Edgar Filing: Andersons, Inc.

SEC Document

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.

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THE ANDERSONS, INC.

INDEX



	Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets – March 31, 2016, December 31, 2015 and March 31, 2015	3
Condensed Consolidated Statements of Operations – Three months ended March 31, 2016 and 2015	5
Condensed Consolidated Statements of Comprehensive Income (Loss) – Three months ended March 31, 2016 and 2015	6
Condensed Consolidated Statements of Cash Flows – Three months ended March 31, 2016 and 2015	7
Condensed Consolidated Statements of Equity – Three months ended March 31, 2016 and 2015	8
Notes to Condensed Consolidated Financial Statements	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3. Quantitative and Qualitative Disclosures about Market Risk	39
Item 4. Controls and Procedures	39
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	40
Item 1A. Risk Factors	40
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 6. Exhibits	41

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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

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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

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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

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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

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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

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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

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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

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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.

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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.

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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.

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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

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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

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	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:

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	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,
(in thousands)	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

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	Post-retirement Benefits
(in thousands)	Three months ended March 31,
(in thousands)	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	)

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		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

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	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).

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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,
(in thousands, except per common share data)	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.

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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

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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

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(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

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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)	% ownership at March 31, 2016	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,
(in thousands)	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:

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	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