10-K405

SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 10-K

 X  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1999

or

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 registrant as specified in its charter)

OHIO (State or other jurisdiction of incorporation or organization)	34-1562374 (I.R.S. Employer Identification No.)
480 W. Dussel Drive, Maumee, Ohio (Address of principal executive offices)	43537 (Zip Code)

Registrant’s telephone number, including area code (419) 893-5050

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Shares

      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 [X] NO [  ]

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

      The aggregate market value of the registrant’s voting stock which may be voted by persons other than affiliates of the registrant was $47,047,796 on February 29, 2000, computed by reference to the last sales price for such stock on that date as reported on the Nasdaq National Market.

      The registrant had 7,655,269 Common shares outstanding, no par value, at February 29, 2000.

DOCUMENTS INCORPORATED BY REFERENCE

      Portions of the 1999 Annual Report of The Andersons, Inc. and Proxy Statement for the Annual Meeting of Shareholders to be held on April 20, 2000, are incorporated by reference into Parts II (Items 5, 6, 7 and 8), III (Items 10, 11 and 12) and IV of this Annual Report on Form 10-K. The Proxy Statement will be filed with the Commission on or about March 10, 2000.

TABLE OF CONTENTS

PART I
	Item 1. Business
	Item 2. Properties
	Item 3. Legal Proceedings
	Item 4. Submission of Matters to a Vote of Security Holders
	Item 4a. Executive Officers of the Registrant
PART II
	Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters
	Item 6. Selected Financial Data
	Item 7. Management's Discussion & Analysis of Financial Condition and Results of Operations
	Item 7a. Quantitative and Qualitative Disclosures about Market Risk
	Item 8. Financial Statements and Supplementary Data
	Report of Independent Auditors
	Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
PART III
	Item 10. Directors and Executive Officers of the Registrant
	Item 11. Executive Compensation
	Item 12. Security Ownership of Certain Beneficial Owners and Management
	Item 13. Certain Relationships and Related Transactions
PART IV
	Item 14. Financial Statement Schedules and Reports on Form 8-K
SIGNATURES
SCHEDULE II - CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS THE ANDERSONS, INC.
EXHIBIT INDEX

PART I

Item 1. Business

(a) General Development of Business

      The Andersons, Inc. is a diversified company with four operating groups. The Agriculture Group merchandises grain, operates grain elevator facilities located in Ohio, Michigan, Indiana and Illinois, manufactures agricultural fertilizer, and distributes agricultural inputs (fertilizer, chemicals, seed and supplies) to dealers and farmers. The Processing Group manufactures lawn fertilizer and corncob based products for use primarily in the lawn and garden and pet industries. The Manufacturing Group purchases, sells, repairs and leases railcars and other rail equipment. The Retail Group operates six retail stores and a distribution center in Ohio.

(b) Financial Information About Industry Segments

      See Note 13 to the consolidated financial statements for information regarding business segments.

(c) Narrative Description of Business

Agriculture Group

      The Agriculture Group operates grain elevators, wholesale fertilizer terminals, and farm centers.

      The Company’s grain operations involve merchandising grain and operating terminal grain elevator facilities. This includes purchasing, handling, processing and conditioning grain, storing grain purchased by the Company as well as grain owned by others, and selling grain. The principal grains sold by the Company are yellow corn, yellow soybeans and soft red and white wheat. The Company’s total grain storage capacity was approximately 80 million bushels at December 31, 1999.

      Grain merchandised by the Company is grown in the midwestern portion of the United States (the Eastern Corn Belt) and is acquired from country elevators, dealers and producers. The Company makes grain purchases at prices referenced to Chicago Board of Trade quotations. The Company competes for the purchase of grain with grain processors and feeders, as well as with other grain merchandisers.

      In 1998, the Company signed a five-year lease agreement with Cargill, Inc. for Cargill’s Maumee and Toledo, Ohio grain handling and storage facilities. As part of the agreement, Cargill was given the marketing rights to grain in the Cargill-owned facilities as well as the adjacent Company-owned facilities in Maumee and Toledo. These agreements cover 45%, or 35 million bushels, of the Company’s total storage space and became effective on June 1, 1998.

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      During 1999, approximately 69% of the grain sold by the Company was purchased domestically by grain processors and feeders, and approximately 31% was exported. Most of the exported grain was purchased by exporters for shipment to foreign markets. Some grain is shipped directly to foreign countries, mainly Canada. Almost all grain shipments are by rail or boat. Rail shipments are made primarily to grain processors and feeders, with some rail shipments made to exporters on the Gulf or East Coast. All boat shipments are from the Port of Toledo. Grain sales, except for grain sales subject to the marketing agreement with Cargill which are effected on a negotiated basis with Cargill’s merchandising staff, are effected on a negotiated basis by the Company’s merchandising staff.

      The Company’s grain business may be adversely affected by the grain supply (both crop quality and quantity) in its principal growing area, government regulations and policies, conditions in the shipping and rail industries and commodity price levels. See “Government Regulation”. The grain business is seasonal coinciding with the harvest of the principal grains purchased and sold by the Company.

      Fixed price purchases and sales of cash grain and grain held in inventory expose the Company to risks related to adverse changes in price. The Company attempts to manage these risks by hedging fixed price purchase and sale transactions and inventory through the use of futures and option contracts with the Chicago Board of Trade (“CBOT”). The CBOT is a regulated commodity futures exchange that maintains futures markets for the grains merchandised by the Company. Futures prices are determined by worldwide supply and demand.

      The Company’s hedging program is designed to reduce the risk of changing commodity prices. In that regard, hedging transactions also limit potential gains from further changes in market prices. The grain division’s profitability is primarily derived from margins on grain sold, and revenues generated from other merchandising activities with its customers, not from hedging transactions. The Company has a policy which specifies the key controls over its hedging program. This policy includes a description of the hedging programs, mandatory review of positions by key management outside of the trading function on a biweekly basis, daily position limits, modeling of positions for changes in market conditions, and other internal controls.

      Purchases of grain can be made the day the grain is delivered to a terminal or via a forward contract made prior to actual delivery. Sales of grain generally are made by contract for delivery in a future period. When the Company purchases grain at a fixed price, the purchase is hedged with the sale of a futures contract on the CBOT. Similarly, when the Company sells grain at a fixed price, the sale is hedged with the purchase of a futures contract on the CBOT. At the close of business each day the open inventory ownership positions as well as open futures and option positions are marked-to-the-market. Gains/losses in the value of the Company’s owned inventory positions due to changing market prices are netted with and generally offset by losses/gains in the value of the Company’s futures positions.

      When a futures contract is entered into, an initial margin deposit must be sent to the CBOT. The amount of the margin deposit is set by the CBOT and varies by commodity. If the market price of a futures contract moves in a direction which is adverse to the Company’s

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position, an additional margin deposit, called a maintenance margin, is required by the CBOT. Subsequent price changes could require additional maintenance margins or could result in the return of maintenance margins by the CBOT. Significant increases in market prices, such as occur when weather conditions are unfavorable for extended periods, can have an effect on the Company’s liquidity and require it to maintain appropriate short-term lines of credit. The Company may utilize CBOT option contracts to limit its exposure to potential required margin deposits in the event of a rapidly rising market.

      The Grain operation relies on forward purchase contracts with producers, dealers and country elevators to ensure an adequate supply of grain to its facilities throughout the year. Bushels contracted for future delivery at February 29, 2000 approximated 49 million, 95% of which are to be delivered to the Company in the 1999 and 2000 crop years (through August 2001). The Company relies heavily on its hedging program as the method for minimizing price risk in its grain inventories and contracts. The Company monitors current market conditions and may expand or reduce the purchasing program in response to changes in those conditions. In addition, the Company reviews its purchase contracts and the parties to those contracts on a regular basis for credit worthiness, defaults and non-delivery.

      The Company competes in the sale of grain with other grain merchants, other elevator operators and farmer cooperatives that operate elevator facilities. Competition is based primarily on price, service and reliability. Some of the Company’s competitors are also its customers and many of its competitors have substantially greater financial resources than the Company.

      The Company’s wholesale fertilizer operations involve purchasing, storing, formulating, and selling dry and liquid fertilizers; providing fertilizer warehousing and services to manufacturers and customers; and the wholesale distribution of seeds and various farm supplies. The major fertilizer ingredients sold by the Company are nitrogen, phosphate and potassium, all of which are readily available from various sources.

      The Company’s wholesale fertilizer market area primarily includes Illinois, Indiana, Michigan and Ohio and customers for the Company’s fertilizer products are principally retail dealers. Sales of agricultural fertilizer products are heaviest in the spring and fall.

      The Company’s aggregate owned wholesale storage capacity for dry fertilizer was 12.9 million cubic feet at December 31, 1999. The Company reserves 5.9 million cubic feet of this space for various fertilizer manufacturers and customers. The Company’s aggregate wholesale storage capacity for liquid fertilizer at December 31, 1999 was 29.7 million gallons and 8.4 million gallons of this space is reserved for manufacturers and customers. The agreements for reserved space provide the Company storage and handling fees and, generally, are for an initial term of one year and are renewable at the end of each term. The Company also leases .3 million cubic feet and 4.4 million gallons of dry and liquid fertilizer capacity, respectively, under arrangements with various fertilizer dealers and warehouses.

      The Company operates fourteen farm centers located throughout Michigan, Indiana and Ohio. These centers, located within the same regions as the Company’s grain and wholesale

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fertilizer facilities, offer agricultural fertilizer, custom application of fertilizer to farms and golf courses, and chemicals, seeds and supplies to the farmer.

      In its agricultural fertilizer businesses, the Company competes with regional cooperatives; fertilizer manufacturers; multi-state retail/wholesale chain store organizations; and other independent wholesalers of agricultural products. Many of these competitors have considerably larger resources than the Company. Competition in the agricultural products business of the Company is based principally on price, location and service.

Processing Group

      The Processing Group produces and markets granular lawn fertilizer and related products to retailers and professional lawn care companies. It also produces and distributes corncob-based products to the chemical carrier, pet and industrial markets. Retail lawn products are sold to mass merchandisers, small independent retailers and other lawn fertilizer manufacturers. During the off-season, ice melt products are distributed to many of the same retailers. Professional lawn products are sold both direct and through distributors to lawn service applicators and to golf courses. Principal raw materials for the lawn care products are nitrogen, potash and phosphate, which are purchased primarily from the Company’s wholesale fertilizer division. The lawn products industry is highly seasonal, with the majority of sales occurring from early spring to early summer. Competition is based principally on merchandising ability, service and quality.

      The Company is one of the largest producers of processed corncob products in the United States. These products serve the chemical and feed ingredient carrier, animal litter and industrial markets and are distributed throughout the United States and Canada and into Europe and Asia. The principal sources for the corncobs are the Company’s grain operations and seed corn producers.

      The Company has signed a letter of intent with The Scott’s Company, Inc. to acquire their U.S. professional turf business. The transaction is expected to close by May 31, 2000.

Manufacturing Group

      The Company’s Manufacturing Group buys, sells, leases, rebuilds and repairs various types of used railcars and rail equipment. The division also provides fleet management services to fleet owners and operates a custom steel fabrication business. A significant portion of the railcar fleet is leased from financial lessors and sub-leased to end-users. Some of these leases are nonrecourse to the Company. Competition for railcar marketing and fleet maintenance services is based primarily on service, access to used rail equipment and access to third party financing. Repair and fabrication shop competition is based primarily on price, quality and location.

      The Company completed its first lease transaction involving locomotives in December 1999. The Company plans to continue to diversify its fleet both as to car type and by primary industry.

Retail Group

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      The Company’s Retail Group consists of six stores operated as “The Andersons”, which are located in the Columbus, Lima and Toledo, Ohio markets and serve urban, suburban and rural customers. The retail concept is “More for Your Home” and includes a full line of home center products plus a wide array of other items not available at the more traditional home center stores. In addition to hardware, home remodeling and lawn & garden products, The Andersons stores offer housewares, automotive products, sporting goods, pet products, bath soft goods and food (bakery, deli, produce, wine and specialty groceries). Each store carries more than 70,000 different items, has 100,000 square feet or more of in-store display space plus 40,000 square feet of outdoor garden center space, and has a center aisle that features do-it-yourself clinics, special promotions and varying merchandise displays.

      The retail merchandising business is highly competitive. The Company competes with a variety of retail merchandisers, including home centers, department and hardware stores. The principal competitive factors are location, quality of product, price, service, reputation, and breadth of selection. The Company’s retail business is affected by seasonal factors with significant sales occurring during the Christmas season and in the spring.

Other Businesses

      The Company announced in January 2000 that it intends to sell its interest in The Andersons — Tireman Auto Centers to its current venture partner and the current general manager. This transaction is expected to close in the first quarter.

Research and Development

      The Company’s research and development program is mainly concerned with the development of improved products and processes, primarily for the Processing Group. The Company expended approximately $380,000, $340,000, and $350,000 on research and development during 1999, 1998 and 1997, respectively.

Employees

      At December 31, 1999, the Company had 1,276 full-time and 1,777 part-time or seasonal employees. The Company believes its relations with its employees are good.

Government Regulation

      Grain sold by the Company must conform to official grade standards imposed under a federal system of grain grading and inspection administered by the United States Department of Agriculture (“USDA”).

