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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1993
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
Commission file number 33-16936
THE ANDERSONS MANAGEMENT CORP.
(Exact name of registrant as specified in its charter)
OHIO 34-1562374
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
480 W. Dussel Dr., Maumee, Ohio 43537
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (419) 893-5050
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
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
Because of ownership and transferability restrictions of the voting
Class B Common Shares, there is no market for these securities.
As of March 1, 1994 there were 4629 Class A Common Shares no par value
and 4539 Class B Common Shares no par value of the Registrant, issued and
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None
PART I
Item 1. Business
The Andersons Management Corp. (The "Corporation") was formed in
August 1987, principally for the purpose of providing management services
to The Andersons, a partnership (the "Partnership") and to act as the
Partnership's sole General Partner. The Corporation began operations in
1988 when it completed an offering of its Class A and Class B Common
Shares, transferred $500,000 of offering proceeds to the Partnership as its
capital investment, and became the sole General Partner of the Partnership.
Ownership of the Corporation's Class A and Class B Common Shares is
restricted to limited partners of The Andersons.
The Corporation provides all management services to the Partnership
pursuant to a Management Agreement entered into between the Partnership and
the Corporation. 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. 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.
Business and Properties of the Partnership
The Partnership 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 supplies
such as fertilizers, seeds and farm supplies; the operation of retail
general stores; the production, distribution and marketing of lawn care
products and corncob products and repairing and leasing of rail cars.
For more complete information as to the Partnership's business and
properties, and other information regarding the Partnership's operations,
reference is made to the Partnership's Form 10-K for the year ended
December 31, 1993 (the "Partnership Form 10-K"), which is filed as an
exhibit hereto through incorporation by reference.
Item 2. Properties
The Corporation leases an office building located in Maumee, Ohio
under a net lease expiring in 2000. The Corporation subleases
approximately 80% of the building to the Partnership. See "Item 13.
Certain Relationships and Related Transactions."
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
(a) Because of ownership and transferability restrictions, there is no
market for the Class A and Class B Common Shares.
(b) As of March 1, 1994, there were 180 holders of Class A Common Shares
and 177 holders of Class B Common Shares.
(c) The Corporation does not intend to pay cash dividends in the
foreseeable future.
Item 6. Selected Financial Data
Year Ended December 31
1993 1992 1991 1990 1989
Management Fees $63,107,331 $57,388,268 $55,357,599 $51,581,824 $46,575,914
Net income 146,399 9,083 24,680 46,473 3,586
Net income
per Class A Share 31.66 1.96 5.38 9.91 .75
Weighted average number
of Class A Common
Shares outstanding 4,624 4,633 4,591 4,691 4,760
As of December 31
1993 1992 1991 1990 1989
Total assets $11,432,203 $ 8,841,177 $ 8,579,945 $ 7,783,120 $ 7,185,424
Shareholders'
equity 1,606,724 1,472,881 1,444,973 1,448,127 1,424,891
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
The Corporation had cash and cash equivalents and short-term
investments of approximately $1.3 million at December 31, 1993 and 1992.
The largest component of the Corporation's working capital was a receivable
from the Partnership. This receivable represents the costs incurred by the
Corporation in providing management and labor services to the Partnership
but not yet paid by the Corporation and therefore not yet collected from
the Partnership. The Corporation has no short-term or long-term debt.
During 1993, the Corporation offered Class A and Class B Common Shares and
received $11,141 under that offering. Class A and Class B Common Shares
redeemed during 1993 totalled $23,697. Management believes, given the
relationship between the Corporation and the Partnership whereby the
Corporation is reimbursed by the Partnership for its cost in providing
management and labor services to the Partnership, and given the
Corporation's cash and cash equivalents and short-term investment of $1.3
million, that the Corporation's liquidity is adequate to meet both
short-term and long-term needs.
