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Related Party Transactions | 12 Months Ended
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Dec. 31, 2016
Related Party Transactions [Abstract] |
Related Party Transactions | 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. In January 2003, the Company became a minority investor in LTG, which focuses on grain merchandising as well as trading related to the energy and biofuels industry. The Company accounts for this investment under the equity method. The Company sells and purchases both grain and ethanol with LTG in the ordinary course of business on terms similar to sales and purchases with unrelated customers. On January 22, 2014, the Company entered into an agreement with LTG for a partial redemption of the Company's investment in LTG for $60 million. At the time of redemption, the Company's interest in LTG reduced from approximately 47.5 percent to approximately 39.2 percent on a fully diluted basis. A portion of the proceeds ($28.5 million) was considered a distribution of earnings and reduced the Company's cost basis in LTG. The difference between the remaining proceeds of $31.5 million and the new cost basis of the shares sold, net of deal costs, resulted in a gain of $17.1 million ($10.7 million after tax) and was recorded in Other Income. On December 4, 2015, 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 is 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. In 2005, the Company became an investor in The Andersons Albion Ethanol LLC (“TAAE”). TAAE is a producer of ethanol and its co-products DDG and corn oil at its 55 million gallon-per-year ethanol production facility in Albion, Michigan. The Company operates the facility under a management contract and provides corn origination, ethanol, corn oil and DDG marketing and risk management services. The Company is separately compensated for all such services except corn oil marketing. The Company also leases its Albion, Michigan grain facility to TAAE. While the Company now holds 55% of the outstanding units of TAAE, a super-majority vote is required for all major operating decisions of TAAE based on the terms of the Operating Agreement. The Company has concluded that the super-majority vote requirement gives the minority shareholders substantive participating rights and therefore consolidation for book purposes is not appropriate. The Company accounts for its investment in TAAE under the equity method of accounting. In 2006, the Company became a minority investor in The Andersons Clymers Ethanol LLC (“TACE”). TACE is also a producer of ethanol and its co-products DDG and corn oil at a 110 million gallon-per-year ethanol production facility in Clymers, Indiana. The Company operates the facility under a management contract and provides corn origination, ethanol, corn oil and DDG marketing and risk management services for which it is separately compensated. The Company also leases its Clymers, Indiana grain facility to TACE. In 2006, the Company became a minority investor in The Andersons Marathon Ethanol LLC (“TAME”). TAME is also a producer of ethanol and its co-products DDG and corn oil at a 110 million gallon-per-year ethanol production facility in Greenville, Ohio. In January 2007, the Company transferred its 50% share in TAME to The Andersons Ethanol Investment LLC (“TAEI”), a consolidated subsidiary of the Company, of which a third party owns 34% of the shares. The Company operates the facility under a management contract and provides corn origination, ethanol, corn oil and DDG marketing and risk management services for which it is separately compensated. In 2009, TAEI invested an additional $1.1 million in TAME, retaining a 50% ownership interest. The Company has marketing agreements with TAAE, TACE, and TAME ("the three unconsolidated ethanol LLCs") under which the Company purchases and markets the ethanol produced to external customers. As compensation for these marketing services, the Company earns a fee on each gallon of ethanol sold. For two of the LLCs, the Company purchases all of the ethanol produced and then sells it to external parties. For the third LLC, the Company buys only a portion of the ethanol produced. The Company acts as the principal in these ethanol sales transactions to external parties as the Company has ultimate responsibility of performance to the external parties. Substantially all of these purchases and subsequent sales are executed through forward contracts on matching terms and, outside of the fee the Company earns for each gallon sold, the Company does not recognize any gross profit on the sales transactions. For the years ended December 31, 2016, 2015 and 2014, revenues recognized for the sale of ethanol purchased from related parties were $427.8 million, $428.2 million and $584.2 million, respectively. In addition to the ethanol marketing agreements, the Company holds corn origination agreements, under which the Company originates all of the corn used in production for each unconsolidated ethanol LLC. For this service, the Company receives a unit based fee. Similar to the ethanol sales described above, the Company acts as a principal in these transactions, and accordingly, records revenues on a gross basis. For the years ended December 31, 2016, 2015 and 2014, revenues recognized for the sale of corn under these agreements were $426.8 million, $443.9 million and $480.2 million, respectively. As part of the corn origination agreements, the Company also markets the DDG produced by the entities. For this service the Company receives a unit based fee. The Company does not purchase any of the DDG from the ethanol entities; however, as part of the agreement, the Company guarantees payment by the buyer for DDG sales. At December 31, 2016 and 2015, the three unconsolidated ethanol entities had a combined receivable balance for DDG of $4.1 million and $3.9 million, respectively, of which $9.4 thousand and $63.3 thousand, respectively, was more than thirty days past due. As the Company has not experienced historical losses and the DDG receivable balances greater than thirty days past due is immaterial, the Company has concluded that the fair value of this guarantee is inconsequential. On July 31, 2013, the Company, along with Lansing Trade Group, LLC established joint ventures that acquired 100% of the stock of Thompsons Limited, including its investment in the related U.S. operating company. Each Company owns 50% of the investment. Thompsons Limited is a grain and food-grade bean handler and agronomy input provider, headquartered in Blenheim, Ontario, and operates 12 locations across Ontario and Minnesota. The Company does not hold a majority of the outstanding shares of Thompsons Limited joint ventures. All major operating decisions of these joint ventures are made by their Board of Directors and the Company does not have a majority of the board seats. Due to these factors, the Company does not have control over these joint ventures and therefore accounts for these investments under the equity method of accounting. The following table presents aggregate summarized financial information of LTG, TAAE, TACE, TAME, Thompsons Limited, and other various investments as they qualified as significant equity method investees in the aggregate. No equity investments qualified as significant for the years ended December 31, 2016, 2015 and 2014.
