Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 10-Q
 
 
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2016
 
¨
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 the registrant as specified in its charter)
 
 
OHIO
 
34-1562374
(State of incorporation
or organization)
 
(I.R.S. Employer
Identification No.)
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   ý     No   ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.    Yes   ý     No   ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  
Large accelerated filer
ý
Accelerated Filer
¨
Non-accelerated filer
¨
Smaller reporting company
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ¨     No   ý
The registrant had approximately 28.2 million  common shares outstanding, no par value, at May 10, 2016 .

Table of Contents

THE ANDERSONS, INC.
INDEX
 
 
Page No.
PART I. FINANCIAL INFORMATION
 
 
PART II. OTHER INFORMATION
 


2
Table of Contents


Part I. Financial Information


Item 1. Financial Statements

The Andersons, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)(In thousands)
 
March 31,
2016
 
December 31,
2015
 
March 31,
2015
Assets
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
46,301

 
$
63,750

 
$
54,461

Restricted cash
718

 
451

 
685

Accounts receivable, net
207,740

 
170,912

 
209,928

Inventories (Note 2)
703,452

 
747,399

 
743,957

Commodity derivative assets – current (Note 5)
61,316

 
49,826

 
86,824

Deferred income taxes
—

 
6,772

 
12,878

Other current assets
76,575

 
90,412

 
65,017

Total current assets
1,096,102

 
1,129,522

 
1,173,750

Other assets:
 
 
 
 
 
Commodity derivative assets – noncurrent (Note 5)
371

 
412

 
243

Goodwill
63,934

 
63,934

 
72,365

Other intangible assets, net
117,023

 
120,240

 
76,557

Other assets, net
5,803

 
9,515

 
31,301

Equity method investments
236,083

 
242,107

 
222,082

 
423,214

 
436,208

 
402,548

Rail Group assets leased to others, net (Note 3)
337,661

 
338,111

 
313,095

Property, plant and equipment, net (Note 3)
462,661

 
455,260

 
398,234

Total assets
$
2,319,638

 
$
2,359,101

 
$
2,287,627


3
Table of Contents

The Andersons, Inc.
Condensed Consolidated Balance Sheets (continued)
(Unaudited)(In thousands)
 
March 31,
2016
 
December 31,
2015
 
March 31,
2015
Liabilities and equity
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Short-term debt (Note 4)
$
274,002

 
$
16,990

 
$
311,660

Trade and other payables
367,338

 
668,788

 
370,377

Customer prepayments and deferred revenue
100,384

 
66,762

 
130,254

Commodity derivative liabilities – current (Note 5)
33,394

 
37,387

 
55,401

Accrued expenses and other current liabilities
65,129

 
70,324

 
64,065

Current maturities of long-term debt (Note 4)
54,044

 
27,786

 
19,037

Total current liabilities
894,291

 
888,037

 
950,794

Other long-term liabilities
27,463

 
18,176

 
14,871

Commodity derivative liabilities – noncurrent (Note 5)
874

 
1,063

 
2,084

Employee benefit plan obligations
46,151

 
45,805

 
59,557

Long-term debt, less current maturities (Note 4)
402,360

 
436,208

 
323,258

Deferred income taxes
179,780

 
186,073

 
139,145

Total liabilities
1,550,919

 
1,575,362

 
1,489,709

Commitments and contingencies (Note 13)

 

 

Shareholders’ equity:
 
 
 
 
 
Common shares, without par value (63,000 shares authorized; 29,430, 29,353 and 29,430 shares issued at 3/31/16, 12/31/15 and 3/31/15, respectively)
96

 
96

 
96

Preferred shares, without par value (1,000 shares authorized; none issued)
—

 
—

 
—

Additional paid-in-capital
217,050

 
222,848

 
223,179

Treasury shares, at cost (1,185, 1,397 and 859 shares at 3/31/16, 12/31/15 and 3/31/15, respectively)
(44,774
)
 
(52,902
)
 
(32,551
)
Accumulated other comprehensive loss
(18,327
)
 
(20,939
)
 
(58,130
)
Retained earnings
596,115

 
615,151

 
644,530

Total shareholders’ equity of The Andersons, Inc.
750,160

 
764,254

 
777,124

Noncontrolling interests
18,559

 
19,485

 
20,794

Total equity
768,719

 
783,739

 
797,918

Total liabilities and equity
$
2,319,638

 
$
2,359,101

 
$
2,287,627

See Notes to Condensed Consolidated Financial Statements


4
Table of Contents

The Andersons, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)(In thousands, except per share data)
 
 
Three months ended
March 31,
 
2016
 
2015
Sales and merchandising revenues
$
887,879

 
$
918,225

Cost of sales and merchandising revenues
820,124

 
834,912

Gross profit
67,755

 
83,313

Operating, administrative and general expenses
79,881

 
78,604

Interest expense
7,051

 
6,039

Other income (loss):
 
 
 
Equity in earnings (loss) of affiliates, net
(6,977
)
 
3,261

Other income (loss), net
3,246

 
3,107

Income (loss) before income taxes
(22,908
)
 
5,038

Income tax provision (benefit)
(7,286
)
 
1,093

Net income (loss)
(15,622
)
 
3,945

Net income (loss) attributable to the noncontrolling interests
(926
)
 
(152
)
Net income (loss) attributable to The Andersons, Inc.
$
(14,696
)
 
$
4,097

Per common share:
 
 
 
Basic earnings (loss) attributable to The Andersons, Inc. common shareholders
$
(0.52
)
 
$
0.14

Diluted earnings (loss) attributable to The Andersons, Inc. common shareholders
$
(0.52
)
 
$
0.14

Dividends declared
$
0.155

 
$
0.14

See Notes to Condensed Consolidated Financial Statements


5
Table of Contents

The Andersons, Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)(In thousands)
 
 
Three months ended
March 31,
 
2016
 
2015
Net income (loss)
$
(15,622
)
 
$
3,945

Other comprehensive income (loss), net of tax:
 
 
 
Recognition of gain on sale of debt securities (net of income tax of $74 and $0)
(126
)
 
—

Change in unrecognized actuarial loss and prior service cost (net of income tax of $(10) and $(236) - Note 8)
173

 
390

Foreign currency translation adjustments (net of income tax of $0 and $(613))
2,505

 
(3,983
)
Cash flow hedge activity (net of income tax of $(35) and $(35))
60

 
58

Other comprehensive income (loss)
2,612

 
(3,535
)
Comprehensive income (loss)
(13,010
)
 
410

Comprehensive income (loss) attributable to the noncontrolling interests
(926
)
 
(152
)
Comprehensive income (loss) attributable to The Andersons, Inc.
$
(12,084
)
 
$
562

See Notes to Condensed Consolidated Financial Statements


6
Table of Contents

The Andersons, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)(In thousands)
 
Three months ended
March 31,
 
2016
 
2015
Operating Activities
 
 
 
Net income (loss)
$
(15,622
)
 
$
3,945

Adjustments to reconcile net income to cash used in operating activities:
 
 
 
Depreciation and amortization
20,902

 
17,523

Bad debt expense
424

 
188

Equity in earnings of affiliates, net of dividends
7,033

 
1,404

Gain on sale of investments
(685
)
 
—

Gains on sales of Rail Group assets and related leases
(2,443
)
 
(4,522
)
Excess tax benefit from share-based payment arrangement
—

 
(224
)
Deferred income taxes
(988
)
 
(3,446
)
Stock-based compensation expense
1,473

 
736

Other
(20
)
 
890

Changes in operating assets and liabilities:
 
 
 
Accounts receivable
(37,474
)
 
(28,366
)
Inventories
43,947

 
51,698

Commodity derivatives
(15,630
)
 
(3,696
)
Other assets
1,526

 
(4,042
)
Trade and other payables
(270,296
)
 
(318,747
)
Net cash provided by (used in) operating activities
(267,853
)
 
(286,659
)
Investing Activities
 
 
 
Purchases of Rail Group assets
(7,340
)
 
(23,455
)
Proceeds from sale of Rail Group assets
4,967

 
12,851

Purchases of property, plant and equipment
(12,305
)
 
(6,742
)
Proceeds from sale of property, plant and equipment
206

 
80

Proceeds from sale of investments
15,013

 
—

Investments in affiliates
(22
)
 
—

Change in restricted cash
(269
)
 
(256
)
Net cash provided by (used in) investing activities
250

 
(17,522
)
Financing Activities
 
 
 
Net change in short-term borrowings
258,000

 
308,500

Proceeds from issuance of long-term debt
76,908

 
30,799

Payments of long-term debt
(80,399
)
 
(63,466
)
Purchase of treasury stock
—

 
(27,783
)
Proceeds from sale of treasury shares to employees and directors
1,275

 
403

Payments of debt issuance costs
(299
)
 
(107
)
Dividends paid
(4,338
)
 
(4,059
)
Excess tax benefit from share-based payment arrangement
—

 
224

Other
(993
)
 
(573
)
Net cash provided by (used in) financing activities
250,154

 
243,938

Decrease in cash and cash equivalents
(17,449
)
 
(60,243
)
Cash and cash equivalents at beginning of period
63,750

 
114,704

Cash and cash equivalents at end of period
$
46,301

 
$
54,461


See Notes to Condensed Consolidated Financial Statements

7
Table of Contents

The Andersons, Inc.
Condensed Consolidated Statements of Equity
(Unaudited)(In thousands, except per share data)
 
Common
Shares
 
Additional
Paid-in
Capital
 
Treasury
Shares
 
Accumulated
Other
Comprehensive
Loss
 
Retained
Earnings
 
Noncontrolling
Interests
 
Total
Balance at December 31, 2014
$
96

 
$
222,789

 
$
(9,743
)
 
$
(54,595
)
 
$
644,556

 
$
20,946

 
$
824,049

Net income
 
 
 
 
 
 
 
 
4,097

 
(152
)
 
3,945

Other comprehensive loss
 
 
 
 
 
 
(3,535
)
 
 
 
 
 
(3,535
)
Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $216 (162 shares)
 
 
(4,051
)
 
4,975

 
 
 
 
 
 
 
924

Purchase of Treasury Shares (631 shares)
 
 


 
(27,783
)
 
 
 
 
 
 
 
(27,783
)
Dividends declared ($0.14 per common share)
 
 
 
 
 
 
 
 
(3,985
)
 
 
 
(3,985
)
Shares Issued for acquisitions (77 shares)
 
 
4,303

 
 
 
 
 
 
 
 
 
4,303

Performance share unit dividend equivalents
 
 
138

 
 
 
 
 
(138
)
 
 
 
—

Balance at March 31, 2015
$
96

 
$
223,179

 
$
(32,551
)
 
$
(58,130
)
 
$
644,530

 
$
20,794

 
$
797,918

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2015
$
96

 
$
222,848

 
$
(52,902
)
 
$
(20,939
)
 
$
615,151

 
$
19,485

 
$
783,739

Net loss
 
 
 
 
 
 
 
 
(14,696
)
 
(926
)
 
(15,622
)
Other comprehensive income
 
 
 
 
 
 
2,612

 
 
 
 
 
2,612

Stock awards, stock option exercises and other shares issued to employees and directors, net of income tax of $417 (212 shares)
 
 
(5,798
)
 
8,128

 
 
 
 
 
 
 
2,330

Dividends declared ($0.155 per common share)
 
 
 
 
 
 
 
 
(4,340
)
 
 
 
(4,340
)
Balance at March 31, 2016
$
96

 
$
217,050

 
$
(44,774
)
 
$
(18,327
)
 
$
596,115

 
$
18,559

 
$
768,719

See Notes to Condensed Consolidated Financial Statements


8
Table of Contents

The Andersons, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)


1. Basis of Presentation and Consolidation
These Condensed Consolidated Financial Statements include the accounts of The Andersons, Inc. and its wholly owned and controlled subsidiaries (the “Company”). All intercompany accounts and transactions are eliminated in consolidation.
Investments in unconsolidated entities in which the Company has significant influence, but not control, are accounted for using the equity method of accounting.
In the opinion of management, all adjustments consisting of normal and recurring items, considered necessary for the fair presentation of the results of operations, financial position, and cash flows for the periods indicated, have been made. The results in these Condensed Consolidated Financial Statements are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2016 .
The Condensed Consolidated Balance Sheet data at December 31, 2015 was derived from the audited Consolidated Financial Statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. An unaudited Condensed Consolidated Balance Sheet as of March 31, 2015 has been included as the Company operates in several seasonal industries.
The accompanying unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in The Andersons, Inc. Annual Report on Form 10-K for the year ended December 31, 2015 (the “2015 Form 10-K”).
New Accounting Standards
In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2016-10, Identifying Performance Obligations and Licensing. This standard is intended to clarify guidance under ASC 606 related to the definition of performance obligations and materiality considerations as well as revenue recognition questions around the licensing of intellectual property. The standard is effective for annual and interim periods beginning after December 15, 2017. The portions of this standard related to licensing are not applicable but the Company is currently assessing the method of adoption and the impact the remaining provisions in this standard will have on its Consolidated Financial Statements and disclosures.
In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Improvements to Employee Share-Based Payment Accounting. This standard simplifies the accounting treatment for excess tax benefits and deficiencies, forfeitures, and cash flow considerations related to share-based compensation. The standard is effective for annual and interim periods beginning after December 15, 2016. The Company is currently assessing the method of adoption and the impact this standard will have on its Consolidated Financial Statements and disclosures.
In March 2016, the FASB issued Accounting Standards Update No. 2016-08, Principal versus Agent Considerations. This standard is intended to clarify the process to determine whether a company should record certain revenue transactions on a gross or a net basis. The standard is effective for annual and interim periods beginning after December 15, 2017. The Company is currently assessing the method of adoption and the impact this standard will have on its Consolidated Financial Statements and disclosures.
In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases. This standard is intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet with expanded disclosures around those items. This guidance is effective for annual and interim periods beginning after December 15, 2018, and early adoption is permitted. The Company is currently evaluating the impact of this standard.
In January 2016, the FASB issued Accounting Standards Update No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. This standard provides guidance for the recognition, measurement, presentation, and disclosure of financial instruments. This guidance is effective for annual and interim periods beginning after December 15, 2017, and early adoption is not permitted. The Company is currently evaluating the impact of this standard.
In November 2015, the FASB issued Accounting Standards Update No. 2015-17, Balance Sheet Classification of Deferred Taxes. This standard simplifies the presentation of deferred income taxes by eliminating the requirement for companies to present deferred tax liabilities and assets as current and non-current on the Consolidated Balance Sheets.  Instead, companies

9

will be required to classify all deferred tax assets and liabilities as non-current.  This guidance is effective for annual and interim periods beginning after December 15, 2016 and early adoption is permitted. The Company has elected to early adopt ASU 2015-17 and this resulted in the presentation noted above on our Consolidated Balance Sheets as of March 31, 2016, and had no impact on our Consolidated Statements of Operations or Consolidated Statements of Cash Flows. The Company elected to apply this change on a prospective basis only so no prior period balance sheets are impacted.
In July 2015, the FASB issued Accounting Standards Update No. 2015-11, Simplifying the Measurement of Inventory. This standard requires entities to measure inventory at the lower of cost or net realizable value rather than at the lower of cost or market. The standard is effective for annual and interim periods beginning after December 15, 2016. The Company is currently evaluating the impact of this standard.
In April 2015, the FASB issued Accounting Standards Update No. 2015-05, Customer's Accounting for Fees Paid in a Cloud Computing Arrangement. This standard provided guidance on determining whether a cloud computing arrangement contained a software license or if it should be treated as a services contract. The guidance was effective January 1, 2016 and the Company has elected to adopt the guidance prospectively. For future agreements that do not include a software license, the software costs will be treated as a service contract. This did not have a material impact on the Company's Consolidated Financial Statements and disclosures in the current period.
In April 2015, the FASB issued Accounting Standards Update No. 2015-03, Simplifying the Presentation of Debt Issuance Costs. This standard requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability. The standard is effective for annual and interim periods beginning after December 15, 2015 and has been adopted in 2016 for current and previously reported periods. The impact is a reduction of other assets and long-term debt by approximately $4 million in the Company's Consolidated Balance Sheets as of March 31, 2016.



In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue From Contracts With Customers. The core principle of the new revenue model is that an entity recognizes revenue from the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard is effective for annual and interim periods beginning after December 15, 2017. The Company is currently assessing the method of adoption and the impact this standard will have on its Consolidated Financial Statements and disclosures.


10


2. Inventories
Major classes of inventories are as follows:
(in thousands)
March 31,
2016
 
December 31,
2015
 
March 31,
2015
Grain
$
450,414

 
$
534,548

 
$
470,216

Ethanol and by-products
11,895

 
8,576

 
9,940

Plant nutrients and cob products
207,109

 
172,815

 
229,551

Retail merchandise
27,792

 
24,510

 
27,311

Railcar repair parts
6,185

 
6,894

 
6,739

Other
57

 
56

 
200

 
$
703,452

 
$
747,399

 
$
743,957


Inventories on the Condensed Consolidated Balance Sheets at March 31, 2016 , December 31, 2015 and March 31, 2015 do not include 2.8 million , 3.4 million and 1.8 million bushels of grain, respectively, held in storage for others. The Company does not have title to the grain and is only liable for any deficiencies in grade or shortage of quantity that may arise during the storage period. Management has not experienced historical losses on any deficiencies and does not anticipate material losses in the future.

3. Property, Plant and Equipment
The components of property, plant and equipment are as follows:
(in thousands)
March 31,
2016
 
December 31,
2015
 
March 31,
2015
Land
$
30,138

 
$
29,928

 
$
23,380

Land improvements and leasehold improvements
77,531

 
77,191

 
73,651

Buildings and storage facilities
304,276

 
303,482

 
274,877

Machinery and equipment
377,879

 
375,028

 
340,109

Construction in progress
47,755

 
32,871

 
18,354

 
837,579

 
818,500

 
730,371

Less: accumulated depreciation
374,918

 
363,240

 
332,137

 
$
462,661

 
$
455,260

 
$
398,234

Depreciation expense on property, plant and equipment was $12.1 million and $10.9 million for the three months ended March 31, 2016 and 2015 , respectively. Capitalized software has been reclassified from property, plant, and equipment, and is now presented as a component of other intangible assets. Prior year balance sheets have been recast to conform with the current period presentation.
Rail Group Assets
The components of Rail Group assets leased to others are as follows:
(in thousands)
March 31,
2016
 
December 31,
2015
 
March 31,
2015
Rail Group assets leased to others
$
436,948

 
$
434,051

 
$
402,509

Less: accumulated depreciation
99,287

 
95,940

 
89,414

 
$
337,661

 
$
338,111

 
$
313,095

Depreciation expense on Rail Group assets leased to others amounted to $4.6 million and $4.0 million for the three months ended March 31, 2016 and 2015 , respectively.