      The production levels, markets and prices of the grains that the Company merchandises are materially affected by United States government programs, including acreage control and price support programs of the USDA. Also, under federal law, the President may prohibit the export of any product, the scarcity of which is deemed detrimental to the domestic economy, or

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under circumstances relating to national security. Because a portion of the Company’s grain sales is to exporters, the imposition of such restrictions could have an adverse effect upon the Company’s operations.

      The Company, like other companies engaged in similar businesses, is subject to a multitude of federal, state and local environmental protection laws and regulations including, but not limited to, laws and regulations relating to air quality, water quality, pesticides and hazardous materials. The provisions of these various regulations could require modifications of certain of the Company’s existing plant and processing facilities and could restrict future facilities expansion or significantly increase their cost of operation. Of the Company’s capital expenditures, approximately $810,000, $650,000 and $945,000 in 1999, 1998 and 1997, respectively, were made in order to comply with these regulations.

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Item 2. Properties

      The Company’s principal agriculture, retail and other properties are described below. Except as otherwise indicated, the Company owns all properties.

Agriculture Facilities

(in thousands)			Agricultural Fertilizer
	Grain Storage		Dry Storage		Liquid Storage
Location	(bushels)		(cubic feet)		(gallons)
Maumee, OH (3)		21,570		4,500		2,878
Toledo, OH Port (4)		13,450		1,800		2,812
Metamora, OH		6,860		—		—
Lyons, OH (2)		380		53		194
Toledo, OH (1)		1,000		—		—
Fremont, OH (2)		—		47		284
Fostoria, OH (2)		—		36		279
Gibsonburg, OH (2)		—		35		307
Pulaski, OH (1) (2)		—		33		250
Lordstown, OH		—		197		—
Champaign, IL		13,500		833		—
Delphi, IN		6,700		923		—
Clymers, IN (2)		4,400		37		2,636
Dunkirk, IN		5,980		833		—
Poneto, IN		600		10		6,298
North Manchester, IN (2)		—		23		127
Seymour, IN		—		720		943
Waterloo, IN (1) (2)		—		992		1,654
Logansport, IN		—		33		3,292
Walton, IN (2)		—		375		5,962
Albion, MI (2)		2,500		22		163
White Pigeon, MI		2,450		—		—
Webberville, MI		—		1,747		3,916
Litchfield, MI (2)		—		40		252
North Adams, MI (2)		—		27		317
Union City, MI (2)		—		60		430
Munson, MI (2)		—		33		160
		79,390		13,409		33,154

(1)	Facility leased.
(2)	Facility is or includes a farm center.
(3)	Includes leased facilities with a 4,300-bushel capacity.
(4)	Includes leased facilities with a 7,500-bushel capacity.

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      The grain facilities are mostly concrete and steel tanks, with some flat storage, which is primarily cover-on-first temporary storage. The Company also owns grain inspection buildings and dryers, a corn sheller plant, maintenance buildings and truck scales and dumps.

      Wholesale fertilizer and farm center properties consist mainly of fertilizer warehouse and distribution facilities for dry and liquid fertilizers. The Maumee, Ohio; Seymour, Indiana; and Walton, Indiana locations have fertilizer mixing, bagging and bag storage facilities. Aggregate storage capacity in the fourteen farm centers located in Michigan, Indiana and Ohio for liquid fertilizer and dry fertilizer is 3.5 million gallons and 521,150 cubic feet, respectively.

Retail Store Properties

Name	Location		Square Feet
Maumee Store		Maumee, OH		131,000
Toledo Store		Toledo, OH		130,000
Woodville Store (1)		Northwood, OH		100,000
Lima Store (1)		Lima, OH		117,000
Brice Store		Columbus, OH		128,000
Sawmill Store		Columbus, OH		134,000
Warehouse (1)		Maumee, OH		245,000

(1) Leased

      The leases for the two stores and the warehouse facility are long-term leases with several renewal options and provide for minimum aggregate annual lease payments approximating $1 million. The two store leases provide for contingent leases payments based on achieved sales volume. Neither store achieved a sales level triggering contingent lease payments in 1999, 1998 or 1997.

Other Properties

      The Company owns lawn fertilizer production facilities and automated pet food production and storage facilities in Maumee, Ohio, a lawn fertilizer production facility in Bowling Green, Ohio and a lawn fertilizer production facility in Montgomery, Alabama. It also owns corncob processing and storage facilities in Maumee, Ohio and Delphi, Indiana. The Company leases lawn fertilizer warehouse facilities in Toledo, Ohio. The Company also participates in a venture that leases lawn fertilizer production and warehouse facilities in Pottstown, Pennsylvania.

      In its railcar business, the Company owns, leases or controls approximately 30 locomotives and 4,300 railcars (primarily covered or open hoppers with some boxcars, tank cars and gondolas) with lease terms ranging from one to twelve years and future minimum lease payments aggregating $41 million with future minimum sublease income of approximately $39 million. The Company also owns a railcar repair facility, a steel fabrication facility, and owns or leases a number of switch engines, cranes and other equipment.

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      The Company owns a service and sales facility for outdoor power equipment and several auto service centers leased to its venture. That venture also leases other auto service centers and a warehouse directly from third parties. The Company expects to continue as landlord on its auto service centers.

      The Company’s administrative office building is leased under a net lease expiring in 2005. The Company owns approximately 994 acres of land on which various of the above properties and facilities are located; approximately 383 acres of farmland and land held for future use; approximately 4 acres of improved land in an office/industrial park held for sale; and certain other real estate.

      Real properties, machinery and equipment of the Company were subject to aggregate encumbrances of approximately $33 million at December 31, 1999. Additions to property, including intangible assets, for the years ended December 31, 1999, 1998 and 1997 amounted to $22 million, $16 million and $16 million, respectively. See Note 10 to the Company’s consolidated financial statements for information as to the Company’s leases.

      The Company believes that its properties, including its machinery, equipment and vehicles, are adequate for its business, well maintained and utilized, suitable for their intended uses and adequately insured.

Item 3. Legal Proceedings

      The Company is not involved in any legal proceedings that it believes to be material.

Item 4. Submission of Matters to a Vote of Security Holders

      None

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Item 4a. Executive Officers of the Registrant

      Pursuant to General Instruction G(3) of Form 10-K, the following information with respect to the executive officers of the registrant is included herein in lieu of being included in the Registrant’s Proxy Statement for its Annual Meeting of Shareholders to be held April 20, 2000.

				Year
Name	Position	Age		Assumed
Dennis J. Addis	Vice President and General Manager, Wholesale Fertilizer Division, Agriculture Group		47		1999
Christopher J. Anderson	Executive Vice President, Strategy and Business Development		45		1999
	President, Processing and Manufacturing Group				1996
Daniel T. Anderson	President, Retail Group		44		1996
	Director of Marketing and Merchandising, Retail Group				1996
Michael J. Anderson	President and Chief Executive Officer		48		1999
	President and Chief Operating Officer				1996
Richard M. Anderson	President, Processing Group		45		1999
Richard P. Anderson	Chairman of the Board		70		1999
	Chairman of the Board and Chief Executive Officer				1996
Joseph C. Christen	Vice President, Human Resource Development		51		1996
Dale W. Fallat	Vice President — Corporate Services		55		1992
Philip C. Fox	Vice President, Corporate Planning		57		1996
Charles E. Gallagher	Vice President, Personnel		58		1996
Richard R. George	Vice President and Controller		50		1996
Beverly J. McBride	Vice President, General Counsel and Secretary		58		1996
Harold M. Reed	Vice President and General Manager, Grain Division, Agriculture Group		43		1999
Martin R. Rossol	Vice President and General Manager, Farm Center Division, Agriculture Group		45		1999
Rasesh H. Shah	President, Manufacturing Group		45		1999
Gary L. Smith	Vice President, Finance and Treasurer		54		1996

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PART II

Item 5. Market for the Registrant’s Common Equity and Related Stockholder Matters

      The information under the caption Quarterly Financial Data and Market for Common Stock on page 12 and Shareholders on the inside back cover of The Andersons, Inc. 1999 Annual Report to Shareholders is incorporated herein by reference. The Company paid quarterly dividends of five cents and four cents per common share, respectively, in 1999 and 1998. The Company declared quarterly dividends of six cents per common share to be paid January 21, 2000 and April 21, 2000 to shareholders of record on January 3, 2000 and April 1, 2000.

Item 6. Selected Financial Data

      The information under the caption Selected Financial Data on page 12 of The Andersons, Inc. 1999 Annual Report to Shareholders is incorporated herein by reference.

Item 7. Management’s Discussion & Analysis of Financial Condition and Results of Operations

      The information under the caption Management’s Discussion & Analysis appearing on pages 18 through 20 of The Andersons, Inc. 1999 Annual Report to Shareholders is incorporated herein by reference.

Item 7a. Quantitative and Qualitative Disclosures about Market Risk

      The information under the captions Market Risk Sensitive Instruments and Positions, Commodities and Interest appearing on page 20 and 21 of The Andersons, Inc. 1999 Annual Report to Shareholders is incorporated herein by reference.

Item 8. Financial Statements and Supplementary Data

      The information under the caption Quarterly Financial Data and Market for Common Stock on page 12 of The Andersons, Inc. 1999 Annual Report to Shareholders, as well as the following consolidated financial statements of The Andersons, Inc. set forth on pages 13 through 17 and 22 through 32 of The Andersons, Inc. 1999 Annual Report to Shareholders are incorporated herein by reference:

• Consolidated Statements of Income for the years ended December 31, 1999, 1998 and 1997

• Consolidated Balance Sheets as of December 31, 1999 and 1998

• Consolidated Statements of Cash Flows for the years ended December 31, 1999, 1998 and 1997

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• Consolidated Statements of Shareholders’ Equity for the years ended December 31, 1999, 1998 and 1997

• Notes to Consolidated Financial Statements

      Following is the Report of Independent Auditors on the Consolidated Financial Statements and schedule:

Report of Independent Auditors

Board of Directors
The Andersons, Inc.

We have audited the accompanying consolidated balance sheets of The Andersons, Inc. and subsidiaries as of December 31, 1999 and 1998, and the related consolidated statements of income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 1999. Our audits also included the financial statement schedule listed in the index at Item 14(a). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of The Andersons, Inc. and subsidiaries at December 31, 1999 and 1998, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/s/ERNST & YOUNG LLP

Toledo, Ohio
January 24, 2000

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

      On February 25, 2000, The Andersons, Inc. determined that the firm of Ernst & Young LLP (E&Y) would no longer serve as the Company’s independent accounting firm, effective with the filing of this document.

      During the years ended December 31, 1999 and 1998 and the subsequent interim period, there were no disagreements between the Company and E&Y on any matters of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which, if not resolved to the satisfaction of E&Y, would have been referred to in their reports. E&Y’s reports on the Company’s financial statements for the years ended December 31, 1999 and 1998 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles.

      The decision to change independent accountants was approved by the Audit Committee of the Company’s Board of Directors

      The Company has engaged PricewaterhouseCoopers LLP as its new independent accountants, also effective with the filing of this document.

PART III

Item 10. Directors and Executive Officers of the Registrant

      For information with respect to the executive officers of the registrant, see “Executive Officers of the Registrant” in Item 4a included in Part I of this report. For information with respect to the Directors of the registrant, see “Election of Directors” in the Proxy Statement for the Annual Meeting of the Shareholders to be held on April 20, 2000 (the “Proxy Statement”), which is incorporated herein by reference; for information concerning 1934 Securities and Exchange Act Section 16(a) Compliance, see such section in the Proxy Statement, incorporated herein by reference.

Item 11. Executive Compensation

      The information set forth under the caption “Executive Compensation” in the Proxy Statement is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management

      The information set forth under the caption “Security Ownership” in the Proxy Statement is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions

      None

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PART IV

Item 14. Financial Statement Schedules and Reports on Form 8-K

(a) (1) The consolidated financial statements of the Company, as set forth under Item 8 of this report on Form 10-K, are incorporated herein by reference from The Andersons, Inc. 1999 Annual Report to Shareholders.

      (2) The following consolidated financial statement schedule is included in Item 14(d):

		Page
II.	Consolidated Valuation and Qualifying Accounts — years ended December 31, 1999, 1998 and 1997		18

      All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.

      (3) Exhibits:

2.1	Agreement and Plan of Merger, dated April 28, 1995 and amended as of September 26, 1995, by and between The Andersons Management Corp. and The Andersons. (Incorporated by reference to Exhibit 2.1 to Registration Statement No. 33-58963).
3.1	Articles of Incorporation. (Incorporated by reference to Exhibit 3(d) to Registration Statement No. 33-16936).
3.4	Code of Regulations of The Andersons, Inc. (Incorporated by reference to Exhibit 3.4 to Registration Statement No. 33-58963).
4.3	Specimen Common Share Certificate. (Incorporated by reference to Exhibit 4.1 to Registration Statement No. 33-58963).
4.4	The Seventeenth Supplemental Indenture dated as of August 14, 1997, between The Andersons, Inc. and The Fifth Third Bank, successor Trustee to an Indenture between The Andersons and Ohio Citizens Bank, dated as of October 1, 1985. (Incorporated by reference to Exhibit 4.4 to The Andersons, Inc. the 1998 Annual Report on Form 10-K)
10.1	Management Performance Program. * (Incorporated by reference to Exhibit 10(a) to the Predecessor Partnership’s Form 10-K dated December 31, 1990, File No. 2-55070).
10.2	The Andersons, Inc. Amended Long-Term Performance Compensation Plan * (Incorporated by reference to Appendix A to the Proxy Statement for the April 22, 1999 Annual Meeting).

