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Published: 5/13/2006

Stock split fueled at The Andersons by ethanol frenzy

BY JON CHAVEZ
BLADE BUSINESS WRITER
Company Chairman Dick Anderson, left, introduces President and CEO Mike Anderson to shareholders in Maumee. Company Chairman Dick Anderson, left, introduces President and CEO Mike Anderson to shareholders in Maumee.
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After weeks of speculation by analysts and investors, including an inquisitive shareholder at its annual meeting yesterday, The Andersons declared a 2-for-1 stock split - the Maumee firm's first stock split since becoming publicly traded in February, 1996.

The result of a current frenzy over ethanol, which has taken the company's stock from a solid $30 per share in October to a lofty $111.21 a share at yesterday's close of trading on the Nasdaq, the stock split will double The Andersons' outstanding shares from 7.6 million to 15.2 million.

"Our stock's recent outstanding performance has enabled us to provide this added benefit to shareholders," said Mike Anderson, company president and chief executive officer. "Additionally, this split enables a larger universe of investors to purchase our shares."

Shareholders as of June 1 will get a second share on June 28 for each share they own. In addition the company yesterday declared a cash dividend of 4.5 cents, payable July 24 to shareholders of record as of July 3.

Both moves by The Andersons' board of directors were made after the hour-long annual meeting, which was held at its Maumee headquarters.

Just eleven years ago, The Andersons held its first annual meeting at the Medical University of Ohio. Then-president and CEO Richard "Dick" Anderson greeted 100 new investors at that session and warned them that they now owned a slow and steady performer, not a "high-tech stock."

Yesterday at the Maumee agribusiness's 11th annual meeting, it was Dick Anderson, now chairman, once again warmly greeting about 100 investors.

But with its stock closing yesterday at $111.21 - compared to $8.36 a share in May, 1996, - Mike Anderson acknowledged that the once slow and steady performer may have crossed a threshold last year with its move into making ethanol - a gas additive distilled from feed corn.

"We've become a little more the topic of conversation than we're used to," he said.

Many investment experts had predicted a split was coming. At the meeting, the first question directed at the CEO was when a stock split would occur.

Mr. Anderson said he has been responding to the frequent question by pretending he cannot hear.

"After the third 'What?' they get the message," he said.

But with national attention from stock watchers and investors seeking stocks relating to renewable fuels such as ethanol, The Andersons has been fielding all kinds of questions.

"It's been an interesting year," Mr. Anderson said, drawing laughs from the shareholders.

Last year the company bought a 44 percent stake in a new ethanol plant near Albion, Mich., and a 37 percent stake in one at Clymers, Ind. It will manage both plants and is seeking an air permit for a third plant in Dunkirk, Ind.

Mr. Anderson said new questioners now ask if it will produce biodiesel or other alternative fuels, a sign the company's image is being reshaped.

"We know now that we're moving into the energy sphere, and we have to do more to address that," he said.

Gene Lesak of Monclova Township, a shareholder since The Andersons went public, said he is gratified by the recent success of the company.

That has made his stock more valuable, and he likes that the firm is moving into ethanol.

The company has a great management team, he said. "This is what this company is about: management that has been there for the shareholders. Other CEOs are all about making big bucks and salaries. You don't see that with The Andersons."

Bob Lynd of Oregon bought Andersons stock in October but not because of ethanol.

"I like ethanol, but it was the rail car and distribution business that attracted me," he said.

The Andersons family also has earned his trust and investment money. "They are down to earth. They are in touch with the people and have honesty and integrity - all the things you'd want in government and business," Mr. Lynd said.

At the meeting in Arrowhead Park, Mr. Anderson estimated the company's 2006 earnings at $3.40 to $3.80 per share with limited fourth quarter income from ethanol.

" It's next year that we'll begin pumping out the ethanol big time," he said. And the company also plans to expand into management of ethanol plants, transportation of ethanol stocks, and distribution of distiller's dried grain, which is an ethanol by-product used to feed cows.

"It's a way to spread the risk of investment," he said.

Mr. Anderson said the firm already has a nice start to 2006 with its $3.8 million first-quarter profit. Usually, the first quarter brings a loss, but the company's fleet of 20,000 rail cars - up from just 7,000 in 2002 - is changing that significantly.

Rail cars helped the company enjoy "a heck of a fourth quarter," boosting its profits to a record $26 million, or $3.39 per share, he said.

Still, new investors who have flocked to the company over the last few months are there mainly because of ethanol.

"They don't care where we were. They care about where we're going," Mr. Anderson said.

Contact Jon Chavez at:

jchavez@theblade.com

or 419-724-6128.



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