Results of Operations
Years ended December 31, 1993 and 1992:
Net income in 1993 was $146,399, or $31.66 per Class A Common Share,
compared to $9,083, or $1.96 per share in 1992. Income earned by the
Corporation on its investment in the Partnership was up $51,398 in 1993 and
the management fee earned by the Corporation based on the Partnership's
return on equity and rent and other reimbursable expenses was up $175,185.
These increases are a result of the improved 1993 operating results of the
Partnership and an increase in reimbursable expenses. Federal income tax
expense was up due to the increase in income.
During 1993 the Corporation adopted Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions." The Corporation 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
the net periodic postretirement benefit cost over a period of approximately
20 years. The effect of adopting the new rules increased the 1993 net
periodic postretiement benefit cost by approximately $850,000 and is
expected to increase future postretirement benefit costs by a like amount.
This cost was included in the management fee charged to the Partnership in
1993 and, therefore, had no impact on the operating results of the
Corporation. Also during 1993, as a result of lower prevailing interest
rates, the Corporation decreased the discount rate used to determine its
projected benefit obligation for its pension plan and for its postretirment
health care benefits. The change in the discount rate, from 8% to 7.5%, is
expected to increase these benefit costs in future years by approximately
$365,000. Because the Corporation charges all employee benefit costs to
the Partnership as part of the management fee, the change in the discount
rate will not impact the future operating results of the Corporation.
Years ended December 31, 1992 and 1991:
Net income in 1992 was $9,083, or $1.96 per Class A Common Share,
compared to $24,680, or $5.38 per share in 1991. Income earned by the
Corporation on its investment in the Partnership was up $59,498 in 1992 and
the management fee earned by the Corporation based on the Partnership's
return on equity and rent and other reimbursable expenses was also up, both
due to the improved 1992 operating results of the Partnership. Interest
earned and other income decreased by $132,549, due to a 50% decrease in
rental income and due to lower interest rates. The rental income decrease
was a result of lower occupancy of outside tenants in the office building
leased by the Corporation to the Partnership and to outside tenants.
Item 8. Financial Statements and Supplementary Data
Report of Independent Auditors
Shareholders
The Andersons Management Corp.
We have audited the accompanying balance sheets of The Andersons Management
Corp. as of December 31, 1993 and 1992, and the related statements of
income, cash flows, and changes in shareholders' equity for each of the
three years in the period ended December 31, 1993. Our audits also included
the financial statement schedules listed in the index at Item 14(a). These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
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 financial statements referred to above present fairly,
in all material respects, the financial position of The Andersons
Management Corp. at December 31, 1993 and 1992, and the results of its
operations and its cash flows for each of the three years in the period
ended December 31, 1993, in conformity with generally accepted accounting
principles. Also in our opinion, the related financial statement
schedules, when considered in relation to the basic financial statements
taken as a whole, present fairly in all material respects the information
set forth therein.
As discussed in Note 3 to the financial statements, in 1993 the Corporation
changed its method of accounting for postretirement benefits.
/s/Ernst & Young
ERNST & YOUNG
Toledo, Ohio
February 7, 1994
The Andersons Management Corp.
Statements of Income
Year ended December 31
1993 1992 1991
Management fees (Note 2) $63,107,331 $57,388,268 $55,357,599
Equity in income of The Andersons 145,526 94,128 34,630
Interest earned and other income 175,925 175,947 308,496
63,428,782 57,658,343 55,700,725
Costs and expenses:
Salaries, wages and benefits 62,326,184 56,782,306 54,833,991
Rent expense 731,209 726,028 715,777
General expenses 153,590 139,926 124,377
63,210,983 57,648,260 55,674,145
Income before income taxes 217,799 10,083 26,580
Federal income taxes:
Current 68,500 3,800 3,700
Deferred (credit) 2,900 (2,800) (1,800)
71,400 1,000 1,900
Net income $ 146,399 $ 9,083 $ 24,680
Net income per weighted average
Class A Common Share $31.66 $1.96 $5.38
Weighted average number of
Class A shares outstanding 4,624 4,633 4,591
See accompanying notes.