15

10.3	The Andersons, Inc. Employee Share Purchase Plan * (Incorporated by reference to Appendix C to Registration Statement No. 33-58963).
13	The Andersons, Inc. 1999 Annual Report to Shareholders
21	Subsidiaries of The Andersons, Inc.
23.1	Consent of Independent Auditors

* Management contract or compensatory plan.

      The Company agrees to furnish to the Securities and Exchange Commission a copy of any long-term debt instrument or loan agreement that it may request.

(b) Reports on Form 8-K:

There were no reports on Form 8-K filed in the fourth quarter of 1999.

(c) Exhibits:

The exhibits listed in Item 14(a)(3) of this report, and not incorporated by reference, follow “Financial Statement Schedule” referred to in (d) below.

(d) Financial Statement Schedule:

The financial statement schedule listed in 14(a)(2) follows “Signatures”.

16

SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) 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, in Maumee, Ohio, on the 10th day of March, 2000.

THE ANDERSONS, INC. (Registrant)

By /s/Michael J. Anderson

Michael J. Anderson
President and Chief Executive Officer

      Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant on the 10th day of March, 2000.

Signature	Title	Date
/s/Michael J. Anderson Michael J. Anderson	President Chief Executive Officer (Principal Executive Officer)	3/10/00
/s/Richard R. George Richard R. George	Vice President & Controller (Principal Accounting Officer) Vice President, Finance &	3/10/00
/s/Gary L. Smith Gary L. Smith	Treasurer (Principal Financial Officer)	3/10/00
/s/Richard P. Anderson Richard P. Anderson	Chairman of the Board Director	3/10/00
/s/Donald E. Anderson Donald E. Anderson	Director	3/10/00
/s/Richard M. Anderson Richard M. Anderson	Director	3/10/00
/s/Thomas H. Anderson Thomas H. Anderson	Director	3/10/00
/s/John F. Barrett John F. Barrett	Director	3/10/00
/s/Paul M. Kraus Paul M. Kraus	Director	3/10/00
/s/Donald L. Mennel Donald L. Mennel	Director	3/10/00
/s/David L. Nichols David L. Nichols	Director	3/10/00
/s/Sidney A. Ribeau Dr. Sidney A. Ribeau	Director	3/10/00
/s/Charles A. Sullivan Charles A. Sullivan	Director	3/10/00
/s/Jacqueline F. Woods Jacqueline F. Woods	Director	3/10/00

Except for those portions of The Andersons, Inc. 1999 Annual Report to Shareholders specifically incorporated by reference in this report on Form 10-K, such annual report is furnished solely for the information of the Securities and Exchange Commission and is not to be deemed “filed” as a part of this filing.

17

SCHEDULE II — CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
THE ANDERSONS, INC.

				Additions
		Balance at		Charged to		Charged to						Balance
		Beginning		Costs and		Other Accounts			Deductions			at End
Description		of Period		Expenses		- Describe			- Describe			of Period
Allowance for doubtful accounts receivable:
	Year ended December 31, 1999	$	4,455,000	$	826,543	$	—		$	1,301,543	(1)	$	3,980,000
	Year ended December 31, 1998		2,957,000		2,913,962		235,500	(2)		1,651,462	(1)		4,455,000
	Year ended December 31, 1997		3,230,000		1,680,523		—			1,953,523	(1)		2,957,000
Allowance for doubtful notes receivable:
	Year ended December 31, 1999	$	515,000	$	353,508	$	—		$	285,508	(1)	$	583,000
	Year ended December 31, 1998		777,000		530,923		—			792,923	(1)		515,000
	Year ended December 31, 1997		735,000		86,409		—			44,409	(1)		777,000

(1)	Uncollectible accounts written off, net of recoveries
(2)	Allowance for doubtful accounts acquired in acquisition of business

18

EXHIBIT INDEX

THE ANDERSONS, INC.

Exhibit
Number
13	The Andersons, Inc. 1999 Annual Report to Shareholders
21	Subsidiaries of The Andersons, Inc.
23.1	Consent of Independent Auditors

19 EX-13 2 EXHIBIT 13 1 Exhibit 13 WE'RE GROWING PLACES 1999 ANNUAL REPORT THE ANDERSONS, INC. TABLE OF CONTENTS HIGHLIGHTS 1 LETTER TO SHAREHOLDERS 2 AGRICULTURE GROUP 4 PROCESSING GROUP 6 MANUFACTURING GROUP 8 RETAIL GROUP 10 SELECTED FINANCIAL DATA 12 REPORT OF INDEPENDENT AUDITORS 13 AUDITED CONSOLIDATED FINANCIAL STATEMENTS 14-17 MANAGEMENT'S DISCUSSION & ANALYSIS 18-21 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 22-32 OFFICERS & DIRECTORS DATA INSIDE BACK DILUTED EARNINGS PER SHARE [BAR CHART] 1997 1998 1999 .50 1.20 1.03 CORPORATE PROFILE The Andersons, Inc. (Nasdaq: ANDE) is a diversified Agribusiness and Retailing Compnay with annual revenues of approximately $1 billion. The Company, which began operations in Maumee, Ohio in 1947 with one grain elevator and 500,000 bushels of storage capacity, today has four operating groups: Agriculture, Processing, Manufacturing, and Retail. For more in-depth information about the Company visit our website at www.andersonsinc.com. 1999 ACCOMPLISHMENTS - - Cash dividends increased 25% - - Announced the sale of the Tireman Auto Centers in effort to focus on core competencies - - Announced acquisition of the U.S. professional turf business of The Scotts Company - - Processing Group increased operating capacity by over 70% - - Invested in process engineering consulting to improve productive capacity - - Completed our largest rail-car deal to date - Railcars controlled - 4,300 - Locomotives controlled - 30 - - Increased grain storage capacity at two Michigan elevators and acquired a pelletized lime plant in Indiana - - Ended 1999 with 68 million bushels in storage - a 15% increase over 1998 - - Developed the Risk Profiler(TM) - a tool designed to manage pricing and volume risk for the grain producer - - All company systems transitioned to new millennium without disruptions - - Implementing a common information systems platform across all Farm Centers - - Completed first phase of ERP implementation in the Wholesale Fertilizer Division and select corporate accounting functions - - Rolled out new Point-of-Sales system in Retail stores to improve checkout, credit control and inventory management. - - Retail group recorded top line growth of 4% with operating income up significantly over 1998 1 2

Financial Highlights (in thousands, except for per share & performance data) 1999 1998 % Change OPERATIONS Grain sales & revenues $ 477,799 $ 630,507 -24.2% Fertilizer, retail & other sales 496,942 468,215 6.1% Other income 4,195 5,412 -22.5% ------------------------------- TOTAL SALES & REVENUES 978,936 1,104,134 -11.3% Gross profit - grain 41,586 40,748 2.1% Gross profit - fertilizer, retail & other 131,908 125,893 4.8% ------------------------------- TOTAL GROSS PROFIT 173,494 166,641 4.1% Income before income taxes 11,959 13,006 -8.1% Net income 8,379 9,752 -14.1% Effective tax rate 29.9% 25.0% 19.6% PER SHARE DATA Net income - basic $ 1.05 $ 1.21 -13.2% Net income - diluted 1.03 1.20 -14.2% Dividends per share 0.20 0.16 25.0% Year end market value 7.81 11.56 -32.4% PERFORMANCE Pretax return on beginning equity 14.5% 18.0% Net income return on beginning equity 10.1% 13.5% Long-term debt to equity ratio* 0.9-TO-1 0.9-to-1 Weighted average shares outstanding - basic 7,996,000 8,059,000 Number of employees 3,053 3,035

*Including pension and postretirement benefits

[Pie Charts] 1999 BEGINNING 1999 REVENUES ALLOCATED CAPITAL OPERATING YEAR: $979 MILLION (AS OF 1/1/99) INCOME Agriculture 65.5% $ 75 $ 6,054 Processing 8.5% $ 18 $ (95) Manufacturing 6.1% $ 14 $ 4,225 Retail 18.1% $ 41 $ 2,455 Other 1.8% $ 17 $ (680) ------------------------------------------------------------------------- 100.00% $ 165 $11,959 =========================================================================