11


4. Debt
The Company is party to borrowing arrangements with a syndicate of banks. See Note 5 in the Company’s 2015 Form 10-K for a description of these arrangements. Total borrowing capacity for the Company under all lines of credit is currently at $ 873.7 million , including $23.7 million of debt of The Andersons Denison Ethanol LLC ("TADE"), which is non-recourse to the Company. At March 31, 2016 , the Company had a total of $538.6 million available for borrowing under its lines of credit. Our borrowing capacity is reduced by a combination of outstanding borrowings and letters of credit. The Company was in compliance with all financial covenants as of March 31, 2016 .
The Company’s short-term and long-term debt at March 31, 2016 ,  December 31, 2015 and March 31, 2015 consisted of the following:
(in thousands)
March 31,
2016
 
December 31,
2015
 
March 31,
2015
Short-term debt – recourse
$
274,002

 
$
16,990

 
$
311,660

Total short-term debt
274,002

 
16,990

 
311,660

Current maturities of long-term debt – non-recourse
—

 
—

 
—

Current maturities of long-term debt – recourse
54,044

 
27,786

 
19,037

Total current maturities of long-term debt
54,044

 
27,786

 
19,037

Long-term debt, less current maturities – non-recourse
—

 
—

 
—

Long-term debt, less current maturities – recourse
402,360

 
436,208

 
323,258

Total long-term debt, less current maturities
$
402,360

 
$
436,208

 
$
323,258


In the first quarter of 2016, the Company completed an agreement for $75.0 million in senior notes payable. The notes payable include $26.0 million with an interest rate of 4.1% due 2021, $24.0 million with an interest rate of 4.6% due 2023, and $25.0 million with an interest rate of 4.9% due 2026, subject to debt covenants similar to the Company's other borrowing arrangements.

5. Derivatives
The Company’s operating results are affected by changes to commodity prices. The Grain and Ethanol businesses have established “unhedged” position limits (the amount of a commodity, either owned or contracted for, that does not have an offsetting derivative contract to lock in the price). To reduce the exposure to market price risk on commodities owned and forward grain and ethanol purchase and sale contracts, the Company enters into exchange traded commodity futures and options contracts and over the counter forward and option contracts with various counterparties. The exchange traded contracts are primarily via the regulated Chicago Mercantile Exchange ("CME"). The Company’s forward purchase and sales contracts are for physical delivery of the commodity in a future period. Contracts to purchase commodities from producers generally relate to the current or future crop years for delivery periods quoted by regulated commodity exchanges. Contracts for the sale of commodities to processors or other commercial consumers generally do not extend beyond one year .

All of these contracts meet the definition of derivatives. While the Company considers its commodity contracts to be effective economic hedges, the Company does not designate or account for its commodity contracts as hedges as defined under current accounting standards. The Company accounts for its commodity derivatives at estimated fair value. The estimated fair value of the commodity derivative contracts that require the receipt or posting of cash collateral is recorded on a net basis (offset against cash collateral posted or received, also known as margin deposits) within commodity derivative assets or liabilities. Management determines fair value based on exchange-quoted prices and in the case of its forward purchase and sale contracts, estimated fair value is adjusted for differences in local markets and non-performance risk. For contracts for which physical delivery occurs, balance sheet classification is based on estimated delivery date. For futures, options and over-the-counter contracts in which physical delivery is not expected to occur but, rather, the contract is expected to be net settled, the Company classifies these contracts as current or noncurrent assets or liabilities, as appropriate, based on the Company’s expectations as to when such contracts will be settled.

Realized and unrealized gains and losses in the value of commodity contracts (whether due to changes in commodity prices, changes in performance or credit risk, or due to sale, maturity or extinguishment of the commodity contract) and grain inventories are included in cost of sales and merchandising revenues. These amounts were previously classified in sales and merchandising revenues but were reclassified starting in the fourth quarter of 2015.


12

Generally accepted accounting principles permit a party to a master netting arrangement to offset fair value amounts recognized for derivative instruments against the right to reclaim cash collateral or obligation to return cash collateral under the same master netting arrangement. The Company has master netting arrangements for its exchange traded futures and options contracts and certain over-the-counter contracts. When the Company enters into a future, option or an over-the-counter contract, an initial margin deposit may be required by the counterparty. The amount of the margin deposit varies by commodity. If the market price of a future, option or an over-the-counter contract moves in a direction that is adverse to the Company’s position, an additional margin deposit, called a maintenance margin, is required. The margin deposit assets and liabilities are included in short-term commodity derivative assets or liabilities, as appropriate, in the Condensed Consolidated Balance Sheets.
The following table presents at March 31, 2016 ,  December 31, 2015 and March 31, 2015 , a summary of the estimated fair value of the Company’s commodity derivative instruments that require cash collateral and the associated cash posted/received as collateral. The net asset or liability positions of these derivatives (net of their cash collateral) are determined on a counterparty-by-counterparty basis and are included within current or noncurrent commodity derivative assets (or liabilities) on the Condensed Consolidated Balance Sheets:
 
March 31, 2016
 
December 31, 2015
 
March 31, 2015
(in thousands)
Net
derivative
asset
position
 
Net
derivative
liability
position
 
Net
derivative
asset
position
 
Net
derivative
liability
position
 
Net
derivative
asset
position
 
Net
derivative
liability
position
Collateral paid (received)
$
27,498

 
$
—

 
$
3,008

 
$
—

 
$
39,521

 
$
—

Fair value of derivatives
11,389

 
—

 
25,356

 
—

 
21,327

 
—

Balance at end of period
$
38,887

 
$
—

 
$
28,364

 
$
—

 
$
60,848

 
$
—


The following table presents, on a gross basis, current and noncurrent commodity derivative assets and liabilities:
 
March 31, 2016
(in thousands)
Commodity derivative assets - current
 
Commodity derivative assets - noncurrent
 
Commodity derivative liabilities - current
 
Commodity derivative liabilities - noncurrent
 
Total
Commodity derivative assets
$
46,999

 
$
382

 
$
1,219

 
$
5

 
$
48,605

Commodity derivative liabilities
(13,181
)
 
(11
)
 
(34,613
)
 
(879
)
 
(48,684
)
Cash collateral
27,498

 
—

 
—

 
—

 
27,498

Balance sheet line item totals
$
61,316

 
$
371

 
$
(33,394
)
 
$
(874
)
 
$
27,419

 
December 31, 2015
(in thousands)
Commodity derivative assets - current
 
Commodity derivative assets - noncurrent
 
Commodity derivative liabilities - current
 
Commodity derivative liabilities - noncurrent
 
Total
Commodity derivative assets
$
51,647

 
$
412

 
$
371

 
$
2

 
$
52,432

Commodity derivative liabilities
(4,829
)
 
—

 
(37,758
)
 
(1,065
)
 
(43,652
)
Cash collateral
3,008

 
—

 
—

 
—

 
3,008

Balance sheet line item totals
$
49,826

 
$
412

 
$
(37,387
)
 
$
(1,063
)
 
$
11,788

 
March 31, 2015
(in thousands)
Commodity derivative assets - current
 
Commodity derivative assets - noncurrent
 
Commodity derivative liabilities - current
 
Commodity derivative liabilities - noncurrent
 
Total
Commodity derivative assets
$
60,071

 
$
254

 
$
1,615

 
$
29

 
$
61,969

Commodity derivative liabilities
(12,768
)
 
(11
)
 
(57,016
)
 
(2,113
)
 
(71,908
)
Cash collateral
39,521

 
—

 
—

 
—

 
39,521

Balance sheet line item totals
$
86,824

 
$
243

 
$
(55,401
)
 
$
(2,084
)
 
$
29,582




13




The gains (losses) included in the Company’s Condensed Consolidated Statements of Operations and the line items in which they are located for the three months ended March 31, 2016 and 2015 are as follows:
 
Three months ended
March 31,
(in thousands)
2016
 
2015
Gains (losses) on commodity derivatives included in cost of sales and merchandising revenues
$
(8,859
)
 
$
43,822

The Company had the following volume of commodity derivative contracts outstanding (on a gross basis) at March 31, 2016 , December 31, 2015 and March 31, 2015 :
 
March 31, 2016
Commodity
Number of bushels
(in thousands)
 
Number of gallons
(in thousands)
 
Number of pounds
(in thousands)
 
Number of tons
(in thousands)
Non-exchange traded:
 
 
 
 
 
 
 
Corn
235,426

 
—

 
—

 
—

Soybeans
21,509

 
—

 
—

 
—

Wheat
12,654

 
—

 
—

 
—

Oats
32,136

 
—

 
—

 
—

Ethanol
—

 
149,374

 
—

 
—

Corn oil
—

 
—

 
3,850

 
—

Other
18

 
—

 
6,234

 
85

Subtotal
301,743

 
149,374

 
10,084

 
85

Exchange traded:
 
 
 
 
 
 
 
Corn
129,465

 
—

 
—

 
—

Soybeans
34,315

 
—

 
—

 
—

Wheat
20,950

 
—

 
—

 
—

Oats
3,225

 
—

 
—

 
—

Ethanol
—

 
1,470

 
—

 
—

Other
—

 
—

 
—

 
—

Subtotal
187,955

 
1,470

 
—

 
—

Total
489,698

 
150,844

 
10,084

 
85


14

 
December 31, 2015
Commodity
Number of bushels
(in thousands)
 
Number of gallons
(in thousands)
 
Number of pounds
(in thousands)
 
Number of tons
(in thousands)
Non-exchange traded:
 
 
 
 
 
 
 
Corn
227,248

 
—

 
—

 
—

Soybeans
13,357

 
—

 
—

 
—

Wheat
13,710

 
—

 
—

 
—

Oats
15,019

 
—

 
—

 
—

Ethanol
—

 
138,660

 
—

 
—

Corn oil
—

 
—

 
11,532

 
—

Other
297

 
—

 
—

 
116

Subtotal
269,631

 
138,660

 
11,532

 
116

Exchange traded:
 
 
 
 
 
 
 
Corn
106,260

 
—

 
—

 
—

Soybeans
17,255

 
—

 
—

 
—

Wheat
28,135

 
—

 
—

 
—

Oats
3,480

 
—

 
—

 
—

Ethanol
—

 
840

 
—

 
—

Other
—

 
840

 
—

 
—

Subtotal
155,130

 
1,680

 
—

 
—

Total
424,761

 
140,340

 
11,532

 
116

 
March 31, 2015
Commodity
Number of bushels
(in thousands)
 
Number of gallons
(in thousands)
 
Number of pounds
(in thousands)
 
Number of tons
(in thousands)
Non-exchange traded:
 
 
 
 
 
 
 
Corn
276,158

 
—

 
—

 
—

Soybeans
29,646

 
—

 
—

 
—

Wheat
13,232

 
—

 
—

 
—

Oats
29,883

 
—

 
—

 
—

Ethanol
—

 
197,961

 
—

 
—

Corn oil
—

 
—

 
5,651

 
—

Other
339

 
—

 
—

 
116

Subtotal
349,258

 
197,961

 
5,651

 
116

Exchange traded:
 
 
 
 
 
 
 
Corn
143,320

 
—

 
—

 
—

Soybeans
38,555

 
—

 
—

 
—

Wheat
26,675

 
—

 
—

 
—

Oats
6,390

 
—

 
—

 
—

Ethanol
—

 
26,334

 
—

 
—

Bean Oil
—

 
—

 
60,240

 
—

Other
—

 
—

 
—

 
10

Subtotal
214,940

 
26,334

 
60,240

 
10

Total
564,198

 
224,295

 
65,891

 
126


At March 31, 2016 , December 31, 2015 and March 31, 2015 , the Company had recorded the following amounts for the fair value of the Company's interest rate derivates:

15

 
March 31,
 
December 31,
 
March 31,
(in thousands)
2016
 
2015
 
2015
Derivatives not designated as hedging instruments
 
 
 
 
 
Interest rate contracts included in other long term liabilities
(4,618
)
 
(3,133
)
 
—

Total fair value of interest rate derivatives not designated as hedging instruments
$
(4,618
)
 
$
(3,133
)
 
$
—

Derivatives designated as hedging instruments
 
 
 
 
 
Interest rate contract included in other short term liabilities
(96
)
 
(191
)
 
—

Total fair value of interest rate derivatives designated as hedging instruments
$
(96
)
 
$
(191
)
 
$
—

The losses included in the Company's Consolidated Statements of Operations and the line item in which they are located for interest rate derivatives not designated as hedging instruments are as follows:
 
Three months ended March 31,
(in thousands)
2016
 
2015
Interest expense
$
(1,600
)
 
$
—

The Company also has foreign currency derivatives which are considered effective economic hedges of specified economic risks but which are not designated as accounting hedges. At March 31, 2016 , December 31, 2015 and March 31, 2015 , the Company had recorded the following amounts for the fair value of the Company's foreign currency derivatives:
 
March 31,
 
December 31,
 
March 31,
(in thousands)
2016
 
2015
 
2015
Derivatives not designated as hedging instruments
 
 
 
 
 
Foreign currency contracts included in short term assets
1,478

 
—

 
—

Total fair value of foreign currency contract derivatives not designated as hedging instruments
$
1,478

 
$
—

 
$
—

The losses included in the Company's Consolidated Statements of Operations and the line item in which they are located for foreign currency contract derivatives not designated as hedging instruments are as follows:
 
Three months ended March 31,
(in thousands)
2016
 
2015
Foreign currency derivative gains included in Other income, net
$
1,478

 
$
—




6. Employee Benefit Plans

The following are components of the net periodic benefit cost for the pension and post-retirement benefit plans maintained by the Company for the three months ended March 31, 2016 and 2015 :
 
Pension Benefits
(in thousands)
Three months ended
March 31,
2016
 
2015
Service cost
$
—

 
$
55

Interest cost
48

 
1,209

Expected return on plan assets
—

 
(1,561
)
Recognized net actuarial loss
36

 
370

Benefit cost
$
84

 
$
73


16

 
Post-retirement Benefits
(in thousands)
Three months ended
March 31,
2016
 
2015
Service cost
$
213

 
$
240

Interest cost
405

 
406

Amortization of prior service cost
(89
)
 
(136
)
Recognized net actuarial loss
235

 
392

Benefit cost
$
764

 
$
902


7. Income Taxes

On a quarterly basis, the Company estimates the effective tax rate expected to be applicable for the full year and makes changes if necessary based on new information or events. The estimated annual effective tax rate is forecast based on actual historical information and forward-looking estimates and is used to provide for income taxes in interim reporting periods. The Company also recognizes the tax impact of certain unusual or infrequently occurring items, such as the effects of changes in tax laws or rates and impacts from settlements with tax authorities, discretely in the quarter in which they occur. Additionally, the annual effective tax rate differs from the statutory U.S. Federal tax rate of 35% primarily due to the impact of state income taxes and to benefits related to the domestic production activities deduction.

For the three months ended March 31, 2016, the Company recorded an income tax benefit of $7.3 million at an effective tax rate of 31.8% , which varied from the U.S. Federal tax rate of 35% primarily due to a 1.9% tax benefit related to the domestic production activities deduction and a 1.7% tax benefit attributable to the accounting for the investment in a foreign affiliate. For the three months ended March 31, 2015, the Company recorded income tax expense of $1.1 million at an effective tax rate of 21.7% .

There have been no material changes to the balance of unrecognized tax benefits reported at December 31, 2015. During the three months ended March 31, 2016, the IRS completed its audit of the Company's 2011 and 2012 consolidated Federal income tax returns. The results of the examination will not have a material effect on the Company's 2016 effective tax rate.



8. Accumulated Other Comprehensive Loss

The following tables summarize the after-tax components of accumulated other comprehensive income (loss) attributable to the Company for the three months ended March 31, 2016 and 2015 :

 
 
 
Changes in Accumulated Other Comprehensive Income (Loss) by Component (a)
 
 
 
For the three months ended March 31, 2016
(in thousands)
 
Losses on Cash Flow Hedges
 
Foreign Currency Translation Adjustments
 
Investment in Debt Securities
 
Defined Benefit Plan Items
 
Total
Beginning Balance
 
$
(111
)
 
$
(12,041
)
 
$
126

 
$
(8,913
)
 
$
(20,939
)
 
Other comprehensive income (loss) before reclassifications
 
60

 
2,505

 
—

 
229

 
2,794

 
Amounts reclassified from accumulated other comprehensive loss
 
—

 
—

 
(126
)
 
(56
)
 
(182
)
Net current-period other comprehensive income (loss)
 
60

 
2,505

 
(126
)
 
173

 
2,612

Ending balance
 
$
(51
)
 
$
(9,536
)
 
$
—

 
$
(8,740
)
 
$
(18,327
)

17

 
 
 
Changes in Accumulated Other Comprehensive Income (Loss) by Component (a)
 
 
 
                        For the three months ended March 31, 2015
(in thousands)
 
Losses on Cash Flow Hedges
 
Foreign Currency Translation Adjustments
 
Investment in Debt Securities
 
Defined Benefit Plan Items
 
Total
Beginning Balance
 
$
(364
)
 
$
(4,709
)
 
$
126

 
$
(49,648
)
 
$
(54,595
)
 
Other comprehensive income (loss) before reclassifications
 
58

 
(3,983
)
 
—

 
475

 
(3,450
)
 
Amounts reclassified from accumulated other comprehensive loss
 
—

 
—

 
—

 
(85
)
 
(85
)
Net current-period other comprehensive income (loss)
 
58

 
(3,983
)
 
—

 
390

 
(3,535
)
Ending balance
 
$
(306
)
 
$
(8,692
)
 
$
126

 
$
(49,258
)
 
$
(58,130
)
(a) All amounts are net of tax. Amounts in parentheses indicate debits
The following tables show the reclassification adjustments from accumulated other comprehensive loss to net income (loss) for the three months ended March 31, 2016 and 2015 :
 
 
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) (a)
(in thousands)
For the three months ended March 31, 2016
Details about Accumulated Other Comprehensive Income (Loss) Components
 
Amount Reclassified from Accumulated Other Comprehensive Income (Loss)
 
Affected Line Item in the Statement Where Net Income Is Presented
Defined Benefit Plan Items
 
 
 
 
     Amortization of prior-service cost
 
$
(89
)
 
(b)
 
 
(89
)
 
Total before tax
 
 
33

 
Income tax provision
 
 
$
(56
)
 
Net of tax
 
 
 
 
 
Other items
 
 
 
 
    Recognition of gain on sale of investment
 
$
(200
)
 
 
 
 
(200
)
 
Total before tax
 
 
74

 
Income tax provision
 
 
$
(126
)
 
Net of tax
 
 
 
 
 
 
 
 
 
 
Total reclassifications for the period
 
(182
)
 
Net of tax

18

 
 
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) (a)
(in thousands)
For the three months ended March 31, 2015
Details about Accumulated Other Comprehensive Income (Loss) Components
 
Amount Reclassified from Accumulated Other Comprehensive Income (Loss)
 
Affected Line Item in the Statement Where Net Income Is Presented
Defined Benefit Plan Items
 
 
 
 
     Amortization of prior-service cost
 
$
(136
)
 
(b)
 
 
(136
)
 
Total before tax
 
 
51

 
Income tax provision
 
 
$
(85
)
 
Net of tax
 
 
 
 
 
Total reclassifications for the period
 
$
(85
)
 
Net of tax
(a) Amounts in parentheses indicate credits to profit/loss
(b) This accumulated other comprehensive loss component is included in the computation of net periodic benefit cost (see Note 6).