The Andersons Management Corp.
Balance Sheets
December 31
1993 1992
Assets
Current assets:
Cash and cash equivalents $ 795,379 $ 223,567
Short-term investments at cost 505,313 1,041,147
Receivable from The Andersons (Note 2) 4,173,287 2,669,529
Note and accounts receivable 3,026 51,867
Prepaid expenses (Note 3) 2,723,668 2,467,869
Total current assets 8,200,673 6,453,979
Receivable from The Andersons (Note 2) 2,413,041 1,756,451
Investment in The Andersons (Note 2) 761,839 622,659
Other 56,650 8,088
$11,432,203 $ 8,841,177
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 1,149,232 $ 1,526,941
Accrued compensation and benefits 6,263,206 4,084,904
Total current liabilities 7,412,438 5,611,845
Postretirement benefits (Note 3) 2,413,041 1,756,451
Shareholders' equity:
Common Shares, without par value (Note 4):
Class A non-voting:
Authorized--25,000 shares
Issued-- 4,855 shares at stated value 1,456,405 1,456,405
Class B voting:
Authorized--25,000 shares
Issued--4,681 shares at stated value 4,681 4,681
Retained earnings 219,090 72,691
1,680,176 1,533,777
Less common shares in treasury,
at cost--(242 and 202 Class A
shares and 147 and 325 Class B
shares in 1993 and 1992, respectively) (73,452) (60,896)
1,606,724 1,472,881
$11,432,203 $ 8,841,177
See accompanying notes.
The Andersons Management Corp.
Statements of Cash Flows
Year ended December 31
1993 1992 1991
Operating activities
Net income $ 146,399 $ 9,083 $ 24,680
Adjustments to reconcile net
income to net cash provided by
(used in) operating activities:
Amortization 264 11,145 11,145
Provision for deferred income
tax (credits) 2,900 (2,800) (1,800)
Equity in earnings of The
Andersons in excess of cash
received (Note 2) (139,180) (91,337) 15,131
Changes in operating assets
and liabilities:
Note and accounts
receivable 45,941 52,527 9,780
Receivable from The
Andersons (Note 2) (2,160,348) 732,588 (616,754)
Prepaid and other assets (304,625) (841,184) (308,009)
Accounts payable and
accrued expenses 2,457,183 233,324 799,979
Net cash provided by (used in)
operating activities 48,534 103,346 (65,848)
Investing activities
Sales and maturities of
short-term investments 1,041,147 - -
Purchases of short-term
investments (505,313) (14,116) (26,661)
Net cash provided by (used in)
investing activities 535,834 (14,116) (26,661)
Financing activities
Sale of Common Shares from
treasury 11,141 46,671 5,369
Purchase of Common Shares
for treasury (23,697) (27,846) (33,203)
Net cash provided by (used in)
financing activities (12,556) 18,825 (27,834)
Increase (decrease) in cash and
cash equivalents 571,812 108,055 (120,343)
Cash and cash equivalents at
beginning of year 223,567 115,512 235,855
Cash and cash equivalents
at end of year $ 795,379 $ 223,567 $ 115,512
See accompanying notes.
The Andersons Management Corp.
Statements of Changes in Shareholders' Equity
Common Shares Retained Treasury
Class A Class B Earnings Shares
Balances at December 31, 1990 $1,456,405 $4,681 $ 38,928 $(51,887)
Sale of 17 Class A and 119
Class B shares from treasury 5,369
Purchase of 107 Class A and
124 Class B shares for
treasury (33,203)
Net income for the year 24,680
Balances at December 31, 1991 1,456,405 4,681 63,608 (79,721)
Sale of 150 Class A and 171
Class B shares from treasury 46,671
Purchase of 90 Class A and 54
Class B shares for treasury (27,846)
Net income for the year 9,083
Balances at December 31, 1992 1,456,405 4,681 72,691 (60,896)
Sale of 35 Class A and 251
Class B shares from treasury 11,141
Purchase of 75 Class A and 73
Class B shares for treasury (23,697)
Net income for the year 146,399
Balances at December 31, 1993 $1,456,405 $4,681 $219,090 $(73,452)
See accompanying notes.
