory for the same period, resulting from lower bushel volume and market prices, was the primary cause of the reduction in borrowings. The loss before income tax credit of $2.4 million, is $0.6 million or 19% better than the loss in the third quarter of 1996. The effective income tax rate for the third quarter of 1997 is 37.5% as compared to the 1996 third quarter effective rate of 40%. The net loss of $1.5 million represents improved results from the $1.8 million net loss in the 1996 third quarter. Loss per share of $0.19 compares favorably to the $0.21 loss per share in the third quarter of 1996. Comparison of the nine months ended September 30, 1997 with the nine months ended September 30, 1996: Sales and revenues for the nine months ended September 30, 1997 totaled $599 million, a decrease of $231 million or 27.8% from the 1996 first nine months sales and revenue of $830 million. The Agriculture Group had a total decrease of $226 million, with most of it due to decreased grain sales and revenue. The significant decrease in grain sales and revenues is due to a 25% decrease in bushels shipped and a 25% decrease in the average price of a bushel sold. Merchandising revenues were lower than the first nine months of 1996 by $3.5 million or 30%. The grain business began 1997 with less grain available for sale than in prior years because of a poor 1996 fall harvest in certain of the primary growing areas served by the Company. A good 1997 wheat crop in the Company's primary growing area and expectations for much improved corn and soybean crops in those same areas (as compared to the prior two harvests) should provide the Company significant bushels to handle in the fourth quarter of 1997. Wholesale fertilizer had a sales and revenues decrease of $8.8 million, or 8.8%, which was due primarily to a 8% decrease in volume, while the retail farm center business experienced a sales increase of $1.2 million or 5%. The Retail Group experienced a 2% decrease in sales from the first nine months of 1996. All stores have been impacted by competition in their respective markets. The original store, located in Maumee, Ohio is undergoing a major renovation which may also have impacted sales. The Processing & Manufacturing Group had a $3.8 million or 4% decrease in sales. The processing business (lawn fertilizer and industrial products) had the largest sales decrease of $11.3 million or 18%. Of this decrease, $7.4 million represents 1996 sales and revenues of businesses that the Company is no longer operating. The remainder of the decrease results primarily from lower volume. The manufacturing division had a $7.2 million or 60% increase in sales for the first nine months of the year due to several railcar sales in the period. Gross profit for the nine months ended September 30, 1997 totaled $101 million, a decrease of $11.8 million or 10% from the 1996 first nine months gross profit of $112.8 million. The Agriculture Group's gross profit decreased $10.7 million, with the grain division showing a decrease of $10.1 million, wholesale fertilizer division a decrease of $1.4 million and retail farm centers an increase of $0.8 million. Gross profit on sales in the Retail Group was down $1.4 million or 4%. The Processing and Manufacturing Group had a $0.9 million decrease in gross profit with the processing division posting a $3 million or 14% decrease, the manufacturing division gross profit up $1.3 million or 34% and the ventures division up $0.8 million or 17%. However, when excluding the 1996 gross profit related to businesses that the Company is no longer operating, the Processing and Manufacturing Group showed an increase of $1.3 million or 5%. Operating, administrative and general expenses for the first nine months of 1997 totaled $96.8 million, a decrease of $1.5 million or 2% from the first nine months of 1996. The decrease relates primarily to 1996 expenses of the businesses not in operation in 1997. Interest expense for the first nine months of 1997 was $6.3 million, a $5.4 million decrease from the first nine months of 1996. This interest expense decrease was due to an $86 million or 66% decrease in average short- term borrowings from the first nine months of 1996. Short-term borrowings are used to fund working capital needs. A $75 million or 55% decrease in average grain inventory for the same period resulting from lower bushel volume and market prices caused the reduction in borrowings. The loss before income tax credit was $2.2 million a $4.9 million decrease from the first nine months income of 1996. The effective income tax rate for the first nine months of 1997 is 37.5% as compared to the 1996 first nine months effective rate of 68.7%. The effective income tax rate of 37.5% for the first nine months of 1997 is reflective of the Company's estimated income tax rate for the year. The 1996 rate includes $0.8 million to establish deferred taxes on the assets of the former partnership at the January 2, 1996 merger and after removing that amount, the 1996 effective rate was 38.6%. Net loss of $1.4 million represents a $2.2 million decrease from the 1996 first nine months net income. The loss per share of $0.16 is a $0.26 decrease from the first nine months of 1996 earnings per share of $0.10. Liquidity and Capital Resources The Company's primary use of cash includes funding working capital requirements, making payments on debt and other obligations, investing in capital additions, acquisitions and improvements, providing a return to its owners through dividends and funding repurchases of its common shares. The Company believes that cash from operations and available financing sources will be sufficient to meet anticipated cash requirements. In the first nine months of 1997, the Company's operations used $59 million. Working capital decreased $10.7 million in this same time period. The Company had $4 million in cash and cash equivalents at September 30, 1997 and has short-term lines of credit of $250 million available to finance working capital, primarily inventories and accounts receivable. At September 30, 1997 $49.7 million was borrowed on the available lines. The nature of the Company's commodity businesses requires it to maintain these credit lines to finance cash requirements that can fluctuate greatly due to seasonal inventory levels and market volatility. Typically the Company's highest borrowings occur in the spring due to high inventory levels in the wholesale fertilizer and retail businesses, credit sales in the wholesale fertilizer and lawn fertilizer businesses and a customary reduction in the liability for grain due to the cash needs of grain producers and market strategies. A