19


9. Earnings Per Share
Unvested share-based payment awards that contain non-forfeitable rights to dividends are participating securities and are included in the computation of earnings per share pursuant to the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. The Company’s nonvested restricted stock that was granted prior to March 2015 is considered a participating security since the share-based awards contain a non-forfeitable right to dividends irrespective of whether the awards ultimately vest.
(in thousands, except per common share data)
Three months ended
March 31,
2016
 
2015
Net income (loss) attributable to The Andersons, Inc.
$
(14,696
)
 
$
4,097

Less: Distributed and undistributed earnings allocated to nonvested restricted stock
3

 
8

Earnings available to common shareholders
$
(14,699
)
 
$
4,089

Earnings per share – basic:
 
 
 
Weighted average shares outstanding – basic
28,101

 
28,742

Earnings per common share – basic
$
(0.52
)
 
$
0.14

Earnings per share – diluted:
 
 
 
Weighted average shares outstanding – basic
28,101

 
28,742

Effect of dilutive awards
—

 
59

Weighted average shares outstanding – diluted
28,101

 
28,801

Earnings per common share – diluted
$
(0.52
)
 
$
0.14

All outstanding share awards were antidilutive at March 31, 2016 as the Company experienced a net loss. There were no antidilutive stock-based awards outstanding at March 31, 2015 .

20


10. Fair Value Measurements
The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis at March 31, 2016 , December 31, 2015 and March 31, 2015 :
(in thousands)
March 31, 2016
Assets (liabilities)
Level 1
 
Level 2
 
Level 3
 
Total
Cash equivalents
$
25,496

 
$
—

 
$
—

 
$
25,496

Restricted cash
718

 
—

 
—

 
718

Commodity derivatives, net (a)
38,070

 
(10,651
)
 
—

 
27,419

Provisionally priced contracts (b)
88,356

 
42,836

 
—

 
131,192

Convertible preferred securities (c)
—

 
—

 
775

 
775

Other assets and liabilities (d)
13,958

 
(4,828
)
 
160

 
9,290

Total
$
166,598

 
$
27,357

 
$
935

 
$
194,890

(in thousands)
December 31, 2015
Assets (liabilities)
Level 1
 
Level 2
 
Level 3
 
Total
Cash equivalents
$
26,931

 
$
—

 
$
—

 
$
26,931

Restricted cash
450

 
—

 
—

 
450

Commodity derivatives, net (a)
26,890

 
(15,101
)
 
—

 
11,789

Provisionally priced contracts (b)
(133,842
)
 
(103,148
)
 
—

 
(236,990
)
Convertible preferred securities (c)
—

 
—

 
13,550

 
13,550

Other assets and liabilities (d)
8,635

 
(3,324
)
 
350

 
5,661

Total
$
(70,936
)
 
$
(121,573
)
 
$
13,900

 
$
(178,609
)
(in thousands)
March 31, 2015
Assets (liabilities)
Level 1
 
Level 2
 
Level 3
 
Total
Cash equivalents
$
1,491

 
$
—

 
$
—

 
$
1,491

Restricted cash
685

 
—

 
—

 
685

Commodity derivatives, net (a)
60,796

 
(31,214
)
 
—

 
29,582

Provisionally priced contracts (b)
55,141

 
59,981

 
—

 
115,122

Convertible preferred securities (c)
—

 
—

 
13,300

 
13,300

Other assets and liabilities (d)
11,583

 
(3,517
)
 
—

 
8,066

Total
$
129,696

 
$
25,250

 
$
13,300

 
$
168,246

 
(a)
Includes associated cash posted/received as collateral
(b)
Included in "Provisionally priced contracts" are those instruments based only on underlying futures values (Level 1) and delayed price contracts (Level 2)
(c)
Recorded in “Other noncurrent assets” on the Company’s Condensed Consolidated Balance Sheets
(d)
Included in other assets and liabilities are deferred compensation assets, ethanol risk management contracts, and foreign exchange derivative contracts (Level 1), interest rate derivatives (Level 2), and contingent consideration to the former owners of Kay Flo Industries, Inc (Level 3).

Level 1 commodity derivatives reflect the fair value of the exchange-traded futures and options contracts that the Company holds, net of the cash collateral that the Company has in its margin account.

The majority of the Company’s assets and liabilities measured at fair value are based on the market approach valuation technique. With the market approach, fair value is derived using prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

The Company’s net commodity derivatives primarily consist of futures or options contracts via regulated exchanges and contracts with producers or customers under which the future settlement date and bushels (or gallons in the case of ethanol contracts) of commodities to be delivered (primarily wheat, corn, soybeans and ethanol) are fixed and under which the price may or may not be fixed. Depending on the specifics of the individual contracts, the fair value is derived from the futures or

21

options prices on the CME or the New York Mercantile Exchange for similar commodities and delivery dates as well as observable quotes for local basis adjustments (the difference, which is attributable to local market conditions, between the quoted futures price and the local cash price). Because basis for a particular commodity and location typically has multiple quoted prices from other agribusinesses in the same geographical vicinity and is used as a common pricing mechanism in the Agribusiness industry, we have concluded that basis is a Level 2 fair value input for purposes of the fair value disclosure requirements related to our commodity derivatives. Although nonperformance risk, both of the Company and the counterparty, is present in each of these commodity contracts and is a component of the estimated fair values, based on the Company’s historical experience with its producers and customers and the Company’s knowledge of their businesses, the Company does not view nonperformance risk to be a material input to fair value for these commodity contracts.

These fair value disclosures exclude physical grain inventories measured at net realizable value. The net realizable value used to measure the Company’s agricultural commodity inventories is the fair value (spot price of the commodity in an exchange), less cost of disposal and transportation based on the local market. This valuation would generally be considered Level 2. The amount is disclosed in Note 2 Inventories. Changes in the net realizable value of commodity inventories are recognized as a component of cost of sales and merchandising revenues.

Provisionally priced contract liabilities are those for which the Company has taken ownership and possession of grain but the final purchase price has not been established. In the case of payables where the unpriced portion of the contract is limited to the futures price of the underlying commodity or we have delivered provisionally priced grain and a subsequent payable or receivable is set up for any futures changes in the grain price, quoted CBOT prices are used and the liability is deemed to be Level 1 in the fair value hierarchy. For all other unpriced contracts which include variable futures and basis components, the amounts recorded for delayed price contracts are determined on the basis of local grain market prices at the balance sheet date and, as such, are deemed to be Level 2 in the fair value hierarchy.

The risk management contract liability allows related ethanol customers to effectively unprice the futures component of their inventory for a period of time, subjecting the bushels to market fluctuations. The Company records an asset or liability for the market value changes of the commodities over the life of the contracts based on quoted CBOT prices and as such, the balance is deemed to be Level 1 in the fair value hierarchy.

The Company’s stake in the Iowa Northern Railway Company ("IANR") was redeemed in the first quarter of 2016. The remaining convertible preferred securities are an interest in an early-stage enterprise in the form of debt securities with the possibility of conversion to equity under certain circumstances.
A reconciliation of beginning and ending balances for the Company’s fair value measurements using Level 3 inputs is as follows:
(in thousands)
2016
 
2015
 
2016
 
2015
 
Contingent Consideration
 
Contingent Consideration
 
Convertible Securities
 
Convertible Securities
Asset (liability) at January 1,
$
(350
)
 
$
—

 
$
13,550

 
$
13,300

Gains (losses) included in earnings
190

 
—

 
710

 
—

Sales proceeds
—

 
—

 
(13,485
)
 
—

Unrealized gains (losses) included in other comprehensive income
—

 
—

 
—

 
—

Asset at March 31,
$
(160
)
 
$
—

 
$
775

 
$
13,300


The following tables summarize quantitative information about the Company's Level 3 fair value measurements as of March 31, 2016 , December 31, 2015 and March 31, 2015 :
Quantitative Information about Level 3 Fair Value Measurements
(in thousands)
Fair Value as of March 31, 2016
 
Valuation Method
 
Unobservable Input
 
Weighted Average
Convertible Notes
$
775

 
Cost basis plus interest
 
N/A
 
N/A
 
 
 
 
 
 
 
 

22

(in thousands)
Fair Value as of December 31, 2015
 
Valuation Method
 
Unobservable Input
 
Weighted Average
Convertible Preferred Securities
$
12,800

 
Market Approach
 
EBITDA Multiples
 
5.6

 
 
 
Income Approach
 
Discount Rate
 
14.5
%
 
 
 
 
 
 
 
 
Convertible Notes
$
750

 
Cost basis plus interest
 
N/A
 
N/A

 
 
 
 
 
 
 
 
(in thousands)
Fair Value as of March 31, 2015
 
Valuation Method
 
Unobservable Input
 
Weighted Average
Convertible Preferred Securities
$
13,300

 
Market Approach
 
EBITDA Multiples
 
6.61

 
 
 
Income Approach
 
Discount Rate
 
14.5
%

Fair Value of Financial Instruments
The fair value of the Company’s long-term debt is estimated using quoted market prices or discounted future cash flows based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. As such, the Company has concluded that the fair value of long-term debt is considered Level 2 in the fair value hierarchy.
(in thousands)
March 31,
2016

December 31,
2015
 
March 31,
2015
Fair value of long-term debt, including current maturities
$
472,997

 
$
467,703

 
$
350,684

Fair value in excess of carrying value
12,577

 
3,708

 
8,390

The fair value of the Company’s cash equivalents, accounts receivable and accounts payable approximate their carrying value as they are close to maturity.

11. Related Party Transactions
Equity Method Investments
The Company, directly or indirectly, holds investments in companies that are accounted for under the equity method. The Company’s equity in these entities is presented at cost plus its accumulated proportional share of income or loss, less any distributions it has received.
On December 4, 2015, Lansing Trade Group, LLC ("LTG") agreed to the sale of equity to New Hope Liuhe Investment (USA), Inc., a U.S. subsidiary of the Chinese company, New Hope Liuhe Co. Ltd. New Hope paid cash for a 20 percent equity interest in LTG. The impact of this transaction to the Company was a reduction in total ownership share of LTG from approximately 38.5 percent to 31.0 percent which includes dilution from newly issued shares as well as a redemption of shares that occurred on a pro rata basis between the Company and the other existing owners of LTG. The Company recognized a total gain of $23.1 million on these transactions. Cash of $8.2 million was received of which $1.3 million was a return of capital and $6.7 million was a return on capital. The remainder was a book gain on cash received in excess of basis in the shares redeemed.
The following table presents the Company’s investment balance in each of its equity method investees by entity:
(in thousands)
March 31, 2016
 
December 31, 2015
 
March 31, 2015
The Andersons Albion Ethanol LLC
$
32,483

 
$
32,871

 
$
28,726

The Andersons Clymers Ethanol LLC
28,199

 
29,278

 
36,063

The Andersons Marathon Ethanol LLC
29,446

 
31,255

 
31,869

Lansing Trade Group, LLC
98,763

 
101,531

 
78,594

Thompsons Limited (a)
45,479

 
43,964

 
44,224

Other
1,713

 
3,208

 
2,606

Total
$
236,083

 
$
242,107

 
$
222,082

 (a) Thompsons Limited and related U.S. operating company held by joint ventures

23

The Company holds a majority interest ( 66% ) in The Andersons Ethanol Investment LLC (“TAEI”). This consolidated entity holds a 50% interest in The Andersons Marathon Ethanol LLC (“TAME”). The noncontrolling interest in TAEI is attributed 34% of the gains and losses of TAME recorded by the Company in its equity in earnings of affiliates.
The following table summarizes income earned from the Company’s equity method investments by entity:
 
% ownership at
March 31, 2016
 
Three months ended
March 31,
(in thousands)
 
2016
 
2015
The Andersons Albion Ethanol LLC
55%
 
$
(322
)
 
$
1,091

The Andersons Clymers Ethanol LLC
38%
 
(1,079
)
 
288

The Andersons Marathon Ethanol LLC
50%
 
(1,809
)
 
333

Lansing Trade Group, LLC
32% (a)
 
(2,767
)
 
2,410

Thompsons Limited (b)
50%
 
(1,000
)
 
(861
)
Other
5%-34%
 
—

 
—

Total
 
 
$
(6,977
)
 
$
3,261

 (a) This does not consider restricted management units which once vested will reduce the ownership percentage by approximately 0.8%
 (b) Thompsons Limited and related U.S. operating company held by joint ventures

Total distributions received from unconsolidated affiliates were $0.1 million and $4.6 million three months ended March 31, 2016 and March 31, 2015 , respectively.

In the first quarter of 2015, LTG and The Andersons Albion Ethanol LLC qualified as significant equity investees of the Company under the income test. The following table presents combined summarized unaudited financial information of these investments for the three months ended March 31, 2016 and 2015:

(in thousands)
Three months ended
March 31,
2016
 
2015
Sales
$
1,462,213

 
$
1,699,063

Gross profit
23,364

 
47,659

Income (loss) from continuing operations
(8,377
)
 
10,586

Net income (loss)
(8,407
)
 
9,345

Net income (loss) attributable to companies
(8,006
)
 
8,343


Investment in Debt Securities
The Company previously owned 100% of the cumulative convertible preferred shares of Iowa Northern Railway Company (“IANR”), which operates a short-line railroad in Iowa. In the first quarter of 2016, these shares were redeemed and the Company no longer has an ownership stake with this entity. See Footnote 10 for additional information on the effects of this transaction.
Related Party Transactions
In the ordinary course of business, the Company will enter into related party transactions with each of the investments described above, along with other related parties. The following table sets forth the related party transactions entered into for the time periods presented:

24

 
Three months ended
March 31,
(in thousands)
2016
 
2015
Sales revenues
$
194,838

 
$
149,472

Service fee revenues (a)
4,636

 
4,925

Purchases of product
101,953

 
102,795

Lease income (b)
2,037

 
1,663

Labor and benefits reimbursement (c)
3,898

 
3,032

Other expenses (d)
149

 
338

 
(a)
Service fee revenues include management fees, corn origination fees, ethanol and distillers dried grains (DDG) marketing fees, and other commissions.
(b)
Lease income includes the lease of the Company’s Albion, Michigan and Clymers, Indiana grain facilities as well as certain railcars to the various ethanol LLCs and IANR.
(c)
The Company provides all operational labor to the unconsolidated ethanol LLCs and charges them an amount equal to the Company’s costs of the related services.
(d)
Other expenses include payments to IANR for repair facility rent and use of their railroad reporting mark, payment to LTG for the lease of railcars and other various expenses.
(in thousands)
March 31, 2016
 
December 31, 2015
 
March 31, 2015
Accounts receivable (e)
$
19,066

 
$
13,362

 
$
13,507

Accounts payable (f)
16,124

 
13,784

 
12,911

(e)
Accounts receivable represents amounts due from related parties for sales of corn, leasing revenue and service fees.
(f)
Accounts payable represents amounts due to related parties for purchases of ethanol and other various items.

For the three months ended March 31, 2016 and 2015 , revenues recognized for the sale of ethanol that the Company purchased from the unconsolidated ethanol LLCs were $87.6 million and $101.8 million , respectively. For the three months ended March 31, 2016 and 2015 , revenues recognized for the sale of corn to the unconsolidated ethanol LLCs under these agreements were $118.5 million and $96.7 million , respectively.

From time to time, the Company enters into derivative contracts with certain of its related parties for the purchase and sale of corn and ethanol, for similar price risk mitigation purposes and on similar terms as the purchase and sale of derivative contracts it enters into with unrelated parties. The fair value of derivative contract assets with related parties as of March 31, 2016 ,  December 31, 2015 and March 31, 2015 was $ 2.3 million , $ 2.3 million and $ 2.4 million , respectively. The fair value of derivative contract liabilities with related parties as of March 31, 2016 , December 31, 2015 and March 31, 2015 was $ 0.4 million , $ 0.3 million and $ 0.3 million , respectively.

12. Segment Information
The Company’s operations include five reportable business segments that are distinguished primarily on the basis of products and services offered. The Grain business includes grain merchandising, the operation of terminal grain elevator facilities and the investments in LTG and Thompsons Limited. The Ethanol business purchases and sells ethanol and also manages the ethanol production facilities organized as limited liability companies, one is consolidated and three are investments accounted for under the equity method. There are various service contracts for these investments. Rail operations include the leasing, marketing and fleet management of railcars and other assets, railcar repair and metal fabrication. The Plant Nutrient business manufactures and distributes agricultural inputs, primarily fertilizer, to dealers and farmers, along with turf care and corncob-based products. The Retail business operates large retail stores, a specialty food market, a distribution center and a lawn and garden equipment sales and service facility. Included in “Other” are the corporate level costs not attributed to an operating segment.
The segment information below includes the allocation of expenses shared by one or more operating segments. Although management believes such allocations are reasonable, the operating information does not necessarily reflect how such data might appear if the segments were operated as separate businesses. Inter-segment sales are made at prices comparable to normal, unaffiliated customer sales. The Company does not have any customers who represent 10 percent or more of total revenues.