The Andersons Management Corp.
Notes to Financial Statements
December 31, 1993
1. Significant Accounting Policies
Cash Equivalents: The Corporation considers all highly liquid debt
instruments purchased with a maturity of three months or less to be cash
equivalents.
Income Taxes: Effective January 1, 1993, the Corporation changed its
method of accounting for income taxes from the deferred method to the
liability method required by Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes." The impact of this change was not
significant.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting and income tax purposes. Temporary differences relating to costs
and expenses incurred on behalf of the Partnership are passed on to the
Partnership through offsetting differences in the recognition of management
fees by the Corporation. Deferred tax assets of the Corporation relate
primarily to temporary differences associated with the Corporations' share
of Partnership net income and amounted to $17,000 and $19,900 at December
31, 1993 and 1992, respectively.
Taxes paid during 1993 and 1991 amounted to $5,000 and $31,000,
respectively, and tax refunds amounted to $5,900 in 1992.
Net Income Per Share of Common Stock: Net income per share of Common Stock
is computed based on the weighted average number of Class A Common Shares
outstanding during the year. See Note 4.
Reclassifications: Certain amounts in the 1992 financial statements have
been reclassified to conform with the 1993 presentation. These
reclassifications had no effect on net income.
2. Investment in The Andersons
The Corporation is the sole general partner of The Andersons (the
Partnership). As sole general partner, the Corporation provides all
management and labor services required by the Partnership in its
operations. In exchange for providing management 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'
invested capital of the Partnership to cover the Corporation's general
overhead and to provide an element of profit to the Corporation.
The Corporation leases an office building under a lease that commenced on
May 1, 1990. The Corporation is required to pay annual lease payments of
$731,209 through 2000. The Corporation charges the Partnership rent for
the space utilized in its operations, which amounted to $529,982, $516,344
and $498,699 in 1993, 1992 and 1991, respectively.
The Partnership generally pays the Corporation for salaries and employee
benefits as those costs are paid by the Corporation. Amounts due from the
Partnership relating to postretirement benefits that will not be received
within one year have been classified as a noncurrent asset.
The components of the management fee and rent charged by the Corporation to
the Partnership consisted of the following:
Year ended December 31
1993 1992 1991
Costs and expenses:
Salaries and wages $47,706,731 $43,356,247 $41,103,580
Employee benefits 14,619,453 13,426,059 13,721,230
Rent for office space and
other reimbursable expenses 641,491 516,344 498,699
Achieved level of return of
the Partnership 139,656 89,618 34,090
Total management fees $63,107,331 $57,388,268 $55,357,599
3. Employee Benefit Plans
The Corporation sponsors several employee benefit programs which include the
following: Defined Benefit Pension Plan, Retirement Savings Investment Plan,
Cash Profit Sharing Plan, Management Performance Program and health insurance
benefits.
Substantially all permanent employees are covered by the Corporation's Defined
Benefit Pension Plan. The benefits are based on the employee's highest five
consecutive years of compensation during their last ten years of service. The
Corporation's policy is to pay into trusteed funds each year an amount equal
to the annual pension expense calculated under the Entry Age Normal method.
The following table sets forth the plan's funded status and amounts recognized
in the Corporation's balance sheets as of December 31, 1993 and 1992.