2 3 TO OUR SHAREHOLDERS, EMPLOYEES AND FRIENDS "WE ARE GROWING PLACES" is evident in the actions of our operating units in 1999. We experienced growth in the number of operating facilities, in service to our customers and in our focus on core competencies. The Andersons, Inc. is a company in transition, within industries in transition. Such times create opportunity for those who see the value of change, and it is our intention to make the most of every opportunity to improve the value of our company. 1999 RESULTS - The Andersons achieved superior earnings in the first two quarters. However, the second half of the year was more difficult as business conditions changed rapidly in the Agriculture (Ag) Group and we invested heavily in the Processing Group. We recorded revenues of $975 million, down 11% from 1998, and earnings of $8.4 million compared with $9.8 million. Earnings per share were $1.03 compared with $1.20. Dividends increased 25% to $0.20. Our cash flow was strong, the year-end balance sheet was stronger than ever, and we repurchased approximately 500,000 shares from the open market. The Ag Group was the performance leader, with the Grain Division turning in its best performance in seven years. However, historic low grain prices dampened demand for inputs, putting pressure on earnings in the Wholesale Fertilizer and Farm Center Divisions. The Manufacturing Group recorded another good year, though flat relative to 1998. Processing, investing heavily for the future, reported break-even performance. The Retail Group increased sales by 4% and ended 1999 with operating income up 48% over 1998. 1999's performance will be discussed in greater depth in the business review pages of this report. As for our future, "WE ARE GROWING PLACES." Where do we see the best opportunities? Our recent PROCESSING GROUP investments in additional operating capacity and process engineering improvements, and our recent announcement to acquire the U.S. professional turf business of The Scotts Company, demonstrates that we believe that the lawn and garden industry offers significant growth potential and opportunity for The Andersons. Our research indicates the U.S. lawn and garden industry is growing at double-digit rates. Demographics are positively affecting the industry as a generation of affluent empty nesters spends more time and money on their lawn and gardens. In the last 12 months we have increased capacity by 70%, adding manufacturing in the Southeast, Atlantic Coast and the Midwest. We are looking for additional production capacity in the West as well. The industry is consolidating and we stand ready to take a leadership role in serving this growing, lucrative market. Just before the end of 1999, the MANUFACTURING GROUP completed its largest lease deal on record. We now control 4,300 rail cars and 30 locomotives that are in service throughout the United States and Canada. Our position in the industry is to source quality used operating equipment, configure it to meet the customer's specifications, and bring the parties together through customized operating leases. We are increasing our focus on fleet management services, which keeps us very close to equipment specifications and customer demands. This focus puts us in a good position to understand and serve future customer needs immediately. The railroad industry is consolidating and trying to become more efficient, with a focus on investing in infrastructure and power rather than railcars. These market changes allow us to utilize our skills and play into our market niche. The railroad consolidation has also stimulated the short-line railroad industry, a market that is friendly to our equipment and lease structures. There are 1.4 million rail cars in the U.S., so we have just scratched the surface. We also see opportunity as the financial services industry consolidates. Financial institutions will be looking outside their traditional infrastructure to build their portfolios, often to intermediaries such as The Andersons. We believe there is an opportunity to source and place equipment with quality credits in creative lease structures. Our largest investment is in the AG GROUP with 42% of the total permanent assets. The Grain Division started 2000 with 68 million bushels of inventory, 15% more than it held at the beginning of 1999. Since the Grain Division's income is sensitive to bushels stored and handled, this puts us in a very good position for 2000. In addition, we have added storage capacity at two of our Michigan elevators, which will make those operations more efficient as we handle more varieties of commodities. We developed the Risk Profiler(TM); a tool designed to evaluate the pricing and volume risks for the producer. We will continue to follow the evolution of genetically modified grain (GMO), to make sure that we are in good position to serve the industry when specific GMO commodity sourcing and segregation is required. 3 4 1999 was the first full year that The Andersons leased and operated two neighboring Cargill elevators in Northwest Ohio. The lease agreement also gives us access to Cargill's global grain-marketing network. The alliance has been a success and we will continue to explore more opportunities as the industry continues to consolidate. We are adding material handling services at one of our Michigan elevators, which will be dedicated to a major aggregate customer. The aggregate business is counter-cyclical to the grain business. This will add revenue and make our existing facility more efficient. The agricultural fertilizer industry nationwide suffered with low margins and low volume in 1999. All sectors of the industry have experienced extensive consolidation and change. Most of this was driven by the low commodity prices at the farm gate and excess fertilizer manufacturing capacity. Our Wholesale Fertilizer and Farm Center Divisions suffered in 1999 along with the industry. However, while they were dealing with operating performance issues they were also positioning for a better 2000. Both divisions invested heavily in new computer systems. Wholesale Fertilizer invested in additional storage capacity, and value-added liquid fertilizer manufacturing capacity, and purchased a pelletized lime manufacturing plant in Indiana. In 1999 the AG GROUP recorded significant operating profit in the presence of a serious downturn in the farm economy. However, we believe population growth, along with demand for improved diets, and higher standards of living will, over the long term, create demand for grain products and provide a promising future for The Andersons. The RETAIL GROUP continues to focus on "MORE FOR YOUR HOME" as its primary product and customer service offering. Marketing and sales will get plenty of attention in 2000 as we strive to improve the shopping experience. We are focusing on the professionalism and product knowledge of our sales staff, product selection and presentation, improved in-stock levels, and creating the right blend of excitement and entertainment in our stores. We want our customers to feel we are offering an exceptional balance of price, service, and quality each and every time they enter our stores. In 1999 we successfully completed the installation of new point-of-sale systems, which will begin paying dividends with faster checkout, better customer and inventory knowledge, and improved credit controls. The Marketing Partners Plus Program was introduced to aggressively reach potential customers through a variety of vendor assisted marketing alternatives. We also restructured to reduce operating costs, improve inventory turns, and improve vendor support and alliances. Several ADMINISTRATIVE issues are on the docket for 2000. The entire business world faced the Y2K issue as we approached the new millennium. Our employees spent countless hours over the past few years getting ready. The preparation paid off: our computer systems made the transition without disruption. Early in 2000, we announced the signing of a letter-of-intent to sell our investment in The Andersons Tireman Auto Centers. This will allow us to focus on our core competencies and reallocate resources into growth opportunities. We will continue to repurchase our shares from the open market in 2000 because we believe it's the best use for our cash. We also plan to start a dividend re-investment program for the benefit of all investors in 2000. With the initiatives we have in place and business conditions we believe are ahead, WE ARE PLANNING FOR DOUBLE-DIGIT EARNINGS GROWTH FOR 2000. One key element in every business success is people. Products, services, technology, capital, and processes are only crafted into successful business strategies with the most important resource - human capital. We would like to thank the 3,000 LOYAL TEAM MEMBERS who help to make The Andersons a success. Their creativity and hard work assure our customer loyalty, and give us optimism for the future. Sincerely, /s/Mike /s/Dick Michael J. Anderson Richard P. Anderson President & Chief Chairman Executive Officer 4 5 Agriculture Group Founder Harold Anderson was a dreamer and a risk-taker who left a prestigious job with Nabisco to become his own boss. He built a 500,000-bushel grain elevator in Maumee, Ohio, in 1947 and began paying customers as much as 10 cents a bushel more than the going price. Word spread quickly through the Midwest about the innovative, farmer-friendly new business, which today offers products and services that reach around the globe. The AGRICULTURE GROUP operates grain elevators and wholesale fertilizer distribution facilities in the four eastern corn belt states of Ohio, Michigan, Indiana and Illinois. Its elevators purchase large quantities of grain and oilseeds (primarily corn, soybeans and wheat) from farms and country elevators in the region, store, condition and market it to domestic and export processors. It's wholesale fertilizer facilities store and market large volumes of dry and liquid agricultural fertilizers to dealers in the four-state region. The group also operates farm centers in Ohio, Michigan and Indiana, which sell fertilizer, crop protection chemicals, seed and field application services to farmers. The group's total revenue declined by $151 million in 1999, primarily because of lower average grain prices. Total operating income also declined somewhat, by $0.6 million, due to a significant reduction in fertilizer usage by area farmers, start-up costs at a terminal we acquired late in the fertilizer season and some non-recurring operating costs. 1999 was the third successive year of relatively good growing seasons and excellent crop yields in our eastern corn belt region. This has resulted in improved demand for grain storage and enhanced our ability to earn a return on our elevators. During the year, we added storage capacity at our Michigan elevators, and completed the first full calendar year of operating the Toledo-area elevators we leased from Cargill in mid-1998. As a result, our 1999 operating income from grain continued to improve significantly. The wholesale fertilizer industry was hit hard by a reduction in the amount of fertilizer that farmers in the region applied to their fields in the spring of 1999. Because of the unusually low grain prices, they chose to reduce their crop production inputs significantly. With the industry's pipeline poised to support higher levels of consumption, this reduction resulted in lower fertilizer prices, margins and volume. With two additional facilities in 1999 (Waterloo and Seymour, Indiana), our total wholesale fertilizer volume increased by about 9%. However, for the reasons stated above, average margins and total gross profit declined slightly from 1998 levels. Total expenses were higher due to the addition of the two facilities and some non-recurring costs. As a result, our wholesale fertilizer operating income dropped noticeably. Performance of the group's farm centers was also influenced heavily by the downturn in agricultural fertilizer consumption in 1999. Gross profit increased by more than 25% for the year, due to increases in total fertilizer tons and application acres from market share gains and full year operation of several locations we acquired in 1998. With the additional locations and some one-time costs, total expenses increased, creating an operating loss for the farm center unit.

[Bar Charts] 1995 1996 1997 1998 1999 SALES & REVENUES Grain $ 660.2 $ 701.0 $ 567.1 $ 631.4 $ 478.1 Wholesale Fertilizer $ 143.1 $ 139.5 $ 130.5 $ 128.2 $ 123.6 Farm Centers $ 28.1 $ 28.6 $ 30.4 $ 36.2 $ 42.9 ----------------------------------------------------------- $ 831.4 $ 869.1 $ 728.0 $ 795.8 $ 644.6 =========================================================== OPERATING INCOME Grain $ 3.3 $ 0.2 $ 0.1 $ 4.9 $ 7.2 Wholesale Fertilizer $ 2.7 $ 3.3 $ 1.8 $ 2.4 $ 0.7 Farm Centers $ - $ 0.2 $ 0.4 $ (0.7) $ (1.9) ----------------------------------------------------------- $ 6.0 $ 3.7 $ 2.3 $ 6.7 $ 6.1 =========================================================== UNIT VOLUMES Grain Bushel Receipts (Millions) 163 126 145 157 158 Grain Bushels Shipped (Millions) 163 148 118 157 150 Wholesale Fertilizer Tons Sold (000) 879 908 845 850 926 Farm Center Application Acres (000) 241 273 319 383 552

5 6 Processing The grain handling business gave rise to the Company's fertilizer business, which in turn spawned the development of the turf care and garden fertilizer products for consumer and professional markets. The agriculture business also led to our corncob milling operation which turns leftover cobs into useful products used the world over - in cosmetics, as a chemical carrier, in cattle and pet foods, as an industrial absorbent, and most recently in retail lines of all-natural cat litters and pet bedding. The PROCESSING GROUP produces granular lawn care products for retailers, professional lawn care operators and golf courses. It also produces ice-melter products, corncob-based chemical and feed ingredient carriers, animal bedding and litter products. The group operates processing and distribution facilities in Indiana, Alabama, Pennsylvania and three locations in Ohio. In 1999, the group's total revenue grew by almost $9 million, or 11.8%. While the cob and pet business segments both achieved revenue growth for the year, most of the increase was generated by volume gains in the lawn products business. The bottom line declined by $2.9 million, however, primarily due to two specific expenditures made to improve capacity and support future growth. One of these was an intensive effort to improve productivity in our Maumee plant. While it involved a sizable up-front expense, it has already significantly increased available capacity by improving efficiency and production throughput rates. We also incurred start-up costs in conjunction with line expansion in Maumee and the new production facilities in Alabama and Pennsylvania. The lawn products industry has been consolidating recently, and our capacity expansion and efficiency-improvement investments clearly demonstrate our intent to be a significant player in this industry. We have also just announced our intent to acquire the Pro Turf (R) business from The Scotts Company. Once completed, the acquisition of this premium golf course turf care product line will establish The Andersons as the market leader in premium golf course turf products. The focus in our cob and pet businesses continues to be the steady shift to higher value-added product applications including premium cat litter products. We recently announced an agreement with the American Colloid Division of AMCOL International, a leading manufacturer and marketer of clay-based cat litter in the U.S., whereby they will distribute, promote and merchandise our proprietary cob-based cat litter products into the independent pet and specialty pet market channels. The significant investments and product announcements we have made recently reflect our confidence and commitment to future profitable growth in this group's various businesses.

[Bar Chart] SALES & REVENUES 1995 1996 1997 1998 1999 Lawn $ 50.6 $ 57.6 $ 52.0 $ 65.5 $ 73.7 Cob $ 7.7 $ 8.5 $ 8.5 $ 8.9 $ 9.5 Pet $ 1.2 $ 1.9 $ 1.6 $ 0.9 $ 1.0 Other $ 7.1 $ 7.4 $ 0.3 $ - $ - -------------------------------------------------------------- $ 66.6 $ 75.4 $ 62.4 $ 75.3 $ 84.2 ============================================================== OPERATING INCOME Lawn $ 0.9 $ 2.5 $ 1.8 $ 3.0 $ 0.6 Cob $ (0.2) $ 0.1 $ (1.0) $ 0.3 $ 0.5 Pet $ - $ - $ (0.1) $ (0.6) $ (0.2) Other $ (0.7) $ 0.3 $ - $ (0.0) $ (1.0) -------------------------------------------------------------- $ - $ 2.9 $ 0.7 $ 2.7 $ (0.1) ==============================================================

6 7 Manufacturing The growing grain business prompted the addition of an elevator in 1960 on the Maumee river - and construction of tracks and development of a fleet of railcars to move grain from Maumee to the Port of Toledo. Our railcar business unit provides fleet management services and buys, repairs, sells, or leases railcars to fleet owners, private companies and some of the best-known railroad companies in North America. The MANUFACTURING GROUP sells and leases railroad rolling stock in North America. It also repairs, refurbishes and reconfigures various types of railcars to meet customer specifications, and it operates a custom steel fabrication business. The group now controls a fleet of about 4,300 railcars of various types and 30 locomotives. The group's total revenue grew by almost $7 million, or 12.8%, in 1999. Because of a slowdown in repair shop volume, however, operating income, which had grown dramatically in recent years, was relatively unchanged for the year. The recent railroad industry consolidations have not gone smoothly, and as a result, some rail traffic was diverted to over-the-road trucks. As a result, demand for certain types of railcars was soft in 1999 and railcar market values experienced a downturn. With lower lease rates most lessors, including ourselves, were not interested in tying up railcars in three to five-year leases - - the term in which we are most active. These cyclical swings caused the group's fleet marketing income to be flat for the year. Late in the year, however, these market conditions began to improve. Railroads are working through the glitches of consolidation and the demand for railcars is starting to rebound. We are taking advantage of the lower railcar market values to acquire good, quality railcar inventory that we believe will provide a good feedstock for 2000 and beyond. In the fourth quarter, we completed this group's largest deal to-date, involving several hundred railcars and 30 locomotives. In addition to its sheer size, this deal was also a first in two other respects. The locomotives were a new type of equipment - until now, our fleet consisted entirely of railcars. In addition, they were our first equipment leasing commitment outside the United States. Consummation of this deal confirmed the confidence of financial institutions and the rail industry in our ability to participate reliably and effectively in this business. Our intent is to continue to profitably build our fleet, diversifying it in terms of lease duration, car types, industries, customers and geographic dispersion. We will continue to monitor credit quality diligently, and to match-fund assets and liabilities as much as possible to effectively manage risk.

[Bar Chart] SALES & REVENUES 1995 1996 1997 1998 1999 Rail Marketing $ 15.3 $ 16.8 $ 20.8 $ 49.0 $ 57.0 Rail Shop $ 1.6 $ 1.3 $ 1.0 $ 1.9 $ 1.0 Fab Shop $ 3.4 $ 3.2 $ 3.5 $ 3.4 $ 3.2 -------------------------------------------------------------- $ 20.4 $ 21.2 $ 25.2 $ 54.3 $ 61.2 ============================================================== OPERATING INCOME Rail Marketing $ 1.3 $ 1.8 $ 2.9 $ 3.5 $ 3.9 Rail Shop $ 0.5 $ 0.4 $ 0.1 $ 0.7 $ 0.0 Fab Shop $ (0.1) $ 0.1 $ 0.3 $ 0.2 $ 0.3 -------------------------------------------------------------- $ 1.7 $ 2.3 $ 3.3 $ 4.4 $ 4.2 ==============================================================