25

 
Three months ended
March 31,
(in thousands)
2016
 
2015
Revenues from external customers
 
 
 
Grain
$
538,814

 
$
558,676

Ethanol
114,693

 
132,801

Plant Nutrient
166,991

 
153,951

Rail
39,609

 
44,216

Retail
27,772

 
28,581

Total
$
887,879

 
$
918,225

 
Three months ended
March 31,
(in thousands)
2016
 
2015
Inter-segment sales
 
 
 
Grain
$
1,451

 
$
1,689

Plant Nutrient
247

 
317

Rail
379

 
181

Total
$
2,077

 
$
2,187

 
Three months ended
March 31,
(in thousands)
2016
 
2015
Income (loss) before income taxes
 
 
 
Grain
$
(17,405
)
 
$
743

Ethanol
(2,680
)
 
5,280

Plant Nutrient
1,704

 
424

Rail
9,375

 
10,313

Retail
(2,076
)
 
(2,183
)
Other
(10,900
)
 
(9,387
)
Noncontrolling interests
(926
)
 
(152
)
Total
$
(22,908
)
 
$
5,038

(in thousands)
March 31, 2016
 
December 31, 2015
 
March 31, 2015
Identifiable assets
 
 
 
 
 
Grain
$
948,802

 
$
1,010,810

 
$
1,022,753

Ethanol
177,987

 
183,080

 
200,095

Plant Nutrient
591,639

 
531,753

 
496,906

Rail
380,347

 
405,702

 
381,909

Retail
46,653

 
44,135

 
47,413

Other
174,210

 
183,621

 
138,551

Total
$
2,319,638

 
$
2,359,101

 
$
2,287,627


13. Commitments and Contingencies
The Company is party to litigation, or threats thereof, both as defendant and plaintiff with some regularity, although individual cases that are material in size occur infrequently. As a defendant, the Company establishes reserves for claimed amounts that are considered probable, and capable of estimation. If those cases are resolved for lesser amounts, the excess reserves are taken into income and, conversely, if those cases are resolved for larger than the amount the Company has accrued, the Company records additional expense. The Company believes it is unlikely that the results of its current legal proceedings for which it is the defendant, even if unfavorable, will be material. As a plaintiff, amounts that are collected can also result in sudden, non-recurring income.

26

Litigation results depend upon a variety of factors, including the availability of evidence, the credibility of witnesses, the performance of counsel, the state of the law, and the impressions of judges and jurors, any of which can be critical in importance, yet difficult, if not impossible, to predict. Consequently, cases currently pending, or future matters, may result in unexpected, and non-recurring losses, or income, from time to time. Finally, litigation results are often subject to judicial reconsideration, appeal and further negotiation by the parties, and as a result, the final impact of a particular judicial decision may be unknown for some time, or may result in continued reserves to account for the potential of such post-verdict actions.
The estimated range of loss for all outstanding claims that are considered reasonably possible is not material.
Build-to-Suit Lease
In August, 2015, the Company entered into a lease agre ement with an initial term of 15 years for a build-to-suit facility to be used as the new corporate headquarters. Construction is expected to be completed in the third quarter of 2016. Since the Company is deemed to be the owner of this facility for accounting purposes during the construction period, we have recognized an asset and a corresponding financing obligation.
As of March 31, 2016, we have recorded a build-to-suit financing obligation of $10.0 million in other long-term liabilities and $0.9 million in other current liabilities.



27


14. Supplemental Cash Flow Information

Certain supplemental cash flow information, including noncash investing and financing activities for the three months ended March 31, 2016 and 2015 are as follows:
 
Three months ended
March 31,
(in thousands)
2016
 
2015
Noncash investing and financing activity
 
 
 
Capital projects incurred but not yet paid
$
7,305

 
$
3,710

Purchase of a productive asset through seller-financing
—

 
1,010

Shares issued for acquisition of business
—

 
4,303

Dividends declared not yet paid
4,341

 
3,985


15. Business Acquisitions

There were no business acquisitions completed in the first quarter of 2016.

Prior Year Business Acquisitions

On May 18, 2015, the Company purchased Kay Flo Industries, Inc. and certain subsidiaries. The Company acquired 100% of the outstanding shares of Kay Flo Industries, Inc. In connection with the acquisition, the Company agreed to pay contingent consideration based on the achievement of specified objectives, including reaching targeted gross profit thresholds. The range of undiscounted amounts the Company could be required to pay under the contingent consideration arrangement is between $0 and $24 million .

The total fair value of consideration for the acquisitions was $129.4 million , including working capital and $0.4 million in estimated fair value of the contingent consideration arrangement. The Company has funded this transaction with long-term debt, short-term debt, and cash on hand. The debt has been drawn from the Company's existing line of credit.

The purchase price allocation was finalized as of December 31, 2015 and is summarized below:
(in thousands)
 
Cash
$
880

Accounts receivable
14,699

Inventory
25,094

Other assets
6,155

Intangibles
53,091

Goodwill
47,735

Property, plant, and equipment
27,478

Accounts payable
(12,131
)
Other current liabilities
(4,866
)
Other non-current liabilities
(28,706
)
Total purchase price
$
129,429


The goodwill recognized as a result of the Kay Flo Industries, Inc. acquisition is $47.7 million and is allocated to the Plant Nutrient segment. The goodwill is not deductible for tax purposes. The goodwill recognized is primarily attributable to expansion of the segment's geographic range and the ability to realize synergies from the combination of product lines and marketing efforts.
Details of the intangible assets acquired are as follows:

28

(in thousands)
Fair Value
 
Useful Life
Unpatented technology
$
13,400

 
10 years
Customer relationships
22,800

 
10 years
Trade names
15,500

 
7 to 10 years
Noncompete agreement
1,342

 
5 years
Favorable leasehold interest
49

 
5 years
Total identifiable intangible assets
$
53,091

 
10 years *
*weighted average number of years


16. Subsequent Events

On April 5, 2016 the Company's Board of Directors approved the sale of eight grain and agronomy locations in Iowa to MaxYield Cooperative of West Bend, Iowa. The Andersons acquired these locations as a part of its 2012 acquisition from Green Plains Grain Company. The Tennessee assets acquired during that same transaction will remain a part of the Company.

This transaction closed on May 2, 2016.


29


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward Looking Statements
The following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contains forward-looking statements which relate to future events or future financial performance and involve known and unknown risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by these forward-looking statements. You are urged to carefully consider these risks and others, including those risk factors listed under Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2015 (“2015 Form 10-K”). In some cases, you can identify forward-looking statements by terminology such as “may,” “anticipates,” “believes,” “estimates,” “predicts,” or the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. These forward-looking statements relate only to events as of the date on which the statements are made and the Company undertakes no obligation, other than any imposed by law, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

Critical Accounting Policies and Estimates
Our critical accounting policies and critical accounting estimates, as described in our 2015 Form 10-K, have not materially changed through the first quarter of 2016.
Executive Overview

Our operations are organized, managed and classified into five reportable business segments: Grain, Ethanol, Plant Nutrient, Rail, and Retail. Each of these segments is based on the nature of products and services offered.

The agricultural commodity-based business is one in which changes in selling prices generally move in relationship to changes in purchase prices. Therefore, increases or decreases in prices of the agricultural commodities that the business deals in will have a relatively equal impact on sales and cost of sales and a much less significant impact on gross profit. As a result, changes in sales for the period may not necessarily be indicative of the overall performance of the business and more focus should be placed on changes to gross profit.
Grain Group
The Grain Group's performance in the first quarter reflects significantly reduced performance in its core grain assets, as well as lower returns from affiliates. The decline in results is attributable to reductions in margin per bushel, as well as limited opportunities for space income on corn and wheat. Low price volatility in the first quarter, coupled with adequate on-farm storage and compressed margins for end users of grain products, also reduced the incentive for farmers to move their grain during the quarter.
Grain inventories on hand at March 31, 2016 were 104.2 million bushels, of which 2.8 million bushels were stored for others. This compares to 101.6 million bushels on hand at March 31, 2015, of which 1.8 million bushels were stored for others. Total grain storage capacity was approximately 161 million bushels at March 31, 2016 compared to 162 million bushels at March 31, 2015.
The outlook for the Grain Group remains cautious as the industry builds inventories back from lower storage utilization rates which we have seen in the past few years. Additionally, the unfavorable fundamentals in the Eastern Corn Belt due to the poor harvest in 2015 continue to put pressure on our assets due to our concentration in that region.
Ethanol Group
The Ethanol Group's first quarter results reflect lower margins, which is driven by lower ethanol prices, partly offset by a decrease in natural gas prices with corn input prices remaining relatively flat. First quarter margins on sales of ethanol were lower than the prior year resulting in an operating loss for the quarter. Driving demand remains strong which supports high sales volumes, however pressure from unleaded prices as well as high levels of production maintained pressure on margins. In addition to lower prices on the finished product side, regional weather challenges adversely impacted the corn crop in 2015 leading to a continued increase in average feedstock costs at several of our facilities.  This will continue to put pressure on profitability at these locations until a new harvest normalizes this regional price variation in the second half of the year.
Ethanol volumes shipped for the three months ended March 31, 2016 and 2015 were as follows:

30
Table of Contents

(in thousands)
Three months ended
March 31,
 
2016
 
2015
Ethanol (gallons shipped)
73,783

 
75,524

E-85 (gallons shipped)
6,320

 
5,559

Corn Oil (pounds shipped)
3,614

 
3,368

DDG (tons shipped) *
40

 
41

* DDG tons shipped converts wet tons to a dry ton equivalent amount

The above table shows only shipped volumes that flow through the Company's sales revenues. Total ethanol, corn oil and DDG production by the unconsolidated LLCs are higher, however, the portion of this volume that is sold directly to their customers is excluded here.
Plant Nutrient Group
The Plant Nutrient Group's results reflect higher volumes in our agricultural nutrient businesses due to the second quarter 2015 acquisition of Kay Flo Industries, Inc. offset by higher overhead costs and decreases in our retail farm center operations. Sales volumes and margins of lawn products increased significantly compared to the prior year.

Storage capacity at our wholesale nutrient and farm center facilities, including leased storage, was approximately 508 thousand tons for dry nutrients and approximately 572 thousand tons for liquid nutrients at March 31, 2016 and approximately 508 thousand tons for dry nutrients and approximately 444 thousand tons for liquid nutrients at March 31, 2015. The increase in our storage capacity is a result of the three additional liquid fertilizer facilities acquired as part of Kay Flo Industries, Inc in the second quarter of 2015.
Fertilizer tons shipped (including sales and service tons) for the three months ended March 31, 2016 and 2015 were as follows:
(in thousands)
Three months ended
March 31,
 
2016
 
2015
Sales tons
397

 
334

Service tons
44

 
41

Total tons
441

 
375

Rail Group
The Rail Group maintained strong utilization rates and flat lease rates per car in the first quarter of 2016. Railcars, locomotives, and barges under management (owned, leased or managed for financial institutions in non-recourse arrangements) at March 31, 2016 were 22,991 compared to 22,879 at March 31, 2015. The average utilization rate (railcars and locomotives under management that are in lease services, exclusive of railcars managed for third party investors) has decreased to 91.5% from 91.8% for the three months ended March 31, 2016 and 2015, respectively.
The Group will continue to focus on ways to strategically grow the rail fleet and continue to look for opportunities to open new repair facilities and other adjacent businesses. We also anticipate future repair business related to new U.S. Department of Transportation rules affecting tank cars across the country.
Retail Group
The retail industry is highly competitive. Our stores compete with a variety of retail merchandisers, including home centers, department and hardware stores, as well as local and national grocers.
Other
Our “Other” represents corporate functions that provide support and services to the operating segments. The results contained within this segment include expenses and benefits not allocated to the operating segments, including a portion of our ERP project.





31
Table of Contents

Operating Results
The following discussion focuses on the operating results as shown in the Condensed Consolidated Statements of Operations with a separate discussion by segment. Additional segment information is included in the Notes to the Condensed Consolidated Financial Statements herein in Note 12. Segment Information.
 
Three months ended
March 31,
(in thousands)
2016
 
2015
Sales and merchandising revenues
$
887,879

 
$
918,225

Cost of sales and merchandising revenues
820,124

 
834,912

Gross profit
67,755

 
83,313

Operating, administrative and general expenses
79,881

 
78,604

Interest expense
7,051

 
6,039

Equity in earnings (loss) of affiliates, net
(6,977
)
 
3,261

Other income, net
3,246

 
3,107

Income (loss) before income taxes
(22,908
)
 
5,038

Loss attributable to noncontrolling interests
(926
)
 
(152
)
Income (loss) before income taxes attributable to The Andersons, Inc.
$
(21,982
)
 
$
5,190

Comparison of the three months ended March 31, 2016 with the three months ended March 31, 2015 :
Grain Group
 
Three months ended
March 31,
(in thousands)
2016
 
2015
Sales and merchandising revenues
$
538,814

 
$
558,676

Cost of sales and merchandising revenues
522,614

 
528,951

Gross profit
16,200

 
29,725

Operating, administrative and general expenses
28,022

 
28,961

Interest expense
2,487

 
2,406

Equity in earnings (loss) of affiliates, net
(3,767
)
 
1,549

Other income, net
668

 
833

Income (loss) before income taxes
(17,408
)
 
740

Loss attributable to noncontrolling interest
(3
)
 
(3
)
Income (loss) before income taxes attributable to The Andersons, Inc.
$
(17,405
)

$
743


Operating results for the Grain Group have decreased $18.1 million compared to the results of the same period last year. Sales and merchandising revenues decreased $19.9 million. This was partially offset by a decrease of cost of sales and merchandising revenues of $6.3 million for a net unfavorable gross profit impact of $13.5 million. This decrease was driven by significantly lower margins on bushels sold as well as limited opportunities for storage income and basis appreciation. The impact of risk management positions and blending income were minimal compared to prior year.

Operating, administrative and general expenses showed a modest decrease of $0.9 million compared to the same period in 2015.

Equity in earnings of affiliates decreased $5.3 million compared to the same period in 2015. This was primarily driven by reduced performance of $5.2 million at Lansing Trade Group.






32
Table of Contents

Ethanol Group
 
Three months ended
March 31,
(in thousands)
2016
 
2015
Sales and merchandising revenues
$
114,693

 
$
132,801

Cost of sales and merchandising revenues
112,357

 
126,515

Gross profit
2,336

 
6,286

Operating, administrative and general expenses
2,748

 
2,892

Interest expense
11

 
17

Equity in earnings (loss) of affiliates, net
(3,210
)
 
1,712

Other income, net
30

 
42

Income (loss) before income taxes
(3,603
)
 
5,131

Loss attributable to noncontrolling interests
(923
)
 
(149
)
Income (loss) before income taxes attributable to The Andersons, Inc.
$
(2,680
)
 
$
5,280


Operating results for the Ethanol Group decreased $8.0 million over the results of the same period last year. Sales and merchandising revenues decreased $18.1 million, almost entirely related to ethanol sales. Ethanol gallons sold decreased 2 percent and the average price of ethanol decreased 15 percent. The $14.2 million decrease in cost of sales is due to the lower volumes noted above as well as lower input costs on natural gas.

Equity in earnings of affiliates decreased $4.9 million due to significantly lower earnings from the unconsolidated ethanol LLCs. The ethanol plants' performance was unfavorably impacted by significantly lower ethanol margins and pricing pressure on ethanol byproducts compared to the prior year.
Plant Nutrient Group
 
Three months ended
March 31,
(in thousands)
2016
 
2015
Sales and merchandising revenues
$
166,991

 
$
153,951

Cost of sales and merchandising revenues
140,302

 
131,985

Gross profit
26,689

 
21,966

Operating, administrative and general expenses
23,882

 
21,217

Interest expense
1,898

 
1,360

Other income, net
795

 
1,035

Income before income taxes
$
1,704

 
$
424


Operating results for the Plant Nutrient Group increased $1.3 million from the same period last year. Sales and merchandising revenues increased $13.0 million primarily due to the new facilities acquired from Kay Flo Industries, Inc in 2015 as well as the integration of acquired product lines into legacy facilities and increases in legacy base nutrient sales volumes. This was partly offset by a 9 percent decrease in average price per fertilizer ton sold. The increase in cost of sales and merchandising revenues follows the additional sales volumes noted above. Additionally, there was an increase in the proportion of sales attributable to higher margin professional lawn and turf products that had a positive impact on gross margins. The total impact of the volume increases and margin expansion to gross profit was $4.7 million.

Operating, administrative, and general expenses increased $2.7 million due to additional costs from the acquisition of Kay Flo Industries, Inc in 2015.





33
Table of Contents

Rail Group
 
Three months ended
March 31,
(in thousands)
2016
 
2015
Sales and merchandising revenues
$
39,609

 
$
44,216

Cost of sales and merchandising revenues
25,049

 
26,894

Gross profit
14,560

 
17,322

Operating, administrative and general expenses
4,871

 
6,319

Interest expense
1,691

 
1,529

Other income, net
1,377

 
839

Income before income taxes
$
9,375

 
$
10,313


Operating results for the Rail Group decreased $0.9 million from the same period last year. Sales and merchandising revenues decreased $4.6 million. Revenue from car sales decreased $7.2 million, leasing revenues increased $0.8 million, and repair and other revenues increased $1.8 million. Cost of sales and merchandising revenues decreased $1.8 million compared to the same period last year primarily as a result of lower car sales volume. Gross profit decreased by $2.8 million compared to last year. This was largely driven by a $2.1 million reduction in gross profit on car sales as that activity was down from the prior year. Other income for 2016 included a gain of $0.7 million on the redemption of our investment in Iowa Northern Railway Company.
Retail Group
 
Three months ended
March 31,
(in thousands)
2016
 
2015
Sales and merchandising revenues
$
27,772

 
$
28,581

Cost of sales and merchandising revenues
19,802

 
20,567

Gross profit
7,970

 
8,014

Operating, administrative and general expenses
9,989

 
10,169

Interest expense
146

 
125

Other income, net
89

 
97

Loss before income taxes
$
(2,076
)
 
$
(2,183
)

Operating results for the Retail Group improved slightly from the same period last year, with a 2% decrease in customer count offset by a 1% increase in gross margin and effective cost controls.
Other
 
Three months ended
March 31,
(in thousands)
2016
 
2015
Sales and merchandising revenues
$
—

 
$
—

Cost of sales and merchandising revenues
—

 
—

Gross profit
—

 
—

Operating, administrative and general expenses
10,369

 
9,046

Interest expense
818

 
602

Other income, net
287

 
261

Loss before income taxes
$
(10,900
)
 
$
(9,387
)

The other operating loss not allocated to business segments increased $1.5 million compared to the same period in the prior year. The majority of the change was a $2.5 million increase in severance charges offset by reductions in unallocated employee benefit costs and corporate incentive compensation.