quarterly cash dividend of $0.03 per common share was paid in each of the first three quarters of 1997. A cash dividend of $0.03 per common share was declared for shareholders of record on October 1, 1997 and was paid on October 21, 1997. No cash dividends were paid in 1996, but the final payment of $64 thousand to former partners electing not to participate in the merger and for fractional shares, was paid in the first quarter of 1996. The Company made income tax payments of $4 million in the first nine months of 1997 and expects to make no additional payments in 1997. Also in the first half of 1997, the Company has purchased 450 thousand shares of its common stock for the treasury and reissued 49 thousand shares to its employees as part of the Employee Share Purchase Plan. The Company has spent $10.1 million to date on capital additions and improvements. Total capital expenditures for 1997 are expected to approximate $16 million. They include $4 million for renovations to retail stores and $4.5 million for plant upgrades, expansion and the purchase of the assets of Blondes Farm Supply, Inc., located in Litchfield and North Adams, Michigan. Blondes Farm Supply, Inc. is a retail farm center business that the Company's agriculture group has leased for several years . In addition, the Company plans approximately $1 million for plant improvements and expansion in the processing and manufacturing group. Funding for these expenditures is expected to come from cash generated from operations or additional long-term debt. Capital expenditures can be curtailed if cash generated from operations is less than expected. Certain of the Company's long-term debt is secured by first mortgages on various facilities. In addition, some of the long-term borrowings include provisions that impose minimum levels of working capital and equity, limitations on additional debt and require the Company to be substantially hedged in its grain transactions. The Company's liquidity is enhanced by the fact that grain inventories are readily marketable. In the opinion of management, the Company's liquidity is adequate to meet short-term and long- term needs. Forward Looking Statements The preceding Management's Discussion and Analysis contain various "forward-looking statements" that reflect the Company's current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties, including but not limited to those identified below, which could cause actual results to differ materially from historical results or those anticipated. The words "believe," "expect," "anticipate" and similar expressions identify forward- looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The following factors could cause actual results to differ materially from historical results or those anticipated; weather, supply and demand of commodities including grains, fertilizer and other basic raw materials, market prices for grains and the potential for increased margin requirements, regulatory agency review of grain contracts and related contract default litigation, competition, economic conditions and competition in its retail stores' markets, interest rates and income taxes. PART II. OTHER INFORMATION Item 1. Legal Proceedings The Company, like others in the agriculture industry, utilizes different types of contracts with producers (including contracts commonly referred to as "Hedged To-Arrive" or "HTA" contracts) to purchase grain. Some grain producers have defaulted or threatened default on certain of these contracts, arguing that their contracts are unenforceable. The Company believes that this is due, in large part, to unprecedented high grain prices experienced in 1996 and in come cases, crop shortages due to poor weather in some of the primary growing areas served by the Company. The Company is currently engaged in litigation and/or arbitration with several defaulting producers, including one purported class action filed on May 16, 1996 in the United States District Court for the Northern District of Illinois, Eastern Division, Case no. 96C2936, Harter, et. al., v. Iowa Grain Company and The Andersons Investment Services Corp., d.b.a. The Andersons, Inc., wherein enforceability of the delivery obligation under certain grain contracts has been raised as an issue. The Harter lawsuit seeks declaratory and injunctive relief and compensatory, exemplary and punitive damages of an unspecified amount. The Court, in Harter, ordered arbitration by the National Grain and Feed Association and dismissed Iowa Grain Company as a defendant. The Company currently has several arbitration cases before the National Grain and Feed Association. The Company also has received several favorable rulings in the arbitration proceedings, including a recent favorable ruling in the Harter arbitration. The Company believes its grain contracts are enforceable obligations and intends to enforce them. Although no assurance can be given that the current litigation and arbitration will not result in liability or loss, the Company continues to believe that it has valid claims and defenses in the lawsuits and proceedings in which it is involved. Pursuant to subpoenas duces tecum served by the Commodities Futures Trading Commission (the "CFTC"), the Company has produced certain records, including names and phone numbers of certain customers, and the depositions of certain employees and former employees have been taken in the matter of "Certain Transactions and Practices Among Grain Elevators, et. al., Involving Futures Contracts." In light of the Company's current and prior use of Hedged To-Arrive contracts, related industry-wide litigation, and current conditions of the industry as a whole, there can be no assurance that other litigation will not be brought, that a class will not be certified or that other CFTC proceedings will not be instituted. There currently is no reasonable basis to predict the amount of future liability or loss, if any, that may arise from such litigation or CFTC proceedings. 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 September 30, 1997. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE ANDERSONS, INC. (Registrant) Date: November 12, 1997 By /s/Richard P. Anderson Richard P. Anderson Chairman of the Board and Chief Executive Officer Date: November 12, 1997 By /s/Richard R. George Richard R. George Vice President and Controller (Principal Accounting Officer) EX-27 2
5 1000 9-MOS DEC-31-1997 SEP-30-1997 3946 0 62140 3563 144365 211203 225309 140948 303262 160284 30019 0 0 84 67436 303262 595169 3715 100997 100997 96842 0 6318 (2163) (811) (1352) 0 0 0 (1352) (.16) (.16)
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