7 8 Retail The success of the Company's first elevator was the catalyst for an entirely different enterprise: general merchandising. Astute Company founders who observed the farmers heading for home with empty trucks after delivering their grain at the elevator in Maumee decided in 1952 to place a general store next to the elevator where farmers could spend some of the rewards they'd just reaped for their harvests. That was the beginning of the Company's popular and successful six-store chain in Ohio. The RETAIL GROUP operates six large stores in Ohio. Three are located in the Toledo area, two in Columbus and one in Lima. Our central message to the retail customer is "MORE FOR YOUR HOME". We strive to offer the broadest assortment of products that people need to take care of the projects they deal with around their homes. In addition, we strive to make the shopping experience for our customers unique and enjoyable. "MORE FOR YOUR HOME" is more than just a phrase, it's our mission. The foundation of our product offering is home remodeling and home maintenance-based. Extensive offerings in kitchen, bath, lighting, flooring, paint and wallcoverings as well as tools, hardware plumbing, electrical and storage are the core. In addition, we have a dominant lawn and garden offering featuring a much broader selection of live plants than traditional big-box home centers. Our housewares department has been upgraded significantly including upscale tabletop and cookware as well as a great assortment of bed and bath domestics. In addition, we offer a complete line of pet food and supplies, basic sporting goods and toys, and casual and work clothing. Our Uncommon Market features fresh fruits and vegetables, an extensive deli, fresh baked European style hard crusted breads and the most dominant selection of wines and specialty beers in the marketplaces that we serve. Total sales for the Retail Group increased by $6.7 million in 1999, up 3.9% from 1998. While we are susceptible to the competitive pressure that new big-box competition puts on us, we feel very good about 1999. Average gross margins were higher than year earlier levels, led by volume increases in higher margin product categories. Total gross profit was up 5.2%. Operating efficiency improved slightly this year due to increased sales volume and good expense control in spite of a tight labor market. We are very encouraged by the progress made in 1999. We continued to advance on many of the objectives that we have set. We improved our on shelf in-stock performance by a full percent and improved our inventory turns by nearly 6%. Our suppliers showed their willingness to partner with us on advertising initiatives by participating aggressively in our new Marketing Partners Plus program. Merchandising initiatives in Lawn and Garden and Automotive produced sales per square foot advances in excess of 10%. We continued to roll our "We Load It" program which makes our stores much easier to shop for our customers. New and different fixtures in our promotional aisles allowed us to present merchandise in a more appealing manner and with much more aggressive price presentation. In the year 2000 we will continue our advance on increasing sales, improving our productivity per square foot of retail space and improving our operating efficiency. 1995 1996 1997 1998 1999 SALES & REVENUES Retail $ 168.3 $ 176.1 $ 170.1 $ 170.6 $ 177.3 OPERATING INCOME Retail $ 1.8 $ 3.8 $ 0.5 $ 1.7 $ 2.5 8 9 Selected Financial Data

1999 1998 1997 1996 1995 (in thousands, except for per share data) Operating Results Total sales & revenues $ 978,936 $1,104,134 $ 998,845 $ 1,154,956 $1,097,730 Income from continuing operations (a) 8,379 9,752 4,074(d) 6,406(e) 6,273 Per share data: Income from continuing operations (b) 1.05 1.21 0.50 0.76 0.74 Dividends paid (c) 0.20 0.16 0.12 -- -- Balance Sheet Data Total assets $ 376,776 $ 360,823 $ 368,244 $ 346,591 $ 455,518 Working capital 67,939 65,898 53,595 61,649 58,897 Long-term debt 74,127 71,565 65,709 68,568 74,139 Shareholders' equity (c) 84,805 82,734 72,201 73,249 67,260

(a) Includes pro forma taxes of $3,915 thousand for 1995. (b) Amounts are net of pro forma income taxes of $.47 for 1995. Amounts for 1995 were calculated using the actual number of shares outstanding on the date of the January 2, 1996 merger. (c) There were no dividends paid in 1996. Distributions made to partners prior to 1996 are not included in this table. (d) Non-recurring charge of $1.1 million for asset impairment is included ($0.7 million after tax). (e) Income taxes for 1996 include a charge of $0.8 million to establish deferred income taxes on assets of the partnership at the time of the merger.

Quarterly Financial Data and Market for Common Stock (in thousands, except for per share data) Net Income (Loss) Common Stock Quote Dividends Quarter Ended Net Sales Gross Profit Amount Per Share-Basic High Low Declared 1999 March 31 $ 200,755 $ 38,866 $ 44 $ 0.01 $ 12.75 $ 11.00 $0.05 June 30 260,325 51,781 7,459 0.92 14.50 11.94 0.05 September 30 174,674 34,690 (2,511) (0.32) 12.88 8.63 0.05 December 31 343,182 48,157 3,387 0.43 9.38 7.50 0.06 --------------- -------------- -------------- -------------- Year $ 978,936 $173,494 $8,379 1.05 $0.21 =============== ============== ============== ============== 1998 March 31 $ 222,189 $ 33,860 $ (824) $ (0.10) $ 9.50 $ 8.25 $0.04 June 30 283,839 48,762 6,370 0.80 11.00 8.94 0.04 September 30 230,792 36,917 (972) (0.12) 1.50 9.88 0.04 December 31 367,314 47,102 5,178 0.64 11.75 9.69 0.05 --------------- -------------- -------------- -------------- Year $1,104,134 $166,641 $9,752 1.21 $0.17 =============== ============== ============== ==============

9 10 Report of Independent Auditors Board of Directors The Andersons, Inc. We have audited the accompanying consolidated balance sheets of The Andersons, Inc. and subsidiaries as of December 31, 1999 and 1998, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of The Andersons, Inc. and subsidiaries at December 31, 1999 and 1998, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. /s/Ernst & Young LLP Toledo, Ohio January 24, 2000 10 11 The Andersons, Inc. Consolidated Statements of Income

YEAR ENDED DECEMBER 31 (in thousands, except per share data) 1999 1998 1997 -------------------------------------------------------- Sales and merchandising revenues $ 974,741 1,098,722 993,746 Other income 4,195 5,412 5,099 -------------------------------------------------------- 978,936 1,104,134 998,845 Cost of sales and merchandising revenues 805,442 937,493 851,157 -------------------------------------------------------- Gross profit 173,494 166,641 147,688 Operating, administrative and general expenses 152,018 144,681 131,818 Asset impairment charge -- -- 1,121 Interest expense 9,517 8,954 8,494 -------------------------------------------------------- 161,535 153,635 141,433 -------------------------------------------------------- Income before income taxes 11,959 13,006 6,255 Income taxes 3,580 3,254 2,181 -------------------------------------------------------- Net income $ 8,379 9,752 4,074 ======================================================== Per common share Basic earnings $ 1.05 1.21 .50 ======================================================== Diluted earnings $ 1.03 1.20 .50 ======================================================== Dividends paid $ .20 .16 .12 ========================================================

The Notes to Consolidated Financial Statements on pages 22-32 are an integral part of this statement. 11 12

The Andersons, Inc. Consolidated Balance Sheets DECEMBER 31 (in thousands) 1999 1998 ------------------------------------- ASSETS Current assets: Cash and cash equivalents $ 25,614 $ 3,253 Accounts and notes receivable: Trade receivables, less allowance for doubtful accounts of $3,980 in 1999; $4,455 in 1998 51,812 62,647 Margin deposits 1,339 248 ------------------------------------- 53,151 62,895 Inventories 178,323 184,990 Deferred income taxes 5,641 4,634 Prepaid expenses 5,796 5,502 ------------------------------------- Total current assets 268,525 261,274 Other assets: Notes receivable and other assets, less allowance for doubtful notes receivable of $583 in 1999; $515 in 1998 4,640 6,543 Investments in and advances to affiliates 954 1,057 ------------------------------------- 5,594 7,600 Property, plant and equipment, net 102,657 91,949 ------------------------------------- $376,776 $360,823 ===================================== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable $ 45,000 $ 7,700 Accounts payable for grain 68,883 88,978 Other accounts payable 65,079 75,301 Accrued expenses 17,465 17,079 Current maturities of long-term debt 4,159 6,318 ------------------------------------- Total current liabilities 200,586 195,376 Deferred income 4,026 -- Pension and postretirement benefits 3,255 3,113 Long-term debt, less current maturities 74,127 71,565 Deferred income taxes 8,742 7,330 Minority interest 1,235 705 Shareholders' equity Common shares, without par value Authorized -- 25,000 shares Issued -- 8,430 shares at stated value of $.01 per share 84 84 Additional paid-in capital 67,227 67,180 Treasury shares (723 and 290 in 1999 and 1998, respectively) (7,158) (2,665) Accumulated other comprehensive income (144) (29) Unearned compensation (158) (83) Retained earnings 24,954 18,247 ------------------------------------- 84,805 82,734 ------------------------------------- $376,776 $360,823 =====================================

The Notes to Consolidated Financial Statements on pages 22-32 are an integral part of this statement. 12 13

The Andersons, Inc. Consolidated Statements of Cash Flows YEAR ENDED DECEMBER 31 (in thousands) 1999 1998 1997 ----------------------------------------- OPERATING ACTIVITIES Net income $8,379 $9,752 $ 4,074 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 11,282 10,575 10,065 Provision for losses on accounts and notes receivable 1,180 3,757 1,767 Asset impairment charge -- -- 1,121 Gain on sale of property, plant and equipment (476) (116) (529) Deferred income taxes 854 (1,696) 478 Other 307 98 36 ----------------------------------------- Cash provided by operations before changes in operating assets and liabilities 21,526 22,370 17,012 Changes in operating assets and liabilities: Trade accounts receivable 8,564 4,953 2,839 Inventories 3,022 6,810 (41,170) Prepaid expenses and other assets 897 (437) (811) Accounts payable for grain (20,095) (32,254) 24,301 Other accounts payable and accrued expenses (5,723) 14,381 (16,737) ----------------------------------------- Net cash provided by (used in) operating activities 8,191 15,823 (14,566) INVESTING ACTIVITIES Purchases of property, plant and equipment (17,963) (11,630) (15,858) Proceeds from sale of property, plant and equipment 772 347 1,221 ----------------------------------------- Net cash used in investing activities (17,191) (11,283) (14,637) FINANCING ACTIVITIES Net increase (decrease) in short-term borrowings 37,300 (11,940) 15,572 Proceeds from issuance of long-term debt 102,082 110,157 150,982 Payments of long-term debt (101,679) (106,389) (151,795) Proceeds from sale of treasury shares to employees 380 440 423 Dividends paid (1,616) (1,291) (985) Purchase of common shares for the treasury (5,106) (542) (4,240) ----------------------------------------- Net cash provided by (used in) financing activities 31,361 (9,565) 9,957 ----------------------------------------- Increase (decrease) in cash and cash equivalents 22,361 (5,025) (19,246) Cash and cash equivalents at beginning of year 3,253 8,278 27,524 ----------------------------------------- Cash and cash equivalents at end of year $25,614 $ 3,253 $ 8,278 =========================================

The Notes to Consolidated Financial Statements on pages 22-32 are an integral part of this statement. 13 14 The Andersons, Inc. Consolidated Statements of Shareholders' Equity

Accumulated Additional Other Common Paid-in Treasury Comprehensive Unearned Retained (in thousands) Shares Capital Shares Income Compensation Earnings Total ------------------------------------------------------------------------------------- Balances at January 1, 1997 $ 84 $ 66,659 $ (600) $ -- $ -- $ 7,106 $ 73,249 Net and comprehensive income 4,074 4,074 Sale of 49 shares to Employee Share Purchase Plan participants 1 422 423 Purchase of 470 shares for treasury (4,240) (4,240) Dividends declared (1,305) (1,305) ------------------------------------------------------------------------------------- Balances at December 31, 1997 84 66,660 (4,418) -- -- 9,875 72,201 Net income 9,752 9,752 Other comprehensive income: Minimum pension liability, net of $19 income taxes (29) (29) ------------ Comprehensive income 9,723 Sale of 47 shares to Employee Share Purchase Plan participants 3 410 413 Exercise of share options (1) 27 26 Restricted stock issued, net of 13 90 (103) -- forfeitures Amortization of unearned compensation 20 20 Issuance of 193 shares in an acquisition 502 1,748 2,250 Issuance of common shares to directors in lieu of retainer 3 20 23 Purchase of 54 shares for treasury (542) (542) Dividends declared (1,380) (1,380) ------------------------------------------------------------------------------------- Balances at December 31, 1998 84 67,180 (2,665) (29) (83) 18,247 82,734 Net income 8,379 8,379 Other comprehensive income: Minimum pension liability, net of $76 income taxes (115) (115) ------------ Comprehensive income 8,264 Sale of 36 shares to Employee Share Purchase Plan participants (12) 334 322 Exercise of share options 3 55 58 Restricted stock issued, net of 48 183 (231) - forfeitures Amortization of unearned compensation 156 156 Issuance of common shares to directors in lieu of retainer 8 41 49 Purchase of 499 shares for treasury (5,106) (5,106) Dividends declared (1,672) (1,672) ------------------------------------------------------------------------------------- Balances at December 31, 1999 $ 84 $ 67,227 $ (7,158) $ (144) $ (158) $ 24,954 $ 84,805 =====================================================================================