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Income Taxes

An income tax benefit of $7.3 million was provided at 31.8%. In the first quarter of 2015, income tax expense of $1.1 million was provided at 21.7%. The lower 2015 effective tax rate is primarily due to benefits attributable to the accounting for the investment in a foreign affiliate.

The Company anticipates that its 2016 effective annual rate will be approximately 33%. The Company’s actual 2015 effective tax rate was a benefit of 2.1%. The lower befefit rate in 2015 relative to our losses before income taxes was primarily due to the impact of the 2015 write-off of goodwill that did not provide a corresponding tax benefit.


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Liquidity and Capital Resources
Working Capital
At March 31, 2016 , we had working capital of $201.8 million . The following table presents changes in the components of current assets and current liabilities:
(in thousands)
March 31, 2016
 
March 31, 2015
 
Variance
Current Assets:
 
 
 
 
 
Cash and cash equivalents
$
46,301

 
$
54,461

 
$
(8,160
)
Restricted cash
718

 
685

 
33

Accounts receivable, net
207,740

 
209,928

 
(2,188
)
Inventories
703,452

 
743,957

 
(40,505
)
Commodity derivative assets – current
61,316

 
86,824

 
(25,508
)
Deferred income taxes
—

 
12,878

 
(12,878
)
Other current assets
76,575

 
65,017

 
11,558

Total current assets
1,096,102

 
1,173,750

 
(77,648
)
Current Liabilities:
 
 
 
 
 
Short-term debt
274,002

 
311,660

 
(37,658
)
Trade and other payables
367,338

 
370,377

 
(3,039
)
Customer prepayments and deferred revenue
100,384

 
130,254

 
(29,870
)
Commodity derivative liabilities – current
33,394

 
55,401

 
(22,007
)
Accrued expenses and other current liabilities
65,129

 
64,065

 
1,064

Current maturities of long-term debt
54,044

 
19,037

 
35,007

Total current liabilities
894,291

 
950,794

 
(56,503
)
Working Capital
$
201,811

 
$
222,956

 
$
(21,145
)
In comparison to March 31, 2015, current assets decreased primarily due to lower commodity prices reducing the carrying value of inventories and commodity derivative assets as well as the reclassification of deferred tax assets as noncurrent as noted in Footnote 1.
Current liabilities decreased primarily for similar reasons. Less short-term financing is required to carry grain and fertilizer inventory at lower commodity prices and the prepaid deposits on fertilizer purchases as of March 31, 2016 reflect this same change in pricing. Offsetting these declines was an increase in current maturities of long-term debt as additional notes become due in the next 12 months.
Sources and Uses of Cash
Operating Activities
Our operating activities used cash of $267.9 million and $286.7 million in the first three months of 2016 and 2015, respectively. The cash used year to date is primarily a result of net losses incurred as well as the fact that use of cash is typically high in the first quarter as the Company prepares for the spring planting season. Additionally, cash distributions from unconsolidated equity method investments were minimal.
Investing Activities
Investing activities provided cash of $0.3 million through the first three months of 2016, compared to using cash of $17.5 million of cash in the prior year. The decrease in cash used is due primarily to a reduction of $16.1 million in railcar acquisitions and proceeds from sale of investments of $15.0 million. This was offset by a $7.9 million decrease in proceeds from railcar sales and a $5.6 million increase in purchases of other property, plant, and equipment. The variability in railcar purchases and sales is driven by timing of opportunities in the Rail Group asset market.
In 2016, we expect to spend a total of $142.0 million for the purchase of railcars, barges and related leases and capitalized modifications of railcars. We also expect to offset this amount by proceeds from the sales and dispositions of approximately $118.0 million during the year. Through March 31, 2016, we invested $7.3 million in the purchase of additional railcars, which is partially offset by proceeds from sales of railcars of $5.0 million. Through March 31, 2015, we invested $23.5 million in the purchase of additional railcars, which was partly offset by proceeds from sales of $12.9 million.

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Table of Contents

Additionally, total capital spending for 2016 on property, plant and equipment in our base business excluding rail leasing activity, but inclusive of information technology spending and the construction of a new corporate headquarters building is expected to be approximately $110.9 million.
Financing Activities
Financing activities provided cash of $250.2 million and $243.9 million for the three months ended March 31, 2016 and 2015, respectively. Short term borrowings decreased which was offset by a larger issuance of private placement debt compared to the prior year. We are party to borrowing arrangements with a syndicate of banks that provides a total of $873.7 million in borrowings, which includes $23.7 million of debt of The Andersons Denison Ethanol LLC which is non-recourse to the Company. Of that total, we had $538.6 million remaining available for borrowing at March 31, 2016. Peak short-term borrowings to date were $412.0 million on January 6, 2016. Typically, our highest borrowing occurs in the Spring due to seasonal inventory requirements in our fertilizer and grain businesses. In addition to increased short-term borrowings, proceeds from long-term debt of $76.9 million were received, which was offset by $80.4 million of long-term debt reductions.

We paid $4.3 million in dividends in the first three months of 2016 compared to $4.1 million in the prior year. We paid $0.155 per common share for the dividend paid in January, 2016, and $0.14 per common share for the dividend paid in January, 2015. On February 26, 2016, we declared a cash dividend of $0.155 per common share payable on April 22, 2016 to shareholders of record on April 1, 2016.
Certain of our long-term borrowings include covenants that, among other things, impose minimum levels of equity and limitations on additional debt. We are in compliance with all such covenants as of March 31, 2016. In addition, certain of our long-term borrowings are collateralized by first mortgages on various facilities or are collateralized by railcar assets. Our non-recourse long-term debt is collateralized by ethanol plant assets.
Because we are a significant consumer of short-term debt in peak seasons and the majority of this is variable rate debt, increases in interest rates could have a significant impact on our profitability. In addition, periods of high grain prices and/or unfavorable market conditions could require us to make additional margin deposits on our exchange traded futures contracts. Conversely, in periods of declining prices, we receive a return of cash.
We believe our sources of liquidity will be adequate to fund our operations, capital expenditures and payments of dividends in the foreseeable future.

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Table of Contents

Off-Balance Sheet Transactions

Our Rail Group utilizes leasing arrangements that provide off-balance sheet financing for its activities. We lease assets from financial intermediaries through sale-leaseback transactions, the majority of which involve operating leasebacks. Rail Group assets we own or lease from a financial intermediary are generally leased to a customer under an operating lease. We also arrange non-recourse lease transactions under which we sell assets to a financial intermediary, and assign the related operating lease to the financial intermediary on a non-recourse basis. In such arrangements, we generally provide ongoing maintenance and management services for the financial intermediary, and receive a fee for such services. On most of the assets, we hold an option to purchase the assets at the end of the lease.

The following table describes our Rail Group asset positions at March 31, 2016 :  
Method of Control
Financial Statement
 
Units
Owned-railcars available for sale
On balance sheet – current
 
26

Owned-railcar assets leased to others
On balance sheet – non-current
 
16,076

Railcars leased from financial intermediaries
Off balance sheet
 
4,138

Railcars – non-recourse arrangements
Off balance sheet
 
2,669

Total Railcars
 
 
22,909

Locomotive assets leased to others
On balance sheet – non-current
 
38

Locomotives leased from financial intermediaries
Off balance sheet
 
4

Total Locomotives
 
 
42

Barge assets leased to others
On balance sheet – non-current
 
—

Barge assets leased from financial intermediaries
Off balance sheet
 
40

Total Barges
 
 
40

In addition, we manage 414 railcars for third-party customers or owners for which we receive a fee.

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Table of Contents


Item 3. Quantitative and Qualitative Disclosures about Market Risk
For further information, refer to our Annual Report on Form 10-K for the year ended December 31, 2015. There were no material changes in market risk, specifically commodity and interest rate risk during the quarter ended March 31, 2016 .

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer ("Certifying Officers"), as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As required by Rule 13a-15(b) of the Exchange Act, the Company carried out an evaluation, under the supervision and with the participation of management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of the end of the period covered by this quarterly report. Based on the results of this evaluation, management concluded that, as of March 31, 2016, the Company's disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
Management concluded that the Company’s system of internal control over financial reporting was effective as of December 31, 2015.  As required by Rule 13a-15(d) of the Exchange Act, the Company carried out an evaluation, under the supervision and with the participation of management, including its Chief Executive Officer and Chief Financial Officer, of any change in the Company’s internal controls over financial reporting that have materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting. The Company is undertaking the phased implementation of an ERP software system. The Company believes it is maintaining and monitoring appropriate internal controls during the implementation period and further believes that its internal control environment will be enhanced as a result of this implementation.  There have been no other changes in the Company’s internal controls over financial reporting during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.




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Table of Contents


Part II. Other Information

Item 1. Legal Proceedings
We are currently subject to various claims and suits arising in the ordinary course of business, which include environmental issues, employment claims, contractual disputes, and defensive counter claims. We accrue liabilities where litigation losses are deemed probable and estimable. We believe it is unlikely that the results of our current legal proceedings, even if unfavorable, will be materially different from what we currently have accrued. There can be no assurance, however, that any claims or suits arising in the future, whether taken individually or in the aggregate, will not have a material adverse effect on our financial condition or results of operations.
Subsequent to March 31, 2016, the Company became aware of potential irregularities at a limited number of its grain facilities regarding the quality procedures with respect to certain outbound rail shipments.  An internal investigation has commenced. Management does not believe that the irregularities, if proven to have occurred, will have a material impact on the Company’s statement of operations, cash flows or financial position.

Item 1A. Risk Factors
Our operations are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in this Form 10-Q and could have a material adverse impact on our financial results. These risks can be impacted by factors beyond our control as well as by errors and omissions on our part. The most significant factors known to us that could materially adversely affect our business, financial condition or operating results are described in our 2015 Form 10-K (Item 1A).

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

No sales or repurchases of shares have occurred in 2016.

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Table of Contents

Item 5. Other Information

On March 1, 2016, we granted restricted shares ("RSAs") to our officers, directors, and other members of management and EPS-based performance share units ("PSUs-EPS") at $27.54 and TSR-based performance share units ("PSUs-TSR") at $26.43 to our officers and other members of management. Michael J. Anderson and Harold M. Reed were not eligible for any new share grants in 2016.
 
RSAs
 
PSUs-EPS^
 
PSUs-TSR^
Patrick E. Bowe
37,300

 
37,300

 
37,300

Michael J. Anderson
—

 
—

 
—

John J. Granato
6,658

 
6,658

 
6,658

Harold M. Reed
—

 
—

 
—

Rasesh H. Shah
3,917

 
3,916

 
3,916

Neill C. McKinstray
5,327

 
5,326

 
5,326

Executive group in total*
94,487

 
73,970

 
73,970

Non-executive director group
22,384

 
—

 
—

Non-executive officer employee group
55,758

 
55,744

 
55,744

* Includes one-time grants of restricted shares to incoming executive officers.
^ Maximum amount that may be earned, equal to 200% of the target amount

Item 6. Exhibits
(a) Exhibits
 
 
 
 
No.
  
Description
 
 
10.73
 
Form of Performance Share Unit Agreement - Total Shareholder Return
 
 
 
10.74
 
Form of Performance Share Unit Agreement - Earnings Per Share
 
 
 
10.75
 
Form of Restricted Share Award
 
 
 
10.76
 
Form of Restricted Share Award - Non-Employee Directors Agreement
 
 
 
12
  
Computation of Ratio of Earnings to Fixed Charges
 
 
31.1
  
Certification of the Chief Executive Officer under Rule 13(a)-14(a)/15d-14(a)
 
 
31.2
  
Certification of the Chief Financial Officer under Rule 13(a)-14(a)/15d-14(a)
 
 
32.1
  
Certifications Pursuant to 18 U.S.C. Section 1350
 
 
 
101
 
Financial Statements from the interim report on Form 10-Q of The Andersons, Inc. for the period ended March 31, 2016, formatted in XBRL: (i) the Condensed Consolidated Statements of Operations, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Equity, (v) the Condensed Consolidated Statement of Cash Flows and (vi) the Notes to Condensed Consolidated Financial Statements.


41
Table of Contents

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: May 10, 2016
 
By /s/ Patrick E. Bowe
 
 
Patrick E. Bowe
 
 
Chief Executive Officer (Principal Executive Officer)
 
 
Date: May 10, 2016
 
By /s/ John Granato
 
 
John Granato
 
 
Chief Financial Officer (Principal Financial Officer)
 
 


42
Table of Contents

Exhibit Index
The Andersons, Inc.
 
 
 
 
No.
  
Description
 
 
 
10.73
 
Form of Performance Share Unit Agreement - Total Shareholder Return
 
 
 
10.74
 
Form of Performance Share Unit Agreement - Earnings Per Share
 
 
 
10.75
 
Form of Restricted Share Award
 
 
 
10.76
 
Form of Restricted Share Award - Non-Employee Directors Agreement
 
 
12
  
Computation of Ratio of Earnings to Fixed Charges
 
 
31.1
  
Certification of the Chief Executive Officer under Rule 13(a)-14(a)/15d-14(a)
 
 
31.2
  
Certification of the Chief Financial Officer under Rule 13(a)-14(a)/15d-14(a)
 
 
32.1
  
Certifications Pursuant to 18 U.S.C. Section 1350
 
 
 
101
 
Financial Statements from the interim report on Form 10-Q of The Andersons, Inc. for the period ended March 31, 2016, formatted in XBRL: (i) the Condensed Consolidated Statements of Operations, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Equity, (v) the Condensed Consolidated Statement of Cash Flows and (vi) the Notes to Condensed Consolidated Financial Statements.


43


EXHIBIT 10.73
TSR PERFORMANCE STOCK UNIT AGREEMENT
PURSUANT TO THE
THE ANDERSONS, INC. 2014 LONG-TERM INCENTIVE COMPENSATION PLAN
* * * * *
Participant:      < participant name >
Grant Date:      < grant date >
Target Number of Performance Stock Units (the “ Target PSUs ”): <number of awards granted>
Maximum Number of Shares of Common Stock that may be issued pursuant to this Agreement (the “ Maximum Shares ”): 200% of Target PSUs
* * * * *
THIS PERFORMANCE STOCK UNIT GRANT AGREEMENT (this “ Agreement ”), dated as of the Grant Date specified above, is entered into by and between The Andersons, Inc., a corporation organized in the State of Ohio (the “ Company ”), and the Participant specified above, pursuant to The Andersons, Inc. 2014 Long-Term Incentive Compensation Plan, as in effect and as amended from time to time (the “ Plan ”), which is administered by the Committee.
WHEREAS , it has been determined under the Plan that it would be in the best interests of the Company to grant Performance Stock Units (“ PSUs ”) provided herein to the Participant.
NOW , THEREFORE , in consideration of the mutual covenants and promises hereinafter set forth and for other good and valuable consideration, the parties hereto hereby mutually covenant and agree as follows:
1. Incorporation By Reference; Plan Document Receipt . This Agreement is subject in all respects to the terms and provisions of the Plan (including, without limitation, any amendments thereto adopted at any time and from time to time unless such amendments are expressly intended not to apply to the Performance Stock Unit provided hereunder), all of which terms and provisions are made a part of and incorporated in this Agreement as if they were each expressly set forth herein. Any capitalized term not defined in this Agreement shall have the same meaning as is ascribed thereto in the Plan. The Participant hereby acknowledges receipt of a true copy of the Plan and that the Participant has read the Plan carefully and fully understands its content. In the event of any conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control.
2. Grant of Performance Stock Unit . The Company hereby grants to the Participant, as of the Grant Date specified above, the number of Target PSUs specified above, with the actual number of shares of Common Stock to be issued pursuant to this grant contingent upon satisfaction of the vesting and performance conditions described in Section 3 hereof, subject to Sections 4 through 6 , which may not exceed the Maximum Shares. Except as otherwise provided by the Plan, the Participant agrees and understands that nothing contained in this Agreement provides, or is intended to provide, the Participant with any protection against potential future dilution of the Participant’s interest in the Company for any reason, and no adjustments shall be made for dividends in cash or other property, distributions or other rights in respect of the shares of Common Stock underlying the PSUs, except as otherwise specifically provided for in the Plan or this Agreement.