1993 1992
Accumulated benefit obligation, including
vested benefits of $4,815,512 in 1993
and $3,536,273 in 1992 $5,159,779 $3,852,363
Projected benefit obligation for service
rendered to date $ 8,222,470 $ 7,454,556
Plan assets at fair value 6,568,985 5,664,926
Projected benefit obligation in excess
of plan assets 1,653,485 1,789,630
Unrecognized net asset at adoption of
FAS 87, net of amortization 243,817 294,296
Unrecognized net gain (loss) 530,128 (158,736)
Prior service cost (147,663) (168,739)
Net pension liability recognized in
balance sheet (includes current portion
of $645,966 in 1993) $ 2,279,767 $ 1,756,451
Net periodic pension cost includes the following components:
Year ended December 31
1993 1992 1991
Service cost - benefits earned
during the period $ 1,135,948 $ 1,088,099 $ 1,020,119
Interest cost on projected
benefit obligation 571,278 461,896 362,838
Return on plan assets (493,623) (331,498) (578,665)
Net amortization and deferral 10,420 (32,317) 326,270
Net periodic pension cost $ 1,224,023 $ 1,186,180 $ 1,130,562
The weighted average discount rate and rate of increase in future compensation
levels used in determining the actuarial present value of the projected
benefit obligation were 7.5% and 4%, respectively, for 1993 and 8% and 5.5%,
respectively, for 1992. The weighted average long-term rate of return on plan
assets used in determining the expected return on plan assets included in net
periodic pension cost was 8% for 1993, 1992 and 1991. Substantially all of
the plan assets are invested in a family of mutual funds at December 31, 1993
and in equity securities and United States Government obligations at December
31, 1992.
Under the Retirement Savings Investment Plan (RSIP) eligible participating
employees may elect to contribute specified amounts up to the lesser of $8,994
or 15% (10% in 1992) of their gross pay on a tax-deferred basis to a trust for
investment in a family of mutual funds. The Corporation contributes an amount
equal to 50% of the participant's contributions, but not in excess of 3% of
the participant's annual gross pay. Participants are fully vested in their
contributions to the RSIP. Participants hired before January 1, 1993 vest
immediately in the Corporation's matching contributions and participants hired
after December 31, 1992 vest ratably over five years. The matching
contributions to the RSIP amounted to $761,536, $682,099 and $661,895 in 1993,
1992 and 1991, respectively.
Substantially all permanent employees are included in the Cash Profit Sharing
Plan. The Plan provides for participants to receive certain percentages of
their pay as various threshold levels of return on partnership capital of the
Partnership are achieved. The Corporation also has a Management Performance
Program for certain levels of management. Participants in the Management
Performance Program are not eligible to participate in the Cash Profit Sharing
Plan. The expense for profit sharing/management performance programs was
$2,050,273, $1,331,260 and $488,488 for 1993, 1992 and 1991, respectively.
The Corporation currently provides certain health insurance benefits to its
employees, including retired employees. The Corporation has reserved the
right in most circumstances to modify the benefits provided and in recent
years has in fact made changes. Further changes were implemented in 1993 that
will effect the benefits provided to future retirees. These changes include
the minimum retirement age, years of service and a sharing in the cost of
providing these benefits. In addition, the Medicare Part B reimbursement
currently paid by the Corporation for retirees is being phased out over a
five-year period.
Effective January 1, 1993, the Corporation adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions." This statement requires that the cost of
providing postretirement health care benefits be accrued 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 the
net periodic postretirement benefit cost over a period of approximately 20
years. The effect of adopting the new rules increased 1993 net periodic
postretirement benefit cost by approximately $850,000 to $1,255,693.
Postretirement benefit costs for 1992 and 1991, which were recorded on a cash
basis, have not been restated. These costs amounted to approximately $404,000
for 1992 and $471,000 for 1991. As all employee benefit costs are charged to
the Partnership as described in Note 2, the change in accounting for
postretirement benefit costs had no effect on the Corporation's net income.