The Notes to Consolidated Financial Statements on pages 22-32 are an integral part of this statement. 14 15 MANAGEMENT'S DISCUSSION AND ANALYSIS OPERATING RESULTS Operating results for The Andersons, Inc. business segments are discussed in the Business Review on pages 4-10 of this annual report. In addition, Note 13 to the consolidated financial statements displays sales and revenues to external customers, intersegment sales, other income, interest expense, operating income, identifiable assets, capital expenditures and depreciation and amortization for each of the Company's business segments. The following discussion focuses on the operating results as shown in the consolidated statements of income. COMPARISON OF 1999 WITH 1998 Sales and merchandising revenues for 1999 totaled $975 million, a decrease of $124 million, or 11%, from 1998. Sales in the Agriculture Segment were down $154 million, or 20%. Grain sales were down $156.9 million, or 20%, due to a 11% volume decrease and a 16% decrease in the average price per bushel sold. This significant decrease was caused by lower market prices and some change in the mix of grain sold by the Company. Fertilizer sales were up $3 million, or 2%, due to an 11% increase in volume offset by an 8% decrease in average price per ton sold. In addition, merchandising revenues were up $5.9 million, or 19%, due to basis appreciation of grain inventory offset by a reduction in income from drying and mixing grain, increases in income from storing grain and fertilizer for others and fees for custom fertilizer application. Grain bushels on hand at December 31, 1999 were 68 million, a 15% increase from December 31, 1998. Total acres, on which custom application was performed, increased 44% from 1998. The 1999 results include a full year of operations from two grain elevators, a wholesale fertilizer distribution facility and four farm centers that were opened or acquired in the first half of 1998. Two additional wholesale distribution facilities and a farm center were opened or acquired in the first half of 1999. The Processing Segment had a sales increase of $8.5 million, or 11%. The majority of this increase, or $7.8 million, was due to a 12% increase in lawn fertilizer volume. This volume increase more than offset a 1% reduction in the average price per ton sold. Sales were up $.7 million, or 7%, in the cob-based businesses. The Company began producing and warehousing lawn fertilizer at a third facility (a joint venture located in Pennsylvania) in mid-1999 and a fourth facility, located in Alabama, in the fourth quarter of 1999. In February 2000, the Company announced its intent to acquire the intangible assets, including fertilizer brands, distribution network and customer lists, of The Scott's Company U.S. professional turf business. The Manufacturing Segment had a sales increase of $7.8 million, or 15%. The majority of this increase was generated by railcar and locomotive sales. Revenues2 from the Segment's leasing and service business were flat due to a soft market. This soft market also contributed to reduced revenue and car volume through the Segment's railcar repair shop. The Retail Segment experienced a $6.6 million, or 4%, increase in sales with all markets (Toledo, Columbus and Lima Ohio) up. Sales increases were due to weather-related sales in January 1999, strong demand for lawn and garden, nursery and home improvement merchandise in the second quarter and a strong Christmas season. In January 2000, the Company announced its intent to sell its interest in The Andersons Tireman Auto Centers, one of its businesses classified as an other business in Note 13 to the consolidated financial statements. 15 16 Gross profit for 1999 totaled $173.5 million, an increase of $6.9 million, or 4%, from 1998. The Agriculture Segment had a gross profit increase of $3 million or 4% due to the increase in merchandising revenues described above and a 17% increase in volume in the farm centers from the acquisitions described previously. Gross profit for the Processing Segment increased $1.2 million, or 4%, from the prior year. In the lawn fertilizer businesses, the increase was due to increased volume. Gross profit in the cob-based businesses was flat. Gross profit in the Manufacturing Segment increased $1.1 million, or 9%, from the prior year in spite of softness in the rail repair business. Gross profit in the Retail Segment improved by $2.6 million, or 5%, from 1998. This was due primarily to increased sales and a slight increase in gross margin percentage. Operating, administrative and general expenses for 1999 totaled $152 million, a $7.3 million, or 5%, increase from 1998. Full time employees increased 3% from the prior year with the majority of the increase due to acquisitions or added capacity in the Processing Segment. Operating, administrative and general expenses as a percent of gross profit increased slightly from 87% in 1998 to 88% in 1999. New facilities required additional labor and benefits expense of $2.5 million, occupancy expense of $2.1 million and other expense of $1.8 million. Interest expense for 1999 was $9.5 million, a $.6 million, or 6%, increase from 1998. Average daily short-term borrowings increased 42% from 1998 while the average short-term interest rate decreased from 5.9% in 1998 to 5.7% in 1999. Income before income taxes of $12 million decreased $1 million, or 8%, from the 1998 pretax income of $13 million. Income tax expense was $3.6 million, a $.3 million, or 10%, increase from 1998. The effective tax rate increased from the 1998 rate of 25% to the 1999 rate of 29.9%. The lower 1998 rate of 25% was due to refinements in the method used to calculate the benefit from the captive foreign sales corporation. Net income for 1999 decreased $1.4 million, or 14%, from the $9.8 million in 1998. Basic earnings per share decreased $.16 from 1998 and diluted earnings per share decreased $.17 from 1998. COMPARISON OF 1998 WITH 1997 Sales and merchandising revenues for 1998 totaled $1.1 billion, an increase of $105 million, or 11%, from 1997. Sales in the Agriculture Segment were up $58.5 million, or 8%, due to a 55% volume increase in grain. This significant volume increase was offset by a decrease in the average price per bushel sold caused by lower market prices and a change in the mix of grain sold by the Company. Fertilizer sales were relatively constant from year to year as a decrease in average price per wholesale ton sold offset sales from additional locations. In addition, merchandising revenues were up $6.3 million, or 25%, due to increases in income from storing grain and fertilizer for others and fees for custom application. During 1998, the Company leased two grain elevators (increasing total grain storage capacity from 69 million to 80 million bushels), added a fertilizer distribution facility and leased or purchased four farm centers. Near the end of 1998, the Company completed the purchase of a combined fertilizer distribution / farm center facility. The Company had 59 million bushels of grain owned or stored for others at December 31, 1998 as compared to 52 million at December 31, 1997. The Processing Segment had a $13 million, or 21%, increase in sales. The majority of this increase, or $10.8 million, was due to a 74% increase in lawn fertilizer volume sold into the consumer market. This 16 17 volume increase more than offset a 13% reduction in the average price per consumer market ton sold. Sales were up $2.5 million in the other fertilizer market segments while the cob-based businesses had decreased sales and revenues of $.3 million. The Manufacturing Segment had a significant sales increase of $27.6 million, or 111%. Of this increase, $22.8 million was due to a 59% increase in railcars sold in 1998. The Segment's leasing and service business generated additional revenues of $4.3 million due to its steadily increasing railcar fleet. The remaining increase was due to additional revenue in the Manufacturing Segment's railcar repair shop. The Retail Segment experienced a slight increase in sales, with both the Toledo and Columbus, Ohio markets up. The Segment ended 1998 with a strong Christmas season including a 6% increase in December same-store sales. This sales increase carried into January due primarily to weather-related sales. Gross profit for 1998 totaled $166.6 million, an increase of $19 million, or 13%, from 1997. The Agriculture Segment had a gross profit increase of $9.9 million or 17% due to the $6.3 million increase in merchandising revenues described above and improved margins on sales of grain and fertilizer. Gross profit for the Processing Segment increased $3.9 million, or 17%, from the prior year. All operations of the Processing Segment experienced increased gross profit. In the lawn fertilizer businesses, the increase was due to increased volume, even though gross profit per ton decreased. The cob-based businesses are transitioning to higher margin, value-added products and had a gross profit increase of $.3 million in spite of decreased volumes. Gross profit in the Manufacturing Segment increased $3.8 million, or 50%, from the prior year. This was due primarily to the railcar sales, greater volume of railcars repaired and higher gross profit per railcar repaired. Gross profit in the Retail Segment improved by $1 million, or 2%, from 1997. This was due primarily to a 2% increase in margins resulting from changes in the product mix, including the addition of home soft goods and similar products in the 1998 reset of the stores. Operating, administrative and general expenses for 1998 totaled $144.7 million, a $12.9 million, or 10%, increase from 1997. Full time employees increased over 10% from the prior year with the majority of the increase due to acquisitions or added capacity in the Agriculture Segment and growth in the Manufacturing Segment. Included in the total increase are additional labor and benefits charges of $5.5 million, maintenance charges of $2.5 million, an increase in the provision for bad debts of $2 million and an increase in depreciation and amortization of $.5 million. All of these increases reflect growth in the underlying businesses. Additional operating expenses relating specifically to the facilities added in 1998 were $3.5 million. Interest expense for 1998 was $9 million, a $.5 million, or 5%, increase from 1997. Average daily short-term borrowings increased 12% from 1997 while the average interest rate decreased slightly. Income before income taxes of $13 million increased $6.8 million, or 108%, from the 1997 pretax income of $6.3 million. Income tax expense was $3.3 million, a $1.1 million, or 49%, increase from 1997. The effective tax rate of 25% represents a significant decrease from the 1997 effective tax rate of 35%. This was due to refinements in the method used to calculate the benefit from the captive foreign sales corporation. Net income more than doubled to $9.8 million from $4.1 million. Basic and diluted earnings per share also more than doubled from the 1997 amounts. 17 18 LIQUIDITY AND CAPITAL RESOURCES The Company's operations (before changes in operating assets and liabilities) provided cash of $21.5 million in 1999, a decrease of $.8 million from 1998. Working capital at December 31, 1999 was $67.9 million, an increase of $2 million or 3% from December 31, 1998. The Company has significant short-term lines of credit available to finance working capital, primarily inventories and accounts receivable. Lines of credit available on December 31, 1999 were $175 million. The Company had drawn $45 million on its short-term lines of credit at December 31, 1999. The Company's peak short-term borrowing of $111 million occurred on April 26. Typically, the Company's highest borrowing occurs in the spring due to seasonal inventory requirements in several of the Company's businesses, credit sales of fertilizer and a customary reduction in grain liabilities due to customer cash needs and market strategies. The Company utilizes interest rate contracts to manage a portion of its interest rate risk on both its long and short term debt and lease commitments. As of December 31, 1999, the Company had swaps with a total notional amount of $16.4 million that convert variable rates to fixed rates on long and short-term borrowings. The Company has also purchased short and long-term interest rate caps with a notional amount of $29.4 million at December 31, 1999. Cash dividends of $1.6 million were paid in 1999 ($.20 per share). The Company made income tax payments of $4.3 million in 1999. The Company purchased 498,800 of its common shares on the open market at an average price of $10.24 per share. The Company issued approximately 67,000 shares to employees, directors and former employees under stock compensation plans. During 1999, the Company acquired property, plant, equipment and intangible assets (customer lists, goodwill, software) with a value of $21.8 million. To accomplish this, it paid cash, gave up working capital and incurred additional long-term debt. Included in these assets are $2 million in retail store improvements, $3.6 million in railcars and railcar improvements, $5.2 million for additional processing lines and facilities in the Processing Group, $2.8 million in additional capacity and facilities in the Agriculture Group and $1.1 million in safety and environmental improvements. Approximately $25 million is budgeted for capital spending in 2000 including $5 million for additional Processing Group capacity and businesses, $1 million for computer hardware and software and $5 million to increase the railcar fleet. These expenditures are expected to be funded by cash generated from operations or additional debt. Certain of the Company's long-term debt is secured by first mortgages on various facilities. In addition, some of the long-term borrowings include provisions that impose minimum levels of working capital and equity, limitations on additional debt and require that the Company be substantially hedged in its grain transactions. The Company's liquidity is enhanced by the fact that grain inventories are readily marketable and the lines of credit that it has available. In the opinion of management, the Company's liquidity is adequate to meet short-term and long-term needs. MARKET RISK SENSITIVE INSTRUMENTS AND POSITIONS The market risk inherent in the Company' market risk sensitive instruments and positions is the potential loss arising from adverse changes in commodity prices and interest rates as discussed below. 18 19 COMMODITIES The availability and price of agricultural commodities are subject to wide fluctuations due to unpredictable factors such as weather, plantings, government (domestic and foreign) farm programs and policies, changes in global demand created by population growth and higher standards of living, and global production of similar and competitive crops. To reduce price risk caused by market fluctuations, the Company follows a policy of hedging its inventories and related purchase and sale contracts. The instruments used are readily marketable exchange traded futures contracts that are designated as hedges. To a lesser degree, the Company uses exchange traded option contracts, also designated as hedges. The changes in market value of such contracts have a high correlation to the price changes of the hedged commodity. The Company's accounting policy for these hedges, as well as the underlying inventory positions, and purchase and sale contracts is to mark them to the market price daily and include gains and losses in the statement of income in sales and merchandising revenues. A sensitivity analysis has been prepared to estimate the Company's exposure to market risk of its commodity position. The Company's daily net commodity position consists of inventories, related purchase and sale contracts and exchange traded contracts. The fair value of such position is a summation of the fair values calculated for each commodity by valuing each net position at quoted futures market prices. Market risk is estimated as the potential loss in fair value resulting from a hypothetical 10% adverse change in such prices. The result of this analysis, which may differ from actual results, is as follows: DECEMBER 31 (in thousands) 1999 1998 ------------------------------------- Net short position $153 $1,961 Market risk 15 196 INTEREST 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. In addition, the Company has off-balance sheet interest rate contracts established as hedges. The fair value of these contracts is estimated based on quoted market termination values. Market risk, which is estimated as the potential increase in fair value resulting from a hypothetical one-half percent decrease in interest rates, is summarized below:

DECEMBER 31 (in thousands) 1999 1998 ----------------------- ----------------------- Fair value of long-term debt and interest rate contracts $77,964 $78,521 Fair value in excess of (less than) carrying value (322) 638 Market risk 595 403