3. Performance Goals and Vesting of PSUs
(a) The Performance Period for the PSUs granted hereunder shall be the three (3) year period beginning January 1, 2016 and ending December 31, 2018.
(b) PSUs shall vest following the conclusion of the Performance Period based on the Company’s annualized total shareholder return (“ TSR ” or the “ Performance Goal ”), as defined below, relative to the annualized TSR of the Russell 3000 Index, (the “ Comparator Group ”) computed during the Performance Period. The number of PSUs that become vested based upon the level of satisfaction of the Performance Goal are referred to herein as “ Vested PSUs .”
(c) For purposes of this Agreement, “ TSR ” for the Company shall mean the sum of (i) the average stock price at the end of the Performance Period plus (ii) the value of all dividends paid during the Performance Period if those dividends had been reinvested in additional shares of stock on the date of payment divided by (iii) the average stock price at the beginning of the Performance Period, annualized as a compound annual rate of return. “TSR” for the Comparator Group shall mean the average index price at the end of the Performance Period divided by the average index price at the beginning of the Performance Period, expressed as a compound annual percentage rate of return. When computing TSR for the Company and the Comparator Group, the average stock or index price at the beginning of the Performance Period will be the average closing stock or index price over the trading days in the month immediately preceding the start of the Performance Period (December 2015), and the average stock or index price at the end of the Performance Period will be the average closing stock or index price over the trading days in the last month of the Performance Period (December 2018).
(d) The Committee shall certify the level of TSR achievement following the end of the Performance Period and prior to settlement of the Vested PSUs. No PSUs will be considered Vested PSUs if the Company’s annualized TSR during the Performance Period is positive but more than twelve (12) percentage points below the Comparator Group’s annualized TSR during the Performance Period. If the Company’s annualized TSR is negative, no PSUs will be considered Vested PSUs if the Company’s annualized TSR during the Performance Period is twelve (12) or more percentage points below the Comparator Group’s annualized TSR during the Performance Period. The Participant must remain continuously employed by the Company or any of its Subsidiaries through January 2 of the calendar year following the end of the Performance Period to be eligible to fully vest in and receive any payment of the Vested PSUs except as otherwise specifically provided for in the Plan or this Agreement. The Committee reserves the right to adjust the number of Vested PSUs to reflect extraordinary transactions or events which impact TSR as it determines in its sole discretion.
(e) The amount of Vested PSUs, if any, for the Performance Period shall be determined in accordance with Appendix A corresponding to the Company’s annualized TSR relative to the Comparator Group’s annualized TSR, (the “ Vested PSU Payout Percent ”).
4. Certain Terminations Prior to Vesting . The Participant’s right to vest in any of the PSUs shall terminate in full and be immediately forfeited upon the Participant’s Termination for any reason; provided, however, that in the event of the Participant’s Termination due to the Participant’s death, Disability or Retirement (each, a “ Special Termination ”), the Participant’s number of Target PSUs shall be adjusted by multiplying the number of such Target PSUs by a fraction, the numerator of which is the number of months of service (rounded to the nearest whole month) from the Grant Date through the date of such Special Termination, and the denominator of which is the total number of months in the Performance Period. Such adjusted number of Target PSUs shall remain outstanding and eligible to become Vested PSUs subject to the level of satisfaction of the applicable Performance Goals, as determined in accordance with Section 3 hereof.
5. Change in Control Prior to Vesting . The Participant’s right to vest in any PSUs following a Change in Control shall depend on (i) whether the PSUs are assumed, converted or replaced by the continuing entity, and (ii) the timing of the Change in Control within the Performance Period, in each case as follows:




(a) In the event that the PSUs are not assumed, converted, or replaced by the continuing entity following the Change in Control (as determined by the Committee), the number of Target PSUs shall immediately become Vested PSUs.
(b) In the event that the PSUs are assumed, converted, or replaced by the continuing entity following the Change in Control (as determined by the Committee), the number of Target PSUs that become Vested PSUs shall be determined following the conclusion of the Performance Period in accordance with the level at which the Performance Goals are satisfied, determined in accordance with Section 3 , and subject to the Participant’s continued employment through the last day of the Performance Period.
(c) Notwithstanding the foregoing, in the event of a Qualifying Termination of the Participant (as defined below) which occurs within three (3) months prior to or twenty-four (24) months following the Change a Control and prior to the end of the Performance Period, the Participant’s PSUs shall not expire immediately upon such Termination and instead the number of Target PSUs shall become Vested PSUs immediately upon the date of the Qualifying Termination (or, if later, the date of such Change in Control), as applicable, provided, however that the Participant must execute and not revoke a general release of claims against the Company in a form reasonably satisfactory to the Committee within forty-five (45) days following such Qualifying Termination or, if later, by the date of the Change in Control. For the avoidance of doubt, in the event a Change in Control has not occurred prior to the Qualifying Termination and does not occur within three (3) months following a Qualifying Termination, any unvested PSUs outstanding at such time shall immediately expire. For purposes of this Section, “ Qualifying Termination ” means the Participant’s Termination by the Company or a Subsidiary, other than for Cause and other than due to the Participant’s explicit request, death or Disability.
6. Rights as a Stockholder . The Participant shall have no rights as a stockholder (including having no right to vote or to receive dividends) with respect to the Common Stock subject to the PSUs prior to the date the Common Stock is delivered to the Participant on account of the Vested PSUs in accordance with Section 7 of this Agreement. Notwithstanding the foregoing, if any dividends are paid with respect to the Common Stock of the Company during the Performance Period, additional shares of Common Stock will be issued to the Participant as soon as administratively feasible immediately following the time that the Vested PSUs are settled in Common Stock in accordance with the terms of the Agreement. The amount of such additional shares of Common Stock will be determined by multiplying (i) the total amount of dividends actually paid on a share of Common Stock prior to the date that the Vested PSUs are settled in accordance with the terms of the Agreement, by (ii) the number of Vested PSU, and then dividing such total by the Fair Market Value of the Common Stock on the date Vested PSUs are converted and settled in Common Stock, as determined by the Committee. If any dividends or distributions are paid in shares, the shares shall be deposited with the Company and shall be subject to the same restrictions on transferability and forfeitability as the PSUs with respect to which they were paid, and shall be deliverable as soon as administratively feasible immediately following the time that the Vested PSUs are settled in Common Stock in accordance with the terms of this Agreement.
7. Payment of Vested PSUs : Vested PSUs, rounded to the nearest whole unit, shall be delivered to Participant in the form of an equal number of shares of Common Stock, and any additional shares deliverable pursuant to Section 6 of this Agreement, rounded to the nearest whole unit, shall be delivered, in each case, no later than March 15 of the calendar year following the calendar year in which the PSUs become Vested PSUs in accordance with the terms of this Agreement. PSUs which do not become Vested PSUs shall be immediately forfeited and the Participant shall have no further rights thereto.
8. Non-Transferability . No portion of the PSUs may be sold, assigned, transferred, encumbered, hypothecated or pledged by the Participant, other than to the Company as a result of forfeiture of the PSUs as provided herein, unless and until payment is made in respect of vested PSUs in accordance with the provisions hereof and the Participant has become the holder of record of the vested shares of Common Stock issuable hereunder.




9. Governing Law . All questions concerning the construction, validity and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Ohio, without regard to the choice of law principles thereof.
10. Withholding of Tax . The Company shall have the power and the right to deduct or withhold, or require the Participant to remit to the Company, an amount sufficient to satisfy any federal, state, local and foreign taxes of any kind (including, but not limited to, the Participant’s FICA and SDI obligations) which the Company, in its sole discretion, deems necessary to be withheld or remitted to comply with the Code and/or any other applicable law, rule or regulation with respect to the PSUs. The Participant shall have until fifteen (15) days prior to the date of issuance to make an election with respect to payment of applicable taxes. If Participant fails to make an election before the fifteen (15) day period prior to the date of issuance, the Company will satisfy the applicable minimum statutorily required tax withholding obligation by reducing the shares of Common Stock otherwise deliverable to the Participant hereunder, based upon the market value of the Shares on the date of vesting (i.e., closing price on the business day prior to the date of vesting) at required withholding tax rates. If the Participant fails to satisfy all tax withholding requirements, the Company may otherwise refuse to issue or transfer any shares of Common Stock otherwise required to be issued pursuant to this Agreement. Any statutorily required withholding obligation with regard to the PSUs may, at the discretion of the Committee, be satisfied by reducing the amount of shares of Common Stock otherwise deliverable to the Participant hereunder.
11. Entire Agreement; Amendment . This Agreement, together with the Plan and any applicable severance or change in control agreement, contains the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements or prior understandings, whether written or oral, between the parties relating to such subject matter. The Committee shall have the right, in its sole discretion, to modify or amend this Agreement from time to time in accordance with and as provided in the Plan. This Agreement may also be modified or amended by a writing signed by both the Company and the Participant. The Company shall give written notice to the Participant of any such modification or amendment of this Agreement as soon as practicable after the adoption thereof.
12. Notices . Any notice hereunder by the Participant shall be given to the Company in writing and such notice shall be deemed duly given only upon receipt thereof by the General Counsel, the Head of Human Resources, or any other administrative agent designated by the Committee. Any notice hereunder by the Company shall be given to the Participant in writing and such notice shall be deemed duly given only upon receipt thereof at such address as the Participant may have on file with the Company.
13. No Right to Service . Nothing in this Agreement shall interfere with or limit in any way the right of the Company or its Subsidiaries to terminate the Participant’s service at any time, for any reason and with or without Cause.
14. Transfer of Personal Data . The Participant authorizes, agrees and unambiguously consents to the transmission by the Company (or any Subsidiary) of any personal data information related to the PSUs awarded under this Agreement for legitimate business purposes. This authorization and consent is freely given by the Participant.
15. Compliance with Laws . The grant of PSUs and the issuance of shares of Common Stock hereunder shall be subject to, and shall comply with, any applicable requirements of any foreign and U.S. federal and state securities laws, rules and regulations (including, without limitation, the provisions of the Securities Act, the Exchange Act and in each case any respective rules and regulations promulgated thereunder) and any other law, rule regulation or exchange requirement applicable thereto. The Company shall not be obligated to issue the PSUs or any shares of Common Stock pursuant to this Agreement if any such issuance would violate any such requirements. As a condition to the settlement of the PSUs, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate to evidence compliance with any applicable law or regulation.




16. Section 409A . Notwithstanding anything herein or in the Plan to the contrary, the PSUs are intended to be exempt from the applicable requirements of Section 409A of the Code and shall be limited, construed and interpreted in accordance with such intent as is reasonable under the circumstances.
17. Compensation Recoupment Policy . By accepting the PSUs, Participant acknowledges and agrees that all rights with respect to the PSUs are subject to the Company’s Compensation Recoupment Policy, as may be in effect from time to time, and Participant may be required to forfeit or repay any or all of the PSUs pursuant to the terms of the Compensation Recoupment Policy. Further, Participant acknowledges and agrees that the Company may, to the extent permitted by law, enforce any repayment obligation pursuant to the Compensation Recoupment Policy by reducing any amounts that may be owing from time to time by the Company to Participant, whether as wages, severance, vacation pay or in the form of any other benefit or for any other reason.
18. Binding Agreement; Assignment . This Agreement shall inure to the benefit of, be binding upon, and be enforceable by the Company and its successors and assigns. The Participant shall not assign (except in accordance with Section 8 hereof) any part of this Agreement without the prior express written consent of the Company.
19. Headings . The titles and headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.
20. Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument.
21. Further Assurances . Each party hereto shall do and perform (or shall cause to be done and performed) all such further acts and shall execute and deliver all such other agreements, certificates, instruments and documents as either party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the Plan and the consummation of the transactions contemplated thereunder.
22. Severability . The invalidity or unenforceability of any provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of any provision of this Agreement in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.
23. Acquired Rights . The Participant acknowledges and agrees that: (a) the Company may terminate or amend the Plan at any time, subject to the limitations contained in the Plan or this Agreement; (b) the grant of PSUs made under this Agreement is completely independent of any other award or grant and is made at the sole discretion of the Company; (c) no past grants or awards (including, without limitation, the PSUs granted hereunder) give the Participant any right to any grants or awards in the future whatsoever; and (d) any benefits granted under this Agreement are not part of the Participant’s ordinary salary, and shall not be considered as part of such salary in the event of severance, redundancy or resignation.

* * * * *





    




APPENDIX A
TSR PERFORMANCE STOCK UNIT AGREEMENT
* * * * *
For purposes of this Agreement, the Vested PSU Payout Percent provided below shall be multiplied by the Target PSUs stated in this Agreement in determining the number of Vested PSUs. Linear interpolation shall be used to determine Vested PSUs earned between goal points listed in the chart below rounded to the nearest whole number of PSUs. Notwithstanding the foregoing, if the Company’s annualized TSR for the Performance Period is below zero, the Vested PSU Payout Percent achieved at Target Range will be no higher than 60% as provided below. The Vested PSU Payout Percent will then be further reduced 5% for every 1% the Company’s annualized TSR is below the Comparator Group’s annualized TSR.

Goal
Achievement
Company’s Annualized TSR Relative to Comparator Group’s Annualized TSR
Vested PSU Payout Percent
% of Target PSUs if Company TSR is Positive
% of Target PSUs if Company TSR is Negative
Maximum
+16 percentage points or more above Target Range
200%
60%
Above Target
For every +1 percentage points Company TSR is above Target Range
100% plus 6.25% of target
60%
Target Range
0 to 2 points above
Comparator Group
100%
60%
Below Target
For every -1 percentage points Company TSR is below Comparator Group
100% less 5% of target
60% less 5% of target
Threshold
 -12 percentage points below
Comparator Group
40%
0%
Below Threshold
More than -12 percentage points below Comparator Group
0%
0%

For Example, at “Target Range” TSR, 100% of the Target PSUs granted to the Participant under this Agreement would become Vested PSUs. At the “Maximum” level of cumulative EPS, 200% of the Target PSUs granted to the Participant under the Agreement would become Vested PSUs.      Signature Page to TSR Performance Stock Unit Agreement




IN WITNESS WHEREOF , the parties hereto have executed this Agreement as of the date first written above.

THE ANDERSONS, INC.
By:     
Name: Valerie Blanchett     
Title: Vice President, Human Resources     
Date: March 1, 2016     

PARTICIPANT
Name: <electronic signature>
Acceptance Date: <acceptance date>





EXHIBIT 10.74
EPS PERFORMANCE STOCK UNIT AGREEMENT
PURSUANT TO THE
THE ANDERSONS, INC. 2014 LONG-TERM INCENTIVE COMPENSATION PLAN
* * * * *
Participant:      <participant name>
Grant Date:      <grant date>
Target Number of Performance Stock Units (the “ Target PSUs ”): <number of awards granted>
Maximum Number of Shares of Common Stock that may be issued pursuant to this Agreement (the “ Maximum Shares ”): 200% of Target PSUs
* * * * *
THIS PERFORMANCE STOCK UNIT GRANT AGREEMENT (this “ Agreement ”), dated as of the Grant Date specified above, is entered into by and between The Andersons, Inc., a corporation organized in the State of Ohio (the “ Company ”), and the Participant specified above, pursuant to The Andersons, Inc. 2014 Long-Term Incentive Compensation Plan, as in effect and as amended from time to time (the “ Plan ”), which is administered by the Committee.
WHEREAS , it has been determined under the Plan that it would be in the best interests of the Company to grant Performance Stock Units (“ PSUs ”) provided herein to the Participant.
NOW , THEREFORE , in consideration of the mutual covenants and promises hereinafter set forth and for other good and valuable consideration, the parties hereto hereby mutually covenant and agree as follows:
1. Incorporation By Reference; Plan Document Receipt . This Agreement is subject in all respects to the terms and provisions of the Plan (including, without limitation, any amendments thereto adopted at any time and from time to time unless such amendments are expressly intended not to apply to the Performance Stock Unit provided hereunder), all of which terms and provisions are made a part of and incorporated in this Agreement as if they were each expressly set forth herein. Any capitalized term not defined in this Agreement shall have the same meaning as is ascribed thereto in the Plan. The Participant hereby acknowledges receipt of a true copy of the Plan and that the Participant has read the Plan carefully and fully understands its content. In the event of any conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control.
2. Grant of Performance Stock Unit . The Company hereby grants to the Participant, as of the Grant Date specified above, the number of Target PSUs specified above, with the actual number of shares of Common Stock to be issued pursuant to this grant contingent upon satisfaction of the vesting and performance conditions described in Section 3 hereof, subject to Sections 4 through 6 , which may not exceed the Maximum Shares. Except as otherwise provided by the Plan, the Participant agrees and understands that nothing contained in this Agreement provides, or is intended to provide, the Participant with any protection against potential future dilution of the Participant’s interest in the Company for any reason, and no adjustments shall be made for dividends in cash or other property, distributions or other rights in respect of the shares of Common Stock underlying the PSUs, except as otherwise specifically provided for in the Plan or this Agreement.




3. Performance Goals and Vesting of PSUs
(a) The Performance Period for the PSUs granted hereunder shall be the three (3) year period beginning January 1, 2016 and ending December 31, 2018.
(b) PSUs shall vest following the conclusion of the Performance Period based on the Company’s three (3) year cumulative fully diluted earnings per share (“ EPS ” or, the “ Performance Goal ”) computed under Generally Accepted Accounting Principles (GAAP) during the Performance Period, in accordance with the chart provided in Appendix A . The number of PSUs that become vested based upon the level of satisfaction of the Performance Goal are referred to herein as “ Vested PSUs .” The Committee shall certify the level of cumulative EPS achievement following the end of the Performance Period and prior to settlement of the Vested PSUs. The Committee reserves the right to adjust the number of Vested PSUs to reflect extraordinary transactions which impact EPS as it determines in its sole discretion. No PSUs will be considered Vested PSUs if the Company’s cumulative EPS during the Performance Period is less than $6.74 . The Participant must remain continuously employed by the Company or any of its Subsidiaries through January 2 of the calendar year following the end of the Performance Period to be eligible to fully vest in and receive any payment of the Vested PSUs except as otherwise specifically provided for in the Plan or this Agreement.
4. Certain Terminations Prior to Vesting . The Participant’s right to vest in any of the PSUs shall terminate in full and be immediately forfeited upon the Participant’s Termination for any reason; provided, however, that in the event of the Participant’s Termination due to the Participant’s death, Disability or Retirement (each, a “ Special Termination ”), the Participant’s number of Target PSUs shall be adjusted by multiplying the number of such Target PSUs by a fraction, the numerator of which is the number of months of service (rounded to the nearest whole month) from the Grant Date through the date of such Special Termination, and the denominator of which is the total number of months in the Performance Period. Such adjusted number of Target PSUs shall remain outstanding and eligible to become Vested PSUs subject to the level of satisfaction of the applicable Performance Goals, as determined in accordance with Section 3 hereof.
5. Change in Control Prior to Vesting . The Participant’s right to vest in any PSUs following a Change in Control shall depend on (i) whether the PSUs are assumed, converted or replaced by the continuing entity, and (ii) the timing of the Change in Control within the Performance Period, in each case as follows:
(a) In the event that the PSUs are not assumed, converted, or replaced by the continuing entity following the Change in Control (as determined by the Committee), the number of Target PSUs shall immediately become Vested PSUs.
(b) In the event that the PSUs are assumed, converted, or replaced by the continuing entity following the Change in Control (as determined by the Committee), the number of Target PSUs that become Vested PSUs shall be determined following the conclusion of the Performance Period in accordance with the level at which the Performance Goals are satisfied, determined in accordance with Section 3 , and subject to the Participant’s continued employment through the last day of the Performance Period.
(c) Notwithstanding the foregoing, in the event of a Qualifying Termination of the Participant (as defined below) which occurs within three (3) months prior to or twenty-four (24) months following the Change a Control and prior to the end of the Performance Period, the Participant’s PSUs shall not expire immediately upon such Termination and instead the number of Target PSUs shall become Vested PSUs immediately upon the date of the Qualifying Termination (or, if later, the date of such Change in Control), as applicable, provided, however that the Participant must execute and not revoke a general release of claims against the Company in a form reasonably satisfactory to the Committee within forty-five (45) days following such Qualifying Termination or, if later, by the date of the Change in Control. For the avoidance of doubt, in the event a Change in Control has not occurred prior to the Qualifying Termination and does not occur within three (3) months following a Qualifying Termination, any unvested PSUs outstanding at such time shall immediately expire. For purposes of this Section, “ Qualifying Termination ” means the Participant’s Termination by the Company or a Subsidiary, other than for Cause and other than due to the Participant’s explicit request, death or Disability.