| December 31,
(in thousands) | 2016 |  | 2015 |  | 2014
Sales | $ | 6,579,413 |  |  | $ | 6,868,257 |  |  | $ | 8,152,313 |
Gross profit | 188,350 |  |  | 250,847 |  |  | 396,774 |
Income from continuing operations | 12,288 |  |  | 85,220 |  |  | 233,831 |
Net income | 6,445 |  |  | 81,368 |  |  | 219,431 |
Current assets | 898,081 |  |  | 1,236,171 |  |  | 1,482,110 |
Non-current assets | 565,416 |  |  | 500,637 |  |  | 558,138 |
Current liabilities | 665,387 |  |  | 796,816 |  |  | 1,153,101 |
Non-current liabilities | 359,816 |  |  | 342,075 |  |  | 381,646 |
Noncontrolling interests | 3,628 |  |  | 11,716 |  |  | 13,953 |
The following table presents the Company’s investment balance in each of its equity method investees by entity:
| December 31,
(in thousands) | 2016 |  | 2015
The Andersons Albion Ethanol LLC | $ | 38,972 |  |  | $ | 32,871 |
The Andersons Clymers Ethanol LLC | 19,739 |  |  | 29,278 |
The Andersons Marathon Ethanol LLC | 22,069 |  |  | 31,255 |
Lansing Trade Group, LLC | 89,050 |  |  | 101,531 |
Thompsons Limited (a) | 46,184 |  |  | 43,964 |
Other | 917 |  |  | 3,208 |
Total | $ | 216,931 |  |  | $ | 242,107 |
(a) | Thompsons Limited and related U.S. operating company held by joint ventures
The following table summarizes income (losses) earned from the Company’s equity method investments by entity:
| % ownership at December 31, 2016 |  | December 31,
(in thousands) |  | 2016 |  | 2015 |  | 2014
The Andersons Albion Ethanol LLC | 55% |  | $ | 6,167 |  |  | $ | 5,636 |  |  | $ | 19,814 |
The Andersons Clymers Ethanol LLC | 39% |  | 6,486 |  |  | 6,866 |  |  | 21,840 |
The Andersons Marathon Ethanol LLC | 50% |  | 5,814 |  |  | 4,718 |  |  | 27,226 |
Lansing Trade Group, LLC | 33% (a) |  | (9,935 | ) |  | 11,880 |  |  | 23,266 |
Thompsons Limited (b) | 50% |  | 1,189 |  |  | 2,735 |  |  | 4,140 |
Other | 5%-34% |  | — |  |  | 89 |  |  | 237 |
Total |  |  | $ | 9,721 |  |  | $ | 31,924 |  |  | $ | 96,523 |
(a) | This does not consider the restricted management units which once vested will reduce the ownership percentage by approximately 0.7%.
(b) | Thompsons Limited and related U.S. operating company held by joint ventures
Total distributions received from unconsolidated affiliates were $33.6 million for the year ended December 31, 2016. The balance at December 31, 2016 that represents the undistributed earnings of the Company's equity method investments is $72.1 million. 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 in this entity. 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:
| December 31,
(in thousands) | 2016 |  | 2015 |  | 2014
Sales revenues | $ | 749,746 |  |  | $ | 825,220 |  |  | $ | 1,062,377 |
Service fee revenues (a) | 17,957 |  |  | 20,393 |  |  | 23,093 |
Purchases of product | 463,832 |  |  | 465,056 |  |  | 604,067 |
Lease income (b) | 5,966 |  |  | 6,664 |  |  | 6,381 |
Labor and benefits reimbursement (c) | 12,809 |  |  | 11,567 |  |  | 11,707 |
Other expenses (d) | 149 |  |  | 1,059 |  |  | 1,224 |
Accounts receivable at December 31 (e) | 26,254 |  |  | 13,362 |  |  | 25,049 |
Accounts payable at December 31 (f) | 23,961 |  |  | 13,784 |  |  | 17,687 |
(a) | Service fee revenues include management fee, corn origination fee, ethanol and 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 unconsolidated 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.
(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.
From time to time, the Company enters into derivative contracts with certain of its related parties, including the unconsolidated ethanol LLCs, LTG, and the Thompsons Limited joint ventures, for the purchase and sale of grain and ethanol, for similar price risk mitigation purposes and on similar terms as the purchase and sale derivative contracts it enters into with unrelated parties. The fair value of derivative contracts with related parties in a gross asset position as of December 31, 2016 and 2015 was $4.1 million and $2.3 million, respectively. The fair value of derivative contracts with related parties in a gross liability position as of December 31, 2016 and 2015 was $0.1 million and $0.3 million, respectively.

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- Definition The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39603-107864 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39622-107864 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39678-107864 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39691-107864 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(k)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Paragraph b -Article 3A + Details
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