19 20 IMPACT OF YEAR 2000 In prior years, the Company discussed the nature and progress of its plans to become Year 2000 ready. In late 1999, the Company completed its remediation and testing of systems. As a result of those planning and implementation efforts, the Company experienced no significant disruptions in information technology and non-information technology systems and believes those systems successfully responded to the Year 2000 date change. The Company is not aware of any material problems resulting from Year 2000 issues, either with its products, its internal systems, or the products and services of third parties. The Company will continue to monitor its mission critical computer applications and those of its suppliers and vendors throughout the year 2000 to ensure that any latent Year 2000 matters that may arise are addressed promptly. FORWARD LOOKING STATEMENTS The preceding Letter to Shareholders, Business Review and Management's Discussion and Analysis contain various "forward-looking statements" which reflect the Company's current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties, including but not limited to those identified below, which could cause actual results to differ materially from historical results or those anticipated. The words "believe," "expect," "anticipate" and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The following factors could cause actual results to differ materially from historical results or those anticipated; weather, supply and demand of commodities including grains, fertilizer and other basic raw materials, market prices for grains and the potential for increased margin requirements, competition, economic conditions, risks associated with acquisitions, interest rates and income taxes. 20 21 The Andersons, Inc. Notes to Consolidated Financial Statements December 31, 1999 1. BASIS OF FINANCIAL PRESENTATION These consolidated financial statements include the accounts of The Andersons, Inc. and its majority owned subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation. On July 1, 1998, the Company issued 193 thousand of its common shares to effect an acquisition of a farm center operation. The acquisition was accounted for as a purchase, and the results of operations have been included in the consolidated statements of income from July 1, 1998. 2. SIGNIFICANT ACCOUNTING POLICIES ESTIMATES AND ASSUMPTIONS The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. CASH AND CASH EQUIVALENTS Cash and cash equivalents include cash and all highly liquid debt instruments purchased with an initial maturity of three months or less. The carrying value of these assets approximates their fair values. INVENTORIES AND INVENTORY COMMITMENTS Grain inventories in the Company's balance sheet are hedged to the extent practicable and are valued on the basis of market prices prevailing at the end of the year. Such inventories are adjusted for the amount of gain or loss (also based on year-end market price quotations) on open commodity contracts at the end of the year. These contracts require performance in future periods. Contracts to purchase grain from producers generally relate to the current or future crop years for delivery periods quoted by regulated commodity exchanges. Contracts for the sale of grain to processors or other consumers generally do not extend beyond one year. The terms of contracts for the purchase and sale of grain are consistent with industry standards. All other inventories are stated at the lower of cost or market. Cost is determined by the average cost method. 21 22 COMMODITY AND INTEREST RATE CONTRACTS For the purpose of hedging its market price risk exposure on grain owned and related forward grain purchase and sale contracts, the Company holds regulated commodity contracts in the form of futures and options contracts for corn, soybeans and wheat. The Company accounts for all commodity contracts using a daily mark-to-the-market method; the same method it uses to value grain inventory and forward purchase and sale contracts. Company policy limits the Company's unhedged grain position. Gains and losses in the value of commodity contracts (whether due to changes in commodity prices or due to sale, maturity, or extinguishment of the commodity contract) and grain inventories and related forward grain contracts are included in sales and merchandising revenues in the statements of income. The Company also periodically enters into interest rate contracts to manage interest rate risk on borrowing or financing activities. Income or expense associated with interest rate swap contracts is recognized on the accrual basis over the term of the agreement as a component of interest expense. The Company expenses the cost of short-term interest rate caps at the date of purchase and long-term interest rate caps over their term. Gains or losses upon settlement of treasury rate locks, hedging the interest component of firm commitment lease transactions, are recognized over the term of the ensuing lease transaction. The balance of deferred losses on settled treasury rate locks totaled $1.4 million and $1.7 million at December 31, 1999 and 1998, respectively. All interest rate contracts are entered into for hedging purposes. The fair value of interest rate contracts is not recognized in the balance sheet. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are carried at cost. Depreciation is provided over the estimated economic useful lives of the individual assets, principally by the straight-line method. INTERNAL USE SOFTWARE In March 1998, the American Institute of Certified Public Accountants issued Statement of Position 98-1, "Accounting for the Costs of Computer Software Developed for or Obtained for Internal Use" (SOP 98-1). The Company adopted SOP 98-1 as of the beginning of 1998. Certain costs incurred in the development of internal use software that were previously expensed are now being capitalized. The effect of this accounting change was not material to net income or earnings per share for 1999 or 1998. Internal use software is included in property, plant and equipment and amortized over its estimated useful life (3 to 10 years). ACCOUNTS PAYABLE FOR GRAIN The liability for grain purchases on which price has not been established (delayed price) has been computed on the basis of market prices at the end of the year, adjusted for the applicable premium or discount. 22 23 REVENUE RECOGNITION Sales of grain and other products are recognized at the time of shipment. Gross profit on grain sales is recognized when sales are contracted. Revenues from other merchandising activities are recognized as open contracts are marked to market or as services are provided. INCOME TAXES Deferred income taxes are determined based on temporary differences between financial reporting and tax bases of assets and liabilities and are measured using the tax rates and laws that will be in effect when the differences are expected to reverse. ADVERTISING Advertising costs are expensed as incurred. Advertising expense of $2.9 million in 1999 and 1998 and $3.2 million in 1997 is included in operating, administrative and general expense. DEFERRED INCOME Certain of the Company's agriculture facilities are subject to a long-term (five year) marketing agreement with a third party that provides for a base-level income guarantee and equal sharing of income earned over the base level. The Company defers cumulative income in excess of the cumulative base level guarantee due to a lookback feature in the marketing agreement that places the excess at risk for the term of the agreement. The Company measures the cumulative net deferral at the end of each contract year and amortizes that amount to income over the remaining term of the agreement. GOODWILL Goodwill, representing the excess of purchase cost over the fair value of net assets of acquired companies, is amortized over the estimated period of benefit (ranging from 5 to 12 years) by the straight-line method. Goodwill of $1 million and $.9 million at December 31, 1999 and 1998, respectively, is included in notes receivable and other assets in the balance sheet. Accumulated amortization at December 31, 1999 and 1998 was $.1 million. 23 24 EARNINGS PER SHARE Basic earnings per share is equal to net income divided by the weighted average shares outstanding. Diluted earnings per share is equal to basic earnings per share plus the incremental per share effect of dilutive options.

(in thousands) 1999 1998 1997 -------------- ---------------- --------------- Net income available for common shareholders $ 8,379 $ 9,752 $ 4,074 ============== ================ =============== Weighted average shares outstanding - basic 7,996 8,059 8,160 Additional shares contingently issuable upon exercise of options 102 59 7 -------------- ---------------- --------------- Weighted average shares outstanding - diluted 8,098 8,118 8,167 ============== ================ ===============

COMPREHENSIVE INCOME As of January 1, 1998, the Company adopted Financial Accounting Standards Board Statement No. 130, "Reporting Comprehensive Income" which requires reporting and displaying comprehensive income and its components. The adoption of this Statement had no effect on the Company's net income or shareholders' equity. Statement No. 130 requires the effect of changes in the minimum pension liability to be included in other comprehensive income. Prior to 1998, there were no components of other comprehensive income. NEW ACCOUNTING STANDARDS The Financial Accounting Standards Board issued Statement No. 133 "Accounting for Derivative Instruments and Hedging Activities", which is effective for fiscal years beginning after June 15, 2000. The effect that this statement will have on the Company has not been determined. RECLASSIFICATIONS Certain amounts in the 1998 and 1997 financial statements have been reclassified to conform to the 1999 presentation. These reclassifications had no effect on net income or shareholders' equity. 24 25 3. INVENTORIES Major classes of inventories are as follows:

DECEMBER 31 (in thousands) 1999 1998 -------------------------------------- Grain $ 83,796 $ 91,218 Agricultural fertilizer and supplies 17,766 27,127 -------------------------------------- Agriculture 101,562 118,345 Processing 28,386 22,428 Manufacturing 17,365 16,039 Retail 28,418 25,863 Other 2,592 2,315 -------------------------------------- $ 178,323 $ 184,990 ======================================

4. PROPERTY, PLANT AND EQUIPMENT The components of property, plant and equipment are as follows:

DECEMBER 31 (in thousands) 1999 1998 ---------------------------------------- Land $ 12,237 $ 12,095 Land improvements and leasehold improvements 27,266 26,056 Buildings and storage facilities 91,374 88,818 Machinery and equipment 118,872 112,561 Software 3,555 3,258 Construction in progress 8,895 3,059 ---------------------------------------- 262,199 245,847 Less allowances for depreciation and amortization 159,542 153,898 ---------------------------------------- $ 102,657 $ 91,949 ========================================

5. ASSET IMPAIRMENT CHARGE Based upon an assessment of historical and projected operating results, the Company determined in 1997 that the carrying value of certain retail store assets were impaired under the criteria defined in FASB Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." As a result, the Company recorded a pretax impairment charge of $1.1 million ($.7 million after tax or $.09 per share) to write down the carrying value of these assets to their estimated fair value. Fair value was estimated through market price comparisons for similar assets. 25 26 6. BANKING AND CREDIT ARRANGEMENTS The Company has available lines of credit for unsecured short-term debt with banks aggregating $175 million. The credit arrangements, the amounts of which are adjusted from time to time to meet the Company's needs, do not have termination dates but are reviewed at least annually for renewal. The terms of certain of the lines of credit provide for annual commitment fees. The following information relates to borrowings under short-term lines of credit.

YEAR ENDED DECEMBER 31 --------------------------------------------------- (in thousands, except for interest rates) 1999 1998 1997 --------------------------------------------------- Maximum amount borrowed $110,500 $94,100 $110,500 Average daily amount borrowed (total of daily borrowings divided by number of days in year) 81,042 57,134 51,237 Average interest rate (computed by dividing interest expense by average daily amount borrowed) 5.70% 5.92% 5.98%

7. LONG-TERM DEBT

Long-term debt consists of the following: DECEMBER 31 (in thousands, except percentages) 1999 1998 ---------------------------------- Note payable under revolving line of credit $25,000 $25,500 Note payable, 7.8%, payable $398 quarterly, due 2004 10,120 11,712 Notes payable, variable rate (7.3% at December 31, 1999), payable $336 quarterly, due 2002 6,391 7,737 Other notes payable 249 762 Industrial development revenue bonds: Variable rate (5.7% at December 31, 1999), due 2019 4,650 -- 6.5%, due 1999 -- 1,000 Variable rate (5.7% at December 31, 1999), payable $882 annually through 2004 3,707 4,588 Variable rate (6.0% at December 31, 1999), due 2025 3,100 3,100 Debenture bonds, 6.3% to 8.7%, due 2000 through 2009 25,012 23,049 Other bonds, 4% to 10% 57 435 ---------------------------------- 78,286 77,883 Less current maturities 4,159 6,318 ---------------------------------- $74,127 $71,565 ==================================

26 27 The Company has a $40 million revolving line of credit with a bank that bears interest based on the LIBOR rate (effective rate of 6.7% at December 31, 1999). The revolving line of credit expires on July 1, 2001. The notes payable due 2002 and 2004, and the industrial development revenue bonds are collateralized by first mortgages on certain facilities and related equipment with a book value of approximately $32.8 million. The various underlying loan agreements, including the Company's revolving credit line, contain certain provisions that require the Company to, among other things, maintain minimum working capital of $32 million and net equity (as defined) of $43 million, limit the addition of new long-term debt, limit its unhedged grain position to 2 million bushels, and restrict the amount of dividends. The Company was in compliance with these covenants at December 31, 1999. The aggregate annual maturities of long-term debt, including sinking fund requirements, are as follows: 2000--$4 million; 2001--$32 million; 2002--$11 million; 2003--$9 million; 2004--$7 million and $15 million thereafter. Interest paid (including interest on short-term lines of credit) amounted to $9 million in 1999, 1998 and 1997. The Company has interest rate contracts to manage interest rate risk on short-term borrowings converting variable interest rates to short-term fixed rates, consistent with projected borrowing needs. At December 31, 1999, the Company has a short-term interest rate swap agreement with a total notional amount of $10 million. The interest rate swap expires in February 2000 and converts variable interest rates to a fixed rate of 5.68%. The Company purchased a short-term interest rate cap in 1999 with a total notional amount of $10 million to hedge short-term borrowing costs. The cap expires in April, 2000 and caps interest rates at 6.08% The Company entered into a long-term interest rate swap in December 1996 to convert its variable rate note payable to a fixed rate of 6.84%. This swap expires in October 2002. The notional amount of this swap equals the outstanding balance of the long-term note and amortizes in the same manner as the note principal. The Company entered into treasury rate locks in 1997 and 1998 to hedge the interest component on lease transactions that closed in 1998 and 1999. There are currently no open treasury rate locks. The Company entered into a long-term interest rate cap in December 1999 with an initial notional amount of $19.4 million to hedge the interest rate component of a lease transaction. The notional amount on this cap amortizes monthly to approximate the reduction in the underlying long-term lease obligation. The effect of long-term and short-term interest rate contracts on interest expense is not significant. 27 28 8. INCOME TAXES

Income tax expense (credit) consists of the following: YEAR ENDED DECEMBER 31 (in thousands) 1999 1998 1997 ---------------- --------------- ------------------ Current: Federal $2,766 $4,919 $1,728 State and local (40) 31 (25) ---------------- --------------- ------------------ 2,726 4,950 1,703 Deferred: Federal 718 (1,415) 393 State and local 136 (281) 85 ---------------- --------------- ------------------ 854 (1,696) 478 ---------------- --------------- ------------------ Total: Federal 3,484 3,504 2,121 State and local 96 (250) 60 ---------------- --------------- ------------------ $3,580 $3,254 $2,181 ================ =============== ==================