6. Rights as a Stockholder . The Participant shall have no rights as a stockholder (including having no right to vote or to receive dividends) with respect to the Common Stock subject to the PSUs prior to the date the Common Stock is delivered to the Participant on account of the Vested PSUs in accordance with Section 7 of this Agreement. Notwithstanding the foregoing, if any dividends are paid with respect to the Common Stock of the Company during the Performance Period, additional shares of Common Stock will be issued to the Participant as soon as administratively feasible immediately following the time that the Vested PSUs are settled in Common Stock in accordance with the terms of the Agreement. The amount of such additional shares of Common Stock will be determined by multiplying (i) the total amount of dividends actually paid on a share of Common Stock prior to the date that the Vested PSUs are settled in accordance with the terms of the Agreement, by (ii) the number of Vested PSUs, and then dividing such total by the Fair Market Value of the Common Stock on the last day of the Performance Period, as determined by the Committee. If any dividends or distributions are paid in shares, the shares shall be deposited with the Company and shall be subject to the same restrictions on transferability and forfeitability as the PSUs with respect to which they were paid, and shall be deliverable as soon as administratively feasible immediately following the time that the Vested PSUs are settled in Common Stock in accordance with the terms of this Agreement.
7. Payment of Vested PSUs : Vested PSUs, rounded to the nearest whole unit, shall be delivered to Participant in the form of an equal number of shares of Common Stock, and any additional shares deliverable pursuant to Section 6 of this Agreement, rounded to the nearest whole unit, shall be delivered, in each case no later than March 15 of the calendar year following the calendar year in which the PSUs become Vested PSUs in accordance with the terms of this Agreement. PSUs which do not become Vested PSUs shall be immediately forfeited and the Participant shall have no further rights thereto.
8. Non-Transferability . No portion of the PSUs may be sold, assigned, transferred, encumbered, hypothecated or pledged by the Participant, other than to the Company as a result of forfeiture of the PSUs as provided herein, unless and until payment is made in respect of vested PSUs in accordance with the provisions hereof and the Participant has become the holder of record of the vested shares of Common Stock issuable hereunder.
9. Governing Law . All questions concerning the construction, validity and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Ohio, without regard to the choice of law principles thereof.
10. Withholding of Tax . The Company shall have the power and the right to deduct or withhold, or require the Participant to remit to the Company, an amount sufficient to satisfy any federal, state, local and foreign taxes of any kind (including, but not limited to, the Participant’s FICA and SDI obligations) which the Company, in its sole discretion, deems necessary to be withheld or remitted to comply with the Code and/or any other applicable law, rule or regulation with respect to the PSUs. The Participant shall have until seven (7) days prior to the date of issuance to make an election with respect to payment of applicable taxes. If Participant fails to make an election before the seven (7) day period prior to the date of issuance, the Company will satisfy the applicable minimum statutorily required tax withholding obligation by reducing the shares of Common Stock otherwise deliverable to the Participant hereunder, based upon the Fair Market Value at the time the Vested PSUs are converted to shares at required withholding tax rates. If the Participant fails to satisfy all tax withholding requirements, the Company may otherwise refuse to issue or transfer any shares of Common Stock otherwise required to be issued pursuant to this Agreement. Any statutorily required withholding obligation with regard to the PSUs may, at the discretion of the Committee, be satisfied by reducing the amount of shares of Common Stock otherwise deliverable to the Participant hereunder.
11. Entire Agreement; Amendment . This Agreement, together with the Plan and any applicable severance or change in control agreement, contains the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements or prior understandings, whether written or oral, between the parties relating to such subject matter. The Committee shall have the right, in its sole discretion, to modify or amend this Agreement from time to time in accordance with and as provided in the Plan. This Agreement may also be modified or amended by a writing signed by both the




Company and the Participant. The Company shall give written notice to the Participant of any such modification or amendment of this Agreement as soon as practicable after the adoption thereof.
12. Notices . Any notice hereunder by the Participant shall be given to the Company in writing and such notice shall be deemed duly given only upon receipt thereof by the General Counsel, the Head of Human Resources, or any other administrative agent designated by the Committee. Any notice hereunder by the Company shall be given to the Participant in writing and such notice shall be deemed duly given only upon receipt thereof at such address as the Participant may have on file with the Company.
13. No Right to Service . Nothing in this Agreement shall interfere with or limit in any way the right of the Company or its Subsidiaries to terminate the Participant’s service at any time, for any reason and with or without Cause.
14. Transfer of Personal Data . The Participant authorizes, agrees and unambiguously consents to the transmission by the Company (or any Subsidiary) of any personal data information related to the PSUs granted under this Agreement for legitimate business purposes. This authorization and consent is freely given by the Participant.
15. Compliance with Laws . The grant of PSUs and the issuance of shares of Common Stock hereunder shall be subject to, and shall comply with, any applicable requirements of any foreign and U.S. federal and state securities laws, rules and regulations (including, without limitation, the provisions of the Securities Act, the Exchange Act and in each case any respective rules and regulations promulgated thereunder) and any other law, rule regulation or exchange requirement applicable thereto. The Company shall not be obligated to issue the PSUs or any shares of Common Stock pursuant to this Agreement if any such issuance would violate any such requirements. As a condition to the settlement of the PSUs, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate to evidence compliance with any applicable law or regulation.
16. Section 409A . Notwithstanding anything herein or in the Plan to the contrary, the PSUs are intended to be exempt from the applicable requirements of Section 409A of the Code and shall be limited, construed and interpreted in accordance with such intent as is reasonable under the circumstances.
17. Compensation Recoupment Policy . By accepting the PSUs, Participant acknowledges and agrees that all rights with respect to the PSUs are subject to the Company’s Compensation Recoupment Policy, as may be in effect from time to time, and Participant may be required to forfeit or repay any or all of the PSUs pursuant to the terms of the Compensation Recoupment Policy. Further, Participant acknowledges and agrees that the Company may, to the extent permitted by law, enforce any repayment obligation pursuant to the Compensation Recoupment Policy by reducing any amounts that may be owing from time to time by the Company to Participant, whether as wages, severance, vacation pay or in the form of any other benefit or for any other reason.
18. Binding Agreement; Assignment . This Agreement shall inure to the benefit of, be binding upon, and be enforceable by the Company and its successors and assigns. The Participant shall not assign (except in accordance with Section 8 hereof) any part of this Agreement without the prior express written consent of the Company.
19. Headings . The titles and headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.
20. Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument.
21. Further Assurances . Each party hereto shall do and perform (or shall cause to be done and performed) all such further acts and shall execute and deliver all such other agreements, certificates, instruments and documents as either party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the Plan and the consummation of the transactions contemplated thereunder.
22. Severability . The invalidity or unenforceability of any provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such




jurisdiction or the validity, legality or enforceability of any provision of this Agreement in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.
23. Acquired Rights . The Participant acknowledges and agrees that: (a) the Company may terminate or amend the Plan at any time, subject to the limitations contained in the Plan or this Agreement; (b) the grant of PSUs made under this Agreement is completely independent of any other award or grant and is made at the sole discretion of the Company; (c) no past grants or awards (including, without limitation, the PSUs granted hereunder) give the Participant any right to any grants or awards in the future whatsoever; and (d) any benefits granted under this Agreement are not part of the Participant’s ordinary salary, and shall not be considered as part of such salary in the event of severance, redundancy or resignation.
* * * * *
APPENDIX A
EPS PERFORMANCE STOCK UNIT AGREEMENT
* * * * *
For purposes of this Agreement, the Vested PSU Payout Percent provided below shall be multiplied by the Target PSUs stated in this Agreement in determining the number of Vested PSUs. Linear interpolation shall be used to determine Vested PSUs earned between goal points listed in the chart below rounded to the nearest whole number of PSUs.


For Example, at the “Target” cumulative EPS, 100% of the Target PSUs granted to the Participant under this Agreement would become Vested PSUs. At the “Maximum” level of cumulative EPS, 200% of the Target PSUs granted to the Participant under the Agreement would become Vested PSUs.




IN WITNESS WHEREOF , the parties hereto have executed this Agreement as of the date first written above.

THE ANDERSONS, INC.
By:     
Name: Valerie Blanchett     
Title: Vice President, Human Resources     
Date: March 1, 2016     

PARTICIPANT
Name: <electronic signature>
Acceptance Date: <acceptance date>





EXHIBIT 10.75
RESTRICTED STOCK AGREEMENT
PURSUANT TO THE
THE ANDERSONS, INC. 2014 LONG-TERM INCENTIVE COMPENSATION PLAN
* * * * *
Participant: <participant name>
Grant Date: <grant date>
Number of Shares of Restricted Stock Granted: <number of awards granted>
* * * * *
THIS RESTRICTED STOCK AWARD AGREEMENT (this “ Agreement ”), dated as of the Grant Date specified above, is entered into by and between The Andersons, Inc., a corporation organized in the State of Ohio (the “ Company ”), and the Participant specified above, pursuant to the The Andersons, Inc. 2014 Long-Term Incentive Compensation Plan, as in effect and as amended from time to time (the “ Plan ”), which is administered by the Committee; and
WHEREAS , it has been determined under the Plan that it would be in the best interests of the Company to grant the shares of Restricted Stock provided herein to the Participant.
NOW , THEREFORE , in consideration of the mutual covenants and promises hereinafter set forth and for other good and valuable consideration, the parties hereto hereby mutually covenant and agree as follows:
1. Incorporation By Reference; Plan Document Receipt. This Agreement is subject in all respects to the terms and provisions of the Plan (including, without limitation, any amendments thereto adopted at any time and from time to time unless such amendments are expressly intended not to apply to the Restricted Stock Award provided hereunder), all of which terms and provisions are made a part of and incorporated in this Agreement as if they were each expressly set forth herein. Any capitalized term not defined in this Agreement shall have the same meaning as is ascribed thereto in the Plan. The Participant hereby acknowledges receipt of a true copy of the Plan and that the Participant has read the Plan carefully and fully understands its content. In the event of any conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control.
2. Grant of Restricted Stock Award. The Company hereby grants to the Participant, as of the Grant Date specified above, the number of shares of Restricted Stock specified above. Except as otherwise provided by the Plan, the Participant agrees and understands that nothing contained in this Agreement provides, or is intended to provide, the Participant with any protection against potential future dilution of the Participant’s interest in the Company for any reason, and no adjustments shall be made for dividends in cash or other property, distributions or other rights in respect of any such shares, except as otherwise specifically provided for in the Plan or this Agreement. Subject to Section 4 hereof, the Participant shall not have the rights of a stockholder in respect of the shares underlying this Award until unrestricted shares are delivered to the Participant. hereof.




3. Vesting.




(a) Subject to the provisions of Sections 3(b), 3(c), and 3(d) hereof, the Restricted Stock subject to this grant shall become unrestricted and vested as follows:
 
Vesting Date
 
Percent of Shares
 
 
January 2, 2017
 
33.3%
 
 
January 2, 2018
 
33.3%
 
 
January 2, 2019
 
33.3%
 
There shall be no proportionate or partial vesting in the periods prior to each vesting date and all vesting shall occur only on the appropriate vesting date, subject to the Participant’s continued service with the Company or any of its Subsidiaries on each applicable vesting date.
(b) Certain Terminations Prior to Vesting. The Participant’s right to vest in any of the Restricted Stock shall terminate in full and be immediately forfeited upon the Participant’s Termination for any reason; provided however, that in the event of the Participant’s Termination due to Participant’s death or Disability (each a “Special Termination”), the Restricted Stock shall immediately become unrestricted and vested.
(c) Change in Control Prior to Vesting. The Participant’s right to vest in the Restricted Stock following a Change in Control shall depend on whether the Restricted Stock is assumed, converted or replaced by the continuing entity as follows:
(i) In the event that the Restricted Stock is not assumed, converted, or replaced by the continuing entity following the Change in Control (as determined by the Committee), the Restricted Stock shall immediately become unrestricted and vested.
(ii) In the event that the Restricted Stock is assumed, converted, or replaced by the continuing entity following the Change in Control (as determined by the Committee), the Restricted Stock shall not immediately vest and shall instead continue to vest in accordance with Section 3(a).
(iii) Notwithstanding anything in this Agreement to the contrary, in the event of a Qualifying Termination of the Participant (as defined below) which occurs within three (3) months prior to or twenty-four (24) months following the Change a Control, the Participant’s Restricted Stock shall not expire immediately upon such Termination and instead the Restricted Stock shall become vested and unrestricted immediately upon the date of the Qualifying Termination (or, if later, the date of such Change in Control), as applicable, provided, however that the Participant must execute and not revoke a general release of claims against the Company in a form reasonably satisfactory to the Committee within forty-five (45) days following such Qualifying Termination or, if later, by the date of the Change in Control. For the avoidance of doubt, in the event a Change in Control has not occurred prior to the Qualifying Termination and does not occur within three (3) months following a Qualifying Termination, any unvested Restricted Stock outstanding at such time shall immediately expire. For purposes of this Section, “ Qualifying Termination ” means the Participant’s Termination by the Company or a Subsidiary, other than for Cause and other than due to the Participant’s explicit request, death or Disability.
(d) Committee Discretion to Accelerate Vesting. Notwithstanding the foregoing, the Committee may, in its sole discretion, provide for accelerated vesting of the Restricted Stock at any time and for any reason.
(e) Forfeiture. Subject to the Committee’s discretion to accelerate vesting hereunder, all unvested shares of Restricted Stock shall be immediately forfeited upon the Participant’s Termination for any reason other than a Special or Qualifying Termination.
4. Dividends and Other Distributions; Voting. If any dividends or other distributions are paid with respect to the Common Stock of the Company while the Participant holds the Restricted Stock and prior to the time that the Restricted Stock becomes vested in accordance with the terms of this Agreement, the Participant shall be entitled to receive such dividends and other distributions attributable to the Restricted Stock in the form of additional shares of Common Stock, provided that any such




dividends or other distributions will be subject to the same vesting requirements as the underlying Restricted Stock. Additional shares of Common Stock attributable to dividends or other distributions will be issued to the Participant as soon as administratively feasible immediately following the time the Restricted Stock become vested in accordance with the terms of the Agreement, but in no event later than March 15 of the calendar year following the calendar year in which the Restricted Stock became vested. The amount of such additional shares of Common Stock will be determined by multiplying (i) the total amount of dividends actually paid on a share of Common Stock prior to the date that the Restricted Stock become vested in accordance with the terms of the Agreement, by (ii) the number of shares of Restricted Stock that become vested in accordance with the terms of this Agreement, and then dividing such total by the Fair Market Value of the Common Stock on the last trading day prior to the applicable vesting date, as determined by the Committee. If any dividends or distributions are paid in shares, the shares shall be deposited with the Company and shall be subject to the same restrictions on transferability and forfeitability as the Restricted Stock with respect to which they were paid. The Participant may exercise full voting rights with respect to the Restricted Stock granted hereunder.
5. Non-Transferability. The shares of Restricted Stock, and any rights and interests with respect thereto, issued under this Agreement and the Plan shall not, prior to vesting, be sold, exchanged, transferred, assigned or otherwise disposed of in any way by the Participant (or any beneficiary of the Participant), other than by testamentary disposition by the Participant or the laws of descent and distribution and other than to the Company as a result of forfeiture of the Restricted Stock as provided herein. Any attempt to sell, exchange, transfer, assign, pledge, encumber or otherwise dispose of or hypothecate in any way any of the Restricted Stock, or the levy of any execution, attachment or similar legal process upon the Restricted Stock, contrary to the terms and provisions of this Agreement and/or the Plan shall be null and void and without legal force or effect.
6. Governing Law. All questions concerning the construction, validity and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Ohio, without regard to the choice of law principles thereof.
7. Withholding of Tax. The Company shall have the power and the right to deduct or withhold, or require the Participant to remit to the Company, an amount sufficient to satisfy any federal, state, local and foreign taxes of any kind (including, but not limited to, the Participant’s FICA and SDI obligations) which the Company, in its sole discretion, deems necessary to be withheld or remitted to comply with the Code and/or any other applicable law, rule or regulation with respect to the Restricted Stock. The Participant shall have until fifteen (15) days prior to the date of vesting to make an election with respect to payment of applicable taxes. If Participant fails to make an election before fifteen (15) days prior to the date of vesting, the Company will satisfy the applicable minimum statutorily required tax withholding obligation by reducing the shares of Common Stock otherwise deliverable to the Participant hereunder, based upon the market value of the Shares on the date of vesting (i.e., closing price on the business day prior to the date of vesting) at required withholding tax rates. If the Participant fails to satisfy all tax withholding requirements, the Company may otherwise refuse to issue or transfer any shares of Common Stock otherwise required to be issued pursuant to this Agreement. Any statutorily required withholding obligation with regard to the Restricted Stock may, at the discretion of the Committee, be satisfied by reducing the amount of shares of Common Stock otherwise deliverable to the Participant hereunder.
8. Section 83(b). If the Participant properly elects (as required by Section 83(b) of the Code) within 30 days after the issuance of the Restricted Stock to include in gross income for federal income tax purposes in the year of issuance the Fair Market Value of such shares of Restricted Stock, the Participant shall pay to the Company or make arrangements satisfactory to the Company to pay to the Company upon such election, any federal, state or local taxes required to be withheld with respect to the Restricted Stock. If the Participant shall fail to make such payment, the Company shall, to the extent permitted by law, have the right to deduct from any payment of any kind otherwise due to the Participant any federal, state or local




taxes of any kind required by law to be withheld with respect to the Restricted Stock, as well as the rights set forth in Section 7 hereof. The Participant acknowledges that it is the Participant’s sole responsibility, and not the Company’s, to file timely and properly the election under Section 83(b) of the Code and any corresponding provisions of state tax laws if the Participant elects to make such election, and the Participant agrees to timely provide the Company with a copy of any such election.
9. Limited Power of Attorney to Transfer Unvested Shares Upon Termination. In order to facilitate the transfer to the Company of any Shares in which Participant forfeits vesting rights pursuant to the terms of this Agreement, Participant agrees to hereby appoint the Treasurer of the Company Participant’s attorney in fact with full power of substitution, to act for Participant in Participant’s name and place to sell, assign, and transfer Shares of the Company registered in Participant’s name on the books of the Company as represented by the Company’s Registrar and Transfer Agent, in book entry form, and to receive the consideration for the Shares. Such power of attorney is irrevocable and coupled with an interest. By accepting this Agreement, Participant hereby ratifies all acts which Participant’s attorney in fact or the Treasurer of the Company substitute lawfully performs pursuant to the power conferred by this instrument.
10. Entire Agreement; Amendment. This Agreement, together with the Plan and any severance or change in control agreement, contains the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements or prior understandings, whether written or oral, between the parties relating to such subject matter. The Committee shall have the right, in its sole discretion, to modify or amend this Agreement from time to time in accordance with and as provided in the Plan. This Agreement may also be modified or amended by a writing signed by both the Company and the Participant. The Company shall give written notice to the Participant of any such modification or amendment of this Agreement as soon as practicable after the adoption thereof.
11. Notices. Any notice hereunder by the Participant shall be given to the Company in writing and such notice shall be deemed duly given only upon receipt thereof by the General Counsel, the Head of Human Resources, or any other administrative agent designated by the Committee. Any notice hereunder by the Company shall be given to the Participant in writing and such notice shall be deemed duly given only upon receipt thereof at such address as the Participant may have on file with the Company.
12. Acceptance. As required by Section 8.2 of the Plan, the Participant may forfeit the Restricted Stock if the Participant does not execute this Agreement within a period of ninety (90) days from the date that the Participant receives this Agreement (or such other period as the Committee shall provide).
13. No Right to Service. Nothing in this Agreement shall interfere with or limit in any way the right of the Company or its Subsidiaries to terminate the Participant’s service at any time, for any reason and with or without Cause.
14. Transfer of Personal Data. The Participant authorizes, agrees and unambiguously consents to the transmission by the Company (or any Subsidiary) of any personal data information related to the Restricted Stock awarded under this Agreement for legitimate business purposes. This authorization and consent is freely given by the Participant.
15. Compliance with Laws. The issuance of the Restricted Stock or unrestricted shares pursuant to this Agreement shall be subject to, and shall comply with, any applicable requirements of any foreign and U.S. federal and state securities laws, rules and regulations (including, without limitation, the provisions of the Securities Act, the Exchange Act and in each case any respective rules and regulations promulgated thereunder) and any other law, rule, regulation or exchange requirement applicable thereto. The Company shall not be obligated to issue the Restricted Stock or any of the shares pursuant to this Agreement if any such issuance would violate any such requirements. As a condition to settlement of the Restricted Stock, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate to evidence compliance with any applicable law or regulation.
16. Section 409A. Notwithstanding anything herein or in the Plan to the contrary, the shares of Restricted Stock are intended to be exempt from the applicable requirements of Section 409A of the Code and shall be limited, construed and interpreted in accordance with such intent.




