The Andersons, Inc. Reports 3rd Qtr. Results

Revenues up 5.7%, Operating Loss Narrows

PRNewswire
Oct 24, 2001

EPS (26) cents vs. (30) cents in Same Period Last Year

MAUMEE, Ohio, Oct. 24 /PRNewswire/ -- The Andersons, Inc. , today announced a net loss of $1.9 million, or $0.26 per diluted share, for the third quarter of 2001, a 14 percent improvement from the comparable period last year when the company lost $2.2 million, or $0.30 per diluted share. Total revenues of $188.8 million were $10.2 million, or 5.7%, higher than the $178.6 million generated in the third quarter of 2000.

Net income for the first nine months of the year was $4.6 million, or $0.62 per diluted share, with revenues of $684.3 million. Net income for the same period in 2000 amounted to $5.7 million, or $0.75 per diluted share, on revenues of $646.3 million. Excluding non-recurring items that occurred in the first quarter of each year and an accounting change that was described in the company's first quarter 2001 earnings release, year-to-date net income was $4.5 million, or $0.61 a share, this year, compared to $5.1 million, or $0.67 a share, in 2000.

The company has four operating groups: Agriculture, Rail, Processing and Retail.

The Agriculture Group operates grain elevators, fertilizer distribution terminals and farm centers in Ohio, Michigan, Indiana and Illinois. Collectively, these facilities handle more than 150 million bushels of grain and 1.3 million tons of dry and liquid agricultural fertilizer products annually. In the most recent quarter, continued strong earnings from the storage of grain enabled the group to achieve revenue growth and an improved bottom line. Through nine months, group revenues were up 7.0% from year- earlier levels, and operating income more than doubled.

The Rail Group controls a fleet of 5,400 railcars and 51 locomotives that are leased to shippers, railroads and fleet owners in a wide range of industries in the U.S. and Canada. During the past twelve months, this fleet has increased by 600 railcars and 21 locomotives. The group also repairs railcars and operates a custom steel fabrication business. Because of a cyclical downturn in the railcar industry during the past two years, the group continued to focus primarily on short-term leasing opportunities rather than car sales or long-term leasing commitments. Despite significant third quarter and nine-month revenue increases attributed to continued growth in the size of its fleet, the group incurred operating losses during these periods because of the writedown of some rail equipment to reflect current values.

The Processing Group manufactures turf and ornamental plant fertilizer and control products. It also produces chemical and feed-ingredient carriers, animal bedding, cat litter and ice-melter products. During the third quarter, the group's total revenue and net operating loss were relatively unchanged from year-earlier levels. Nine-month results were markedly different from 2000 results, however. While total revenues were higher because of the acquisition of a pro turf business in May of last year, the operating loss was significantly worse this year because of higher expenses due to that acquisition, increased ingredient costs and lower fertilizer consumption this season in consumer and golf course markets. In response to these factors, the group has begun taking steps to significantly reduce the breakeven volume level in this business and to evaluate its overall strategy in this consolidating industry.

The Retail Group operates six large stores in Ohio. With a theme of More For Your Home™, these stores offer traditional home center merchandise but also feature garden centers, extensive lines of housewares and domestics, automotive supplies, pet supplies, sporting goods, wine and a unique specialty food offering. Same store sales were down 1.5% in the third quarter and first nine months this year compared to the same periods in 2000. With increased labor costs and lower margins due in part to the impact of this summer's drought conditions on garden center business, the group's third quarter operating loss widened somewhat, and year-to-date income declined.

According to President and Chief Executive Officer Mike Anderson, "Given the seasonal patterns of several of our businesses, we expect to incur a loss in the July through September months. Overall, this year's third quarter results were fairly typical, but the component pieces that make up this performance were not necessarily so. While our ag business is experiencing a terrific year, performance in our rail and retail units is somewhat soft, and our processing business is really struggling. During the second and third quarters this year, we have incurred charges that total $2.6 million for severance costs and rail inventory write-downs, giving the company a lower cost position to better address competitive challenges in the marketplace.

"The September 11 attacks have not noticeably affected our ag businesses, but their negative influence on general economic conditions in the country is impacting our rail, processing and retail units. These same forces are expected to continue through the fourth quarter. In addition, agriculture will probably begin to feel the impact of lower carryover stocks of corn and soft red wheat in the U.S. Year-to-year comparisons for the fourth quarter will also be influenced by a sizable insurance gain realized last year.

"The Company's balance sheet continues to be strong -- our capital spending program is much lower this year, earnings before interest, taxes, depreciation and amortization ("EBITDA") are similar to last year's nine- months to-date figure of $26 million, and our working capital is significantly higher than twelve months ago."

The company will host a webcast on Thursday, October 25, 2001 at 11:00 A.M. EST, to discuss its year-to-date performance and full-year earnings outlook. The webcast can be accessed under the heading "Financial Information" on its website http://www.andersonsinc.com/ or at http://www.videonewswire.com/event.asp?id=1404.

This release contains forward-looking statements. These statements involve risks and uncertainties that could cause actual results to differ materially, including, without limitation, economic, weather and regulatory conditions, competition, and the risk factors set forth from time to time in the company's filings with the Securities and Exchange Commission.