The Corporation's postretirement benefits are not funded. The status of the
plan as of January 1 and December 31, 1993 is as follows:
December 31, January 1,
1993 1993
Accumulated postretirement benefit obligation:
Retirees $ 5,534,885 $ 5,311,584
Fully eligible active plan participants 752,975 619,988
Other active participants 3,065,722 2,480,644
9,353,582 8,412,216
Unrecognized net transition obligation (7,991,605) (8,412,216)
Unrecognized net loss (582,737) -
Accrued postretirement benefit cost $ 779,240 $ -
Net periodic postretirement benefit cost for 1993 includes the following
components:
Service cost $ 181,457
Interest cost 653,625
Amortization of transition obligation 420,611
Net periodic postretirement benefit costs $ 1,255,693
The weighted average discount rate used in determining the 1993 postretirement
benefit cost and the accumulated postretirement benefit obligation at January
1, 1993 was 8%. The weighted average discount rate used in determining the
accumulated postretirement benefit obligation at December 31, 1993 was 7.5%.
The assumed health care cost trend rate used to measure the expected cost of
benefits covered by the plan was 12% in 1993, declining to 5% through the year
2000 and remaining at that level thereafter. A 1% increase in the assumed
health care cost trend rate would increase the annual postretirement benefit
cost by approximately $150,000 and the accumulated postretirement benefit
obligation as of December 31, 1993 by approximately $1,515,000.
To partially fund self-insured health care and other employee benefits, the
Corporation makes payments to a trust. Assets of the trust amounted to
$2,710,395 and $2,467,869 at December 31, 1993 and 1992, respectively, and
such amounts are included in prepaid expenses.
4. Description of Common Shares
Common shares of the Corporation are held by limited partners of The
Andersons. The holders of Class A shares are entitled to dividends, if
declared, and to any surplus, earned or otherwise, of the Corporation upon
liquidation or dissolution. The holders of Class B shares have sole voting
power, but are not entitled to share in any dividends or surplus of the
Corporation.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The Corporation's Board of Directors has overall responsibility for the
management of the Corporation's affairs, including its responsibilities as
General Partner of the Partnership. Therefore, the Board directs the
management and operations of the Partnership, through the Corporation, as
General Partner, and pursuant to the Management Agreement. Day-to-day
management decisions have been delegated by the Board to the Corporation's
Chief Executive Officer and various committees authorized by the Board.
Under the Corporation's Code of Regulations, the Board of Directors consists
of not less than 7, nor more than 21, directors. Directors serve three year
terms on a staggered basis so that no more than one-third of the entire Board
is subject to election each year. Holders of Class B Shares have the
opportunity to vote for the election of directors at annual meetings of the
Corporation's shareholders, which are scheduled no later than May 31 each
year. The Corporation's officers are appointed by the Board of Directors.
The executive officers and directors of the Corporation are:
Name Age Position
Thomas H. Anderson 70 Chairman of the Board (1) (2)
Richard P. Anderson 64 Director; President and Chief Executive
Officer
Christopher J. Anderson 39 Vice President Business Development
Group (3)
Daniel T. Anderson 38 Director; General Merchandise Manager
Retail Group (3)
Donald E. Anderson 67 Director; Science Advisor
Michael J. Anderson 42 Director; Vice President and General
Manager Retail Group (2)
Richard M. Anderson 37 Director; Vice President and General
Manager Industrial Products Group (2)
John F. Barrett 44 Director
Joseph L. Braker 43 Vice President and General Manager Ag
Group (3)
Dale W. Fallat 49 Director; Vice President Corporate
Services
Richard R. George 44 Corporate Controller and Principal
Accounting Officer (1)
Paul M. Kraus 61 Director (2)
Peter A. Machin 46 Vice President and General Manager Lawn
Products Group (1)
Beverly J. McBride 52 General Counsel and Corporate
Secretary (2)
Rene C. McPherson 69 Director (1) (2)
Donald M. Mennel 75 Director (1) (3)
Larry D. Rigel 52 Vice President Marketing (1)
Janet M. Schoen 34 Director (2)
Gary L. Smith 48 Corporate Treasurer (3)
(1) Member of Nominating and Advisory Committee
(2) Member of Compensation Committee
(3) Member of Audit Committee
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