A reconciliation from the statutory U.S. federal tax rate of 35% to the effective tax rate is as follows:

1999 1998 1997 -------------- ------------- ------------- Statutory U.S. Federal tax rate 35.0% 35.0% 35.0% Increase (decrease) in rate resulting from: Effect of commissions paid to foreign sales corporation (5.3) (10.3) (1.4) State and local income taxes net of related federal taxes 0.5 0.4 0.6 Other (net) (0.3) (0.1) 0.7 -------------- ------------- ------------- Effective tax rate 29.9% 25.0% 34.9% ============== ============= =============

In 1998, the Company refined its method for calculating commissions payable to its foreign sales corporation as provided under current regulations of the Internal Revenue Service. As a result of this refinement in calculation, the Company reduced its federal income tax liability for 1997 and 1996 by approximately $.5 million and $.3 million, respectively. These reductions are reflected in 1998 income taxes as an increased effect of commissions paid to its foreign sales corporation. Income taxes paid in 1999, 1998 and 1997 were $4.3 million, $4.0 million, and $4.1 million. 28 29 Significant components of the Company's deferred tax liabilities and assets are as follows:

DECEMBER 31 (in thousands) 1999 1998 ---------------- ---------------- Deferred tax liabilities: Tax depreciation in excess of book depreciation $(10,629) $ (8,968) Prepaid employee benefits (2,279) (2,122) Deferred income (709) (570) Other (454) (408) ---------------- ---------------- (14,071) (12,068) Deferred tax assets: Employee benefits accrual 3,832 3,366 Deferred income 2,795 1,776 Allowance for doubtful accounts and notes receivable 1,778 1,636 Inventory reserve 1,474 1,337 Investments 660 495 Other 431 762 ---------------- ---------------- 10,970 9,372 ---------------- ---------------- Net deferred tax liability $ (3,101) $ (2,696) ================ ================

9. STOCK COMPENSATION PLANS The Company has elected to account for its two stock compensation plans using the recognition and measurement principles of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), and related Interpretations because the alternative fair value accounting provided for under FASB Statement No. 123, "Accounting for Stock-Based Compensation," ("Statement 123") requires use of option valuation models that were not developed for use in valuing employee stock options. With the exception of the restricted shares described below, no compensation expense is recognized for either plan under APB 25, because the exercise price of the Company's stock options equaled the market price of the underlying stock on the date of grant.. The Amended and Restated Long-Term Performance Compensation Plan (the "LT Plan") authorizes the Board of Directors to grant options and share awards to employees and outside directors for up to 1,400,000 common shares of the Company. Options granted under the LT Plan have a maximum term of 10 years. Options granted to outside directors have a fixed term of five years and vest after one year. Options granted to management personnel under the LT Plan have a five-year term and vest 40% immediately, 30% after one year and the remaining 30% after two years. The LT Plan also permits awards of restricted stock. The Company issued 20,980 and 17,445 restricted shares during 1999 and 1998, respectively, of which 27,855 remain outstanding at December 31, 1999. These shares carry voting and dividend rights; however, sale of the shares is restricted prior to vesting. Shares issued under the plan were recorded at their fair value on the grant date with a corresponding charge to shareholders' equity representing the unearned portion of the award. The unearned portion is being amortized as compensation expense on a straight-line basis over the related vesting period. Compensation expense related to this plan amounted to $156 thousand and $20 thousand during 1999 and 1998, respectively. 29 30 Certain Company executives and outside directors have elected to receive a portion of their cash compensation in stock options and/or restricted stock issued under the LT Plan. These options and restricted stock vest immediately. The options have a ten-year term. There were 57,958 and 50,756 options issued in lieu of cash compensation in 1998 and 1997, respectively. There were 2,169 and 3,531 restricted shares issued in lieu of cash compensation in 1999 and 1998, respectively. The Company's Employee Share Purchase Plan (the "ES Plan") allows employees to purchase common shares through payroll withholdings. The ES Plan also contains an option component. The share purchase price is the lower of the market price at the beginning or end of the year. The Company records a liability for withholdings not yet applied towards the purchase of common stock. Pro forma information regarding net income and earnings per share required by Statement 123 is determined as if the Company has accounted for its employee stock options granted under the fair value method of that Statement. The fair value of each option grant is estimated at the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions by year.

1999 1998 1997 --------------- ------------------ ---------------- LONG TERM PERFORMANCE COMPENSATION PLAN Risk free interest rate 4.58% 5.61% 6.22% Dividend yield 1.73% 1.79% 1.33% Volatility factor of the expected market price of the Company's common shares .313 .266 .272 Expected life for the options (in years) 5.00 6.43 6.49 EMPLOYEE SHARE PURCHASE PLAN Risk free interest rate 4.58% 5.46% 6.08% Dividend yield 1.73% 1.80% 1.35% Volatility factor of the expected market price of the Company's common shares .313 .266 .272 Expected life for the options (in years) 1.00 1.00 1.00

For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting period. The Company's pro forma information follows (in thousands, except for per share information):

1999 1998 1997 ---------------- ------------------- ----------------- Pro forma net income $7,936 $9,348 $3,700 Pro forma earnings per share: Basic $.99 $1.16 $.45 Diluted $.98 $1.15 $.45

30 31 A summary of the Company's stock option activity, and related information for the years ended December 31 follows (in thousands, except for prices):

LONG TERM PERFORMANCE COMPENSATION PLAN -------------------------------------------------------------------------------------------- 1999 1998 1997 ------------------------------- ------------------------------ ----------------------------- WEIGHTED WEIGHTED WEIGHTED AVERAGE AVERAGE AVERAGE EXERCISE EXERCISE EXERCISE SHARES PRICE SHARES PRICE SHARES PRICE ------------- ----------------- ------------- ---------------- -------------- -------------- Outstanding at beginning of year 499 $8.89 305 $8.85 137 $8.60 Granted / subscribed 183 11.56 202 8.93 170 9.05 Exercised (6) 9.00 (3) 8.76 -- -- Expired/forfeited (5) 11.30 (5) 8.63 (2) 8.60 ------------- ----------------- ------------- ---------------- -------------- -------------- Outstanding at end of year 671 $9.60 499 $8.89 305 $8.85 ============= ================= ============= ================ ============== ==============

Options available for grant at December 31, 1999 684 Options price range at December 31, 1999 $8.60 TO $12.375 Weighted average remaining contractual life 3.52 Weighted average fair value of options granted during 1999 $3.44 Options exercisable at December 31, 1999 519 Weighted average exercise price of options exercisable at December 31, 1999 $9.23

EMPLOYEE SHARE PURCHASE PLAN ------------------------------------------------------------------------------------------- 1999 1998 1997 ------------------------------- -------------------------------- -------------------------- WEIGHTED WEIGHTED WEIGHTED AVERAGE AVERAGE AVERAGE EXERCISE EXERCISE EXERCISE SHARES PRICE SHARES PRICE SHARES PRICE ------------- ----------------- ------------- ------------------ ------------- ------------ Outstanding at beginning of year 36 $8.875 47 $8.875 49 $8.60 Granted / subscribed 43 8.250 38 8.875 52 8.875 Exercised (36) 8.875 (47) 8.875 (49) 8.60 Expired (4) 8.250 (2) 8.875 (5) 8.875 ------------- ----------------- ------------- ------------------ ------------- ------------ Outstanding at end of year 39 $8.250 36 $8.875 47 $8.875 ============= ================= ============= ================== ============= ============

Options available for grant at December 31, 1999 129 Options price at December 31, 1999 $8.25 Weighted average fair value of options granted during 1999 $1.50 Options exercisable at December 31, 1999 39 31 32 10. LEASES AND RELATED COMMITMENTS The Company leases certain equipment and real property under operating leases, including railcars. Many of the Company's leasing arrangements provide for renewals and purchase options, including a majority of the railcar leases. Rental expense and rental income under operating leases was as follows:

(in thousands) 1999 1998 1997 ----------------------------------------------------- Rental expense - railcars $5,405 $8,883 $7,160 Rental expense - other 5,558 4,522 4,819 ----------------------------------------------------- Total rental expense $10,963 $13,405 $11,979 ===================================================== Rental income - railcars $8,639 $10,552 $8,555 Rental income - other 69 69 69 ----------------------------------------------------- Total rental income $8,708 $10,621 $8,624 =====================================================

At December 31, 1999, the Company's property, plant and equipment included railcars with a cost of $8.8 million and accumulated depreciation of $1.6 million that were held for leasing purposes. Future minimum rentals for all noncancelable operating leases, for which the Company is liable, and future rental income from noncancelable subleases are as follows:

(in thousands) Future Minimum Future Rental Rentals Income --------------------------------------------------------- Year ended December 31 2000 $10,851 $ 7,365 2001 9,702 7,067 2002 8,743 6,702 2003 7,865 5,998 2004 5,155 3,749 Future years 9,882 8,517 --------------------------------------------------------- $52,198 $39,398 =========================================================

11. PENSION AND OTHER POSTRETIREMENT BENEFITS The Company provides retirement benefits for substantially all of its employees under several defined benefit and defined contribution pension plans. The Company's expense for its defined contribution plans amounted to $1.3 million in 1999 and $1.1 million in 1998 and 1997. The Company also provides certain health insurance benefits to employees including retirees. The Company elected to recognize the accrued benefits earned by employees, as of January 1, 1993 (transition obligation) prospectively, which means this cost will be recognized as a component of the net periodic postretirement benefit cost over a period of approximately 20 years. 32 33 Following are the details of the defined benefit pension (Pension Benefits) plans and postretirement benefit plan liability and funding status.

POSTRETIREMENT BENEFITS (in thousands) PENSION BENEFITS 1999 1998 1999 1998 --------------- -------------- ----------------- ---------------- CHANGE IN BENEFIT OBLIGATION Benefit obligation at beginning of year $21,030 $16,440 $8,585 $10,294 Service cost 1,996 1,679 343 298 Interest cost 1,359 1,169 604 613 Actuarial (gains)/losses (457) 2,832 426 2,555 Plan amendment -- -- -- (4,585) Participant contributions -- -- 17 15 Benefits paid (2,552) (1,090) (585) (605) --------------- -------------- ----------------- ---------------- Benefit obligation at end of year 21,376 21,030 9,390 8,585 CHANGE IN PLAN ASSETS Fair value of plan assets at beginning of year 21,782 16,800 -- -- Actual return on plan assets 4,592 3,925 -- -- Company contributions 2,542 2,147 568 590 Participant contributions -- -- 17 15 Benefits paid (2,552) (1,090) (585) (605) --------------- -------------- ----------------- ---------------- Fair value of plan assets at end of year 26,364 21,782 -- -- --------------- -------------- ----------------- ---------------- Funded status of plans (underfunded) 4,988 752 (9,390) (8,585) Unrecognized net actuarial (gain) loss (2,884) 240 2,657 2,344 Unrecognized prior service cost 169 195 -- -- Unrecognized net transition obligation -- -- 1,439 1,550 Additional minimum liability (407) (244) -- -- --------------- -------------- ----------------- ---------------- Prepaid (accrued) benefit cost $1,866 $ 943 $ (5,294) $ (4,691) =============== ============== ================= ================

Amounts recognized in the consolidated balance sheets consist of:

POSTRETIREMENT BENEFITS (in thousands) PENSION BENEFITS 1999 1998 1999 1998 --------------- ---------------- ---------------- --------------- Accrued expenses $ (1,021) $ (897) $ $ -- -- Pension and postretirement asset (liability) 2,887 1,840 (5,294) (4,691) --------------- ---------------- ---------------- --------------- Net amount recognized $ 1,866 $ 943 $ (5,294) $ (4,691) =============== ================ ================ ===============

In March 1998, the Company amended its postretirement benefit plan to provide eligible retirees the option of enrolling in a Medicare HMO. Subsequent to the initial enrollment period, the Company re-measured its accumulated benefit obligation incorporating the Medicare HMO enrollment and cost 33 34 assumptions. The $4.6 million reduction in the accumulated benefit obligation resulting from the re-measurement reduced the unrecognized net transition obligation. Included in pension and postretirement benefits is $848 thousand and $262 thousand at December 31, 1999 and 1998, respectively, of deferred compensation for certain employees who, due to Internal Revenue Service guidelines, may not take full advantage of the Company's defined benefit plan. Assets funding this plan are recorded at fair value in prepaid expenses. Amounts applicable to a Company pension plan with accumulated benefit obligations in excess of plan assets are as follows:

(in thousands) 1999 1998 -------------------- ------------------ Projected benefit obligation $1,131 $1,160 Accumulated benefit obligation and additional liability 328 760 Minimum liability addition 163 244 Intangible asset adjustment 28 (195) -------------------- ------------------ 191 49 Tax benefit 76 20 -------------------- ------------------ Other comprehensive income $ 115 $ 29 ==================== ==================

POSTRETIREMENT PENSION BENEFITS BENEFITS 1999 1998 1999 1998 --------------- -------------- ------------ ------------- WEIGHTED AVERAGE ASSUMPTIONS AS OF DECEMBER 31 Discount rate 7.5% 6.8% 7.5% 6.8% Expected return on plan assets 9.0% 8.0% -- -- Rate of compensation increases 4.0% 4.0% -- -- Health care cost