  The Andersons, Inc. is located on the Internet at www.andersonsinc.com

                             The Andersons, Inc.
                      Consolidated Statements of Income
                                 (Unaudited)

                                     Three Months ended  Nine Months ended
                                        September 30        September 30
  (in thousands, except for per
   share amounts)                        2001      2000      2001      2000

  Sales and merchandising revenues   $188,830  $178,622  $684,310  $646,334
  Cost of sales and merchandising
   revenues                           157,516   146,583   569,621   534,383
  Gross profit                         31,314    32,039   114,689   111,951

  Operating, administrative and
   general expenses                    33,044    33,351   101,869    99,077
  Interest expense                      2,463     2,969     8,944     8,239
  Other income / gains:
    Other income                          812       918     2,189     3,040
    Gain on insurance settlement            -         -       338         -
    Gain on sale of business                -         -         -       907
  Income before income taxes and
   cumulative
    effect of accounting change        (3,381)   (3,363)    6,403     8,582
  Income taxes                         (1,476)   (1,128)    1,664     2,877
  Net income before cumulative
   effect
    of accounting change               (1,905)   (2,235)    4,739     5,705
  Cumulative effect of accounting
   change, net of
    income tax benefit                      -         -      (185)        -
  Net income                          $(1,905)  $(2,235)   $4,554    $5,705

  Per common share:
        Basic earnings                 $(0.26)   $(0.30)    $0.62     $0.76
        Diluted earnings               $(0.26)   $(0.30)    $0.62     $0.75
        Dividends paid                 $0.065    $0.060    $0.195    $0.180

  Weighted average shares
   outstanding-basic                    7,225     7,463     7,300     7,552
  Weighted average shares
   outstanding-diluted                  7,225     7,463     7,324     7,564


                            The Andersons, Inc.
                         Consolidated Balance Sheets
                                 (Unaudited)

                                     September 30  December 31 September 30
             (in thousands)             2001         2000         2000
  Assets
  Current assets:
    Cash and cash equivalents           $5,088      $13,138      $5,900
    Accounts receivable (net) and
     margin deposits                    58,165       55,475      51,348
    Inventories                        191,535      209,706     165,840
    Other current assets                21,228       24,505      14,978
  Total current assets                 276,016      302,824     238,066

  Other assets                           6,695       10,020      10,885
  Railcar assets leased to
    others (net)                        24,379       22,281      28,500
  Property, plant and
    equipment (net)                     95,422       98,071      95,272
    Total                             $402,512     $433,196    $372,723

  Liabilities and shareholders' equity
  Current liabilities:
    Notes payable                      $95,100      $71,300     $88,600
    Other current liabilities          112,900      176,264     112,283
  Total current liabilities            208,000      247,564     200,883

  Deferred items, long-term liabilities
   and minority interest                16,036       15,637      12,911
  Long-term debt                        87,463       80,159      72,420
  Shareholders' equity                  91,013       89,836      86,509
    Total                             $402,512     $433,196    $372,723

The September 30, 2000 balance sheet has been restated to conform with the December 31, 2000 and September 30, 2001 presentation.

                                Segment Data
                               (In thousands)

  Quarter ended September 30, 2001        Agriculture  Processing     Rail

  Revenues from external customers         $115,799     $22,345     $10,172
  Other income                                  333          97          27
    Total                                  $116,132     $22,442     $10,199

  Operating income (loss)                     $(130)    $(2,184)      $(282)

  Quarter ended September 30, 2000
  Revenues from external customers         $108,218     $22,744      $6,525
  Other income                                  244         101          67
    Total                                  $108,462     $22,845      $6,592

  Operating income (loss)                   $(1,196)    $(2,256)       $331

  Nine Months ended September 30, 2001
  Revenues from external customers         $430,573     $98,128     $27,583
  Other income                                  832         273          13
  Gain on insurance settlement                  338           -           -
    Total                                  $431,743     $98,401     $27,596

  Operating income (loss)                   $13,385     $(4,210)    $(1,205)

  Nine Months ended September 30, 2000
  Revenues from external customers         $402,396     $89,412     $22,077
  Other income                                  818         293         220
  Gain on sale of business                        -           -           -
    Total                                  $403,214     $89,705     $22,297

  Operating income (loss)                    $6,429       $(476)     $1,170


                                Segment Data
                               (In thousands)

  Quarter ended September 30, 2001          Retail      Other      Total

  Revenues from external customers         $40,514         $-    $188,830
  Other income                                 131        224         812
    Total                                  $40,645       $224    $189,642

  Operating income (loss)                    $(706)      $(79)    $(3,381)

  Quarter ended September 30, 2000
  Revenues from external customers         $41,135         $-    $178,622
  Other income                                 144        362         918
    Total                                  $41,279       $362    $179,540

  Operating income (loss)                    $(349)      $107     $(3,363)

  Nine Months ended September 30, 2001
  Revenues from external customers        $128,026         $-    $684,310
  Other income                                 465        606       2,189
  Gain on insurance settlement                   -          -         338
    Total                                 $128,491       $606    $686,837

  Operating income (loss)                      $86    $(1,653)     $6,403

  Nine Months ended September 30, 2000
  Revenues from external customers        $129,960     $2,489    $646,334
  Other income                                 461      1,248       3,040
  Gain on sale of business                       -        907         907
    Total                                 $130,421     $4,644    $650,281

  Operating income (loss)                   $1,346       $113      $8,582

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SOURCE: The Andersons, Inc.

Contact: Gary Smith of The Andersons, Inc., +1-419-891-6417


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