December 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 Ag 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. 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 1. Business." 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 1993 $308,333 $150,000 $4,497
President and Chief 1992 286,666 60,000 4,300
Executive Officer 1991 280,008 4,200
Thomas H. Anderson 1993 206,669 90,000 4,497
Chairman of the Board 1992 190,004 35,000 4,364
1991 185,004 4,238
Joseph L. Braker 1993 194,634 70,000 4,497
Vice President and General 1992 181,408 30,000 4,364
Manager Ag Products Group 1991 175,106 15,000 4,238
Larry Rigel 1993 162,558 15,000 4,497
Vice President and General 1992 151,924 30,000 4,364
Manager Retail Group 1991 146,876 4,238
Michael J. Anderson 1993 161,962 100,000 4,497
Vice President and General 1992 146,978 30,000 4,364
Manager Grain Group 1991 136,238 41,000 4,087
(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 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 six 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 $ 3,292 $ 6,584 $ 9,877 $ 16,461
100,000 7,042 14,084 21,127 35,211
150,000 10,792 21,584 32,377 53,961
200,000 14,542 29,084 43,627 72,711
250,000 18,292 36,584 54,877 91,461
Directors' Fees
Directors who are not employees of the Corporation and who are not
members of the Anderson family receive an annual retainer of $10,000.
Directors who are not employees of the Corporation receive a fee of $600 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 $2,000 provided they are not an employee of the Corporation, and
members of the committees who are not employees of the Corporation receive
$400 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, Paul M. Kraus,
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 are limited partners in Alshire-Columbus Limited Partnership
("Alshire-Columbus"), an Ohio limited partnership, which owns the
Partnership's Brice General Store in Columbus, Ohio. The store is leased to
the Partnership by Alshire-Columbus at an annual base rental of $732,000.
Additional rental payments are due if net sales exceed $35 million. The lease
is a "net lease" and has an initial term expiring in 2000, with three five-
year renewal periods and options to purchase the building, land and
improvements at the end of the initial term and each renewal period. The
Partnership believes that the terms of the Brice General Store lease are at
least as favorable to the Partnership as terms obtainable from other third
parties.
The Partnership contributed the land, at its cost ($1,367,000), for its
original limited partner interest. As original limited partner, the
Partnership has no economic interest in the income from operations of Alshire-
Columbus but will receive a preferential distribution upon any sale of the
real estate equal to the cost of the land plus an amount equal to the
aggregate cash distributions received by the limited partners in excess of
their capital contributions. The remaining cash proceeds from any sale of the
Brice General Store will be distributed to the limited partners - 75%; the
Partnership, as original limited partner - 24%; and the general partner - 1%.
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 own more than
one limited partnership unit, except for Richard P. Anderson, who owns two
units. In the aggregate, 8 3/4 units are owned by directors and executive
officers of the Corporation, and their family members own an additional four
units. The limited partners, other than the Partnership, have 99% of the
economic interest in the income from operations of Alshire-Columbus and the
general partner has a 1% economic interest.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) No individual beneficially owns as much as 5% of the Voting Class
B Common Shares of the Corporation. As of March 1, 1994, the descendants of
the founders of the Partnership beneficially held 3,597 shares of the voting
Class B Common Shares, representing 79% of the outstanding shares.
(b) The following table sets forth, as of March 1, 1994, the beneficial
ownership by each Director and by all Directors and Officers as a group, of
the Corporation's voting Class B Common Shares:
Number of Shares Percent
Director Beneficially Owned of Class
Richard P. Anderson 79 1.7%
Thomas H. Anderson 77 1.7%
Daniel T. Anderson 81 1.8%
Donald E. Anderson 50 1.1%
Michael J. Anderson 28 *
Richard M. Anderson 62 1.4%
John F. Barrett 2 *
Joseph L. Braker 7 *
Dale W. Fallat 19 *
Paul M. Kraus 40 *
Rene C. McPherson 0 *
Donald M. Mennel 5 *
Larry D. Rigel 24 *
Janet M. Schoen 65 1.4%
Directors and Officers as a group 630 13.9%
* less than 1%
(c) The Corporation knows of no arrangements which may at a subsequent
date result in a change in control of the Corporation.