17. Compensation Recoupment Policy. By accepting the Restricted Stock Grant, Participant acknowledges and agrees that all rights with respect to the Restricted Stock are subject to the Company’s Compensation and Recoupment Policy, as may be in effect from time to time, and Participant may be required to forfeit or repay any or all of the Restricted Stock pursuant to the terms of the Compensation Recoupment Policy. Further, Participant acknowledges and agrees that the Company may, to the extent permitted by law, enforce any repayment obligation pursuant to the Compensation Recoupment Policy by reducing any amounts that may be owing from time to time by the Company to participant, whether as wages, severance, vacation pay or in the form of any other benefit or for any other reason.
18. Binding Agreement; Assignment. This Agreement shall inure to the benefit of, be binding upon, and be enforceable by the Company and its successors and assigns. The Participant shall not assign (except in accordance with Section 5 hereof) any part of this Agreement without the prior express written consent of the Company.
19. Headings. The titles and headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.
20. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument.
21. Further Assurances. Each party hereto shall do and perform (or shall cause to be done and performed) all such further acts and shall execute and deliver all such other agreements, certificates, instruments and documents as either party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the Plan and the consummation of the transactions contemplated thereunder.
22. Severability. The invalidity or unenforceability of any provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of any provision of this Agreement in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.
23. Acquired Rights. The Participant acknowledges and agrees that: (a) the Company may terminate or amend the Plan at any time subject to the limitations contained in the Plan or this Agreement; (b) the grant of Restricted Stock made under this Agreement is completely independent of any other award or grant and is made at the sole discretion of the Company; (c) no past grants or awards (including, without limitation, the Restricted Stock granted hereunder) give the Participant any right to any grants or awards in the future whatsoever; and (d) any benefits granted under this Agreement are not part of the Participant’s ordinary salary, and shall not be considered as part of such salary in the event of severance, redundancy or resignation.
* * * * *




IN WITNESS WHEREOF , the parties hereto have executed this Agreement as of the date first written above.

THE ANDERSONS, INC.
By:     
Name: Valerie Blanchett     
Title: Vice President, Human Resources     
Date: March 1, 2016     

PARTICIPANT
Name: <electronic signature>
Acceptance Date: <acceptance date>





EXHIBIT 10.76
NON-EMPLOYEE DIRECTORS
RESTRICTED STOCK AGREEMENT
PURSUANT TO THE
THE ANDERSONS, INC. 2014 LONG-TERM INCENTIVE COMPENSATION PLAN
* * * * *
Participant: <participant name>
Grant Date: <grant date>
Number of Shares of Restricted Stock Granted: <number of awards granted>
* * * * *
THIS RESTRICTED STOCK AWARD AGREEMENT (this “ Agreement ”), dated as of the Grant Date specified above, is entered into by and between The Andersons, Inc., a corporation organized in the State of Ohio (the “ Company ”), and the Participant specified above, pursuant to the The Andersons, Inc. 2014 Long-Term Incentive Compensation Plan, as in effect and as amended from time to time (the “ Plan ”), which is administered by the Committee; and
WHEREAS , it has been determined under the Plan that it would be in the best interests of the Company to grant the shares of Restricted Stock provided herein to the Participant.
NOW , THEREFORE , in consideration of the mutual covenants and promises hereinafter set forth and for other good and valuable consideration, the parties hereto hereby mutually covenant and agree as follows:
1. Incorporation By Reference; Plan Document Receipt. This Agreement is subject in all respects to the terms and provisions of the Plan (including, without limitation, any amendments thereto adopted at any time and from time to time unless such amendments are expressly intended not to apply to the Restricted Stock Award provided hereunder), all of which terms and provisions are made a part of and incorporated in this Agreement as if they were each expressly set forth herein. Any capitalized term not defined in this Agreement shall have the same meaning as is ascribed thereto in the Plan. The Participant hereby acknowledges receipt of a true copy of the Plan and that the Participant has read the Plan carefully and fully understands its content. In the event of any conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control.
2. Grant of Restricted Stock Award. The Company hereby grants to the Participant, as of the Grant Date specified above, the number of shares of Restricted Stock specified above. Except as otherwise provided by the Plan, the Participant agrees and understands that nothing contained in this Agreement provides, or is intended to provide, the Participant with any protection against potential future dilution of the Participant’s interest in the Company for any reason, and no adjustments shall be made for dividends in cash or other property, distributions or other rights in respect of any such shares, except as otherwise specifically provided for in the Plan or this Agreement. Subject to Section 4 hereof, the Participant shall not have the rights of a stockholder in respect of the shares underlying this Award until unrestricted shares are delivered to the Participant in accordance with Section 4 hereof.


3. Vesting.




(a) Subject to the provisions of Sections 3(b), 3(c), and 3(d) hereof, the Restricted Stock subject to this grant shall become unrestricted and vested as follows:
 
Vesting Date
 
Percent of Shares
 
 
March 1, 2017
 
100%
 
There shall be no proportionate or partial vesting in the period prior to the vesting date and all vesting shall occur only on the appropriate vesting date, subject to the Participant’s continued service on the Board on the applicable vesting date.
(b) Certain Terminations Prior to Vesting. The Participant’s right to vest in any of the Restricted Stock shall terminate in full and be immediately forfeited upon the Participant’s Termination for any reason; provided however, that in the event of the Participant’s Termination due to Participant’s death or Disability (each a “Special Termination”), the Restricted Stock shall immediately become unrestricted and vested.
(c) Change in Control Prior to Vesting. The Participant’s right to vest in the Restricted Stock following a Change in Control shall depend on whether the Restricted Stock is assumed, converted or replaced by the continuing entity as follows:
(i) In the event that the Restricted Stock is not assumed, converted, or replaced by the continuing entity following the Change in Control (as determined by the Committee), the Restricted Stock shall immediately become unrestricted and vested.
(ii) In the event that the Restricted Stock is assumed, converted, or replaced by the continuing entity following the Change in Control (as determined by the Committee), the Restricted Stock shall not immediately vest and shall instead continue to vest in accordance with Section 3(a).
(d) Committee Discretion to Accelerate Vesting. Notwithstanding the foregoing, the Committee may, in its sole discretion, provide for accelerated vesting of the Restricted Stock at any time and for any reason.
(e) Forfeiture. Subject to the Committee’s discretion to accelerate vesting hereunder, all unvested shares of Restricted Stock shall be immediately forfeited upon the Participant’s Termination for any reason other than a Special Termination.
4. Dividends and Other Distributions; Voting. If any dividends or other distributions are paid with respect to the Common Stock of the Company while the Participant holds the Restricted Stock and prior to the time that the Restricted Stock becomes vested in accordance with the terms of this Agreement, the Participant shall be entitled to receive such dividends and other distributions attributable to the Restricted Stock in the form of additional shares of Common Stock, provided that any such dividends or other distributions will be subject to the same vesting requirements as the underlying Restricted Stock. Additional shares of Common Stock attributable to dividends or other distributions will be issued to the Participant as soon as administratively feasible immediately following the time the Restricted Stock become vested in accordance with the terms of the Agreement, but in no event later than March 15 of the calendar year following the calendar year in which the Restricted Stock became vested. The amount of such additional shares of Common Stock will be determined by multiplying (i) the total amount of dividends actually paid on a share of Common Stock prior to the date that the Restricted Stock become vested in accordance with the terms of the Agreement, by (ii) the number of shares of Restricted Stock that become vested in accordance with the terms of this Agreement, and then dividing such total by the Fair Market Value of the Common Stock on the last trading day prior to the applicable vesting date, as determined by the Committee. If any dividends or distributions are paid in shares, the shares shall be deposited with the Company and shall be subject to the same restrictions on transferability and forfeitability as the Restricted Stock with respect to which they were paid. The Participant may exercise full voting rights with respect to the Restricted Stock granted hereunder.




5. Non-Transferability. The shares of Restricted Stock, and any rights and interests with respect thereto, issued under this Agreement and the Plan shall not, prior to vesting, be sold, exchanged, transferred, assigned or otherwise disposed of in any way by the Participant (or any beneficiary of the Participant), other than by testamentary disposition by the Participant or the laws of descent and distribution and other than to the Company as a result of forfeiture of the Restricted Stock as provided herein. Any attempt to sell, exchange, transfer, assign, pledge, encumber or otherwise dispose of or hypothecate in any way any of the Restricted Stock, or the levy of any execution, attachment or similar legal process upon the Restricted Stock, contrary to the terms and provisions of this Agreement and/or the Plan shall be null and void and without legal force or effect.
6. Governing Law. All questions concerning the construction, validity and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Ohio, without regard to the choice of law principles thereof.
7. Section 83(b). If the Participant properly elects (as required by Section 83(b) of the Code) within 30 days after the issuance of the Restricted Stock to include in gross income for federal income tax purposes in the year of issuance the Fair Market Value of such shares of Restricted Stock, the Participant shall pay to the Company or make arrangements satisfactory to the Company to pay to the Company upon such election, any federal, state or local taxes required to be withheld with respect to the Restricted Stock. If the Participant shall fail to make such payment, the Company shall, to the extent permitted by law, have the right to deduct from any payment of any kind otherwise due to the Participant any federal, state or local taxes of any kind required by law to be withheld with respect to the Restricted Stock, as well as the rights set forth in Section 1 hereof. The Participant acknowledges that it is the Participant’s sole responsibility, and not the Company’s, to file timely and properly the election under Section 83(b) of the Code and any corresponding provisions of state tax laws if the Participant elects to make such election, and the Participant agrees to timely provide the Company with a copy of any such election.
8. Limited Power of Attorney to Transfer Unvested Shares Upon Termination. In order to facilitate the transfer to the Company of any Shares in which Participant forfeits vesting rights pursuant to the terms of this Agreement, Participant agrees to hereby appoint the Treasurer of the Company Participant’s attorney in fact with full power of substitution, to act for Participant in Participant’s name and place to sell, assign, and transfer Shares of the Company registered in Participant’s name on the books of the Company as represented by the Company’s Registrar and Transfer Agent, in book entry form, and to receive the consideration for the Shares. Such power of attorney is irrevocable and coupled with an interest. By accepting this Agreement, Participant hereby ratifies all acts which Participant’s attorney in fact or the Treasurer of the Company substitute lawfully performs pursuant to the power conferred by this instrument.
9. Entire Agreement; Amendment. This Agreement, together with the Plan and any severance or change in control agreement, contains the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements or prior understandings, whether written or oral, between the parties relating to such subject matter. The Committee shall have the right, in its sole discretion, to modify or amend this Agreement from time to time in accordance with and as provided in the Plan. This Agreement may also be modified or amended by a writing signed by both the Company and the Participant. The Company shall give written notice to the Participant of any such modification or amendment of this Agreement as soon as practicable after the adoption thereof.
10. Notices. Any notice hereunder by the Participant shall be given to the Company in writing and such notice shall be deemed duly given only upon receipt thereof by the General Counsel, the Head of Human Resources, or any other administrative agent designated by the Committee. Any notice hereunder by the Company shall be given to the Participant in writing and such notice shall be deemed duly given only upon receipt thereof at such address as the Participant may have on file with the Company.
11. Acceptance. As required by Section 8.2 of the Plan, the Participant may forfeit the Restricted Stock if the Participant does not execute this Agreement within a period of ninety (90) days from the date that the Participant receives this Agreement (or such other period as the Committee shall provide).




12. Transfer of Personal Data. The Participant authorizes, agrees and unambiguously consents to the transmission by the Company (or any Subsidiary) of any personal data information related to the Restricted Stock awarded under this Agreement for legitimate business purposes. This authorization and consent is freely given by the Participant.
13. Compliance with Laws. The issuance of the Restricted Stock or unrestricted shares pursuant to this Agreement shall be subject to, and shall comply with, any applicable requirements of any foreign and U.S. federal and state securities laws, rules and regulations (including, without limitation, the provisions of the Securities Act, the Exchange Act and in each case any respective rules and regulations promulgated thereunder) and any other law, rule, regulation or exchange requirement applicable thereto. The Company shall not be obligated to issue the Restricted Stock or any of the shares pursuant to this Agreement if any such issuance would violate any such requirements. As a condition to settlement of the Restricted Stock, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate to evidence compliance with any applicable law or regulation.
14. Section 409A. Notwithstanding anything herein or in the Plan to the contrary, the shares of Restricted Stock are intended to be exempt from the applicable requirements of Section 409A of the Code and shall be limited, construed and interpreted in accordance with such intent.
15. Binding Agreement; Assignment. This Agreement shall inure to the benefit of, be binding upon, and be enforceable by the Company and its successors and assigns. The Participant shall not assign (except in accordance with Section 5 hereof) any part of this Agreement without the prior express written consent of the Company.
16. Headings. The titles and headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.
17. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument.
18. Further Assurances. Each party hereto shall do and perform (or shall cause to be done and performed) all such further acts and shall execute and deliver all such other agreements, certificates, instruments and documents as either party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the Plan and the consummation of the transactions contemplated thereunder.
19. Severability. The invalidity or unenforceability of any provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of any provision of this Agreement in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.
20. Acquired Rights. The Participant acknowledges and agrees that: (a) the Company may terminate or amend the Plan at any time subject to the limitations contained in the Plan or this Agreement; (b) the grant of Restricted Stock made under this Agreement is completely independent of any other award or grant and is made at the sole discretion of the Company; and (c) no past grants or awards (including, without limitation, the Restricted Stock granted hereunder) give the Participant any right to any grants or awards in the future whatsoever.
* * * * *




IN WITNESS WHEREOF , the parties hereto have executed this Agreement as of the date first written above.

THE ANDERSONS, INC.
By:     
Name: Valerie Blanchett     
Title: Vice President, Human Resources     
Date: March 1, 2016     

PARTICIPANT
Name: <electronic signature>
Acceptance Date: <acceptance date>



Exhibit 12

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
THE ANDERSONS, INC.

 
Three months ended
March 31,
(in thousands, except for ratio)
2016
 
2015
Computation of earnings
 
 
 
  Pretax income (a)
$
(15,931
)
 
$
1,777

  Add:
 
 
 
    Interest expense on indebtedness
7,051

 
6,039

    Amortization of debt issue costs
272

 
270

    Interest portion of rent expense (b)
2,434

 
2,102

    Distributed income of equity investees
67

 
4,550

  Earnings
$
(6,107
)
 
$
14,738

 
 
 
 
Computation of fixed charges
 
 
 
  Interest expense on indebtedness
$
7,051

 
$
6,039

  Amortization of debt issue costs
272

 
270

  Interest portion of rent expense (b)
2,434

 
2,102

  Fixed charges
$
9,757

 
$
8,411

 
 
 
 
Ratio of earnings to fixed charges
-0.63
 
1.75


(a) Pretax income as presented is income from continuing operations before adjustment for income or loss from equity investees.
(b) The portion of rent expense on operating leases included in the calculation of the fixed charges ratio above is a reasonable approximation of the interest factor on those agreements.





Exhibit 31.1
Certifications
I, Patrick E. Bowe, certify that:
1
I have reviewed this report on Form 10-Q of The Andersons, Inc.
2
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
 
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
 
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
May 10, 2016
 
 
/s/ Patrick E. Bowe
 
Patrick E. Bowe
 
Chief Executive Officer (Principal Executive Officer)




Exhibit 31.2
Certifications
I, John Granato, certify that:
1
I have reviewed this report on Form 10-Q of The Andersons, Inc.
2
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
 
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
 
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
May 10, 2016
 
 
/s/ John Granato
 
John Granato
 
Chief Financial Officer (Principal Financial Officer)




Exhibit 32.1
The Andersons, Inc.
Certifications Pursuant to 18 U.S.C. Section 1350
In connection with the Quarterly Report of The Andersons, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2016 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to such officer’s knowledge:
(1)
The Report fully complies with the requirements of 13(a) or 15(d) of the Securities Exchange Act of 1934, and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.
May 10, 2016
 
 
 
 
/s/ Patrick E. Bowe
 
Patrick E. Bowe
 
Chief Executive Officer
 
 
 
/s/ John Granato
 
John Granato
 
Chief Financial Officer