Item 13. Certain Relationships and Related Transactions
See "Item 1. Business" regarding personnel and management services
provided by the Corporation to the Partnership. The management fee received
by the Corporation in 1993 under the Management Agreement between the
Corporation and the Partnership was $63,107,331. See Note 2 to the
Corporation's Financial Statements.
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 80% 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 1993, the rental payments made by the Partnership to
the Corporation, net of the reimbursement for management and maintenance of
the building was $529,982, which is included in the management fee referred
to in the preceding paragraph.
See "Item 11. Executive Compensation - Compensation Committee
Interlocks and Insider Participation - Certain Transactions - Alshire-
Columbus" regarding transactions with management.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)(1) The following financial statements of the registrant are included
in Item 8:
Page
Report of Independent Auditors................................... 5
Statements of Income - years ended
December 31, 1993, 1992 and 1991............................... 6
Balance Sheets - December 31, 1993 and 1992...................... 7
Statements of Cash Flows - years ended
December 31, 1993, 1992 and 1991............................... 8
Statements of Changes in Shareholders' Equity -
years ended December 31, 1993, 1992 and 1991................... 9
Notes to Financial Statements.................................... 10
(2) The following financial statement schedules are included in
14(d):
I. Marketable Securities - December 31, 1993............ 24
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) Articles of Incorporation. (Incorporated by reference to
Exhibit 3(d) in Registration Statement No. 33-16936.)
3(b) Code of Regulations. (Incorporated by reference to Exhibit
3(e) in Registration Statement No. 33-16936.)
4(a) Specimen certificate of Class A Shares. (Incorporated by
reference to Exhibit 4(b)(i) in Registration Statement No.
33-16936.)
4(b) Specimen certificate of Class B Shares. (Incorporated by
reference to Exhibit 4(b)(ii) in Registration Statement No.
33-16936.)
10(a) Management Performance Program.* (Incorporated by
reference to Exhibit 10(a) to the Partnership's Form 10-K
dated December 31, 1990, File no. 2-55070.)
10(b) Lease agreement effective May 1, 1990, between Carentmon
and The Andersons Management Corp. (Incorporated by
reference to Exhibit 10(b) to Registrants Form 10-K dated
December 31, 1992.)
* Management contract or compensatory plan.
28 Partnership Form 10-K for the year ended December 31, 1993.
(Incorporated by reference to File No. 2-55070.)
The Corporation 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 29th day of March, 1994.
THE ANDERSONS MANAGEMENT CORP.
(Registrant)
By /s/Thomas H. Anderson
Thomas H. Anderson
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on the 29th day of March, 1994.
Signature Title
/s/Richard P. Anderson President and Chief Executive Officer,
Richard P. Anderson Officer, Director
(Principal Executive and Financial Officer)
/s/Richard R. George Corporate Controller
Richard R. George (Principal Accounting Officer)
Signature Title Signature Title
/s/Daniel T. Anderson Director /s/Dale W. Fallat Director
Daniel T. Anderson Dale W. Fallat
/s/Donald E. Anderson 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
Director
John F. Barrett
No proxy statement is prepared. Audited financial statements will be
distributed to Shareholders at a later date.
SCHEDULE I - MARKETABLE SECURITIES
THE ANDERSONS MANAGEMENT CORP.
December 31, 1993
Amount
at Which
Carried In
Principal the Balance
Type of Investment Amount Cost Value Sheet
U.S. Government Obligations $500,000 $505,313 $505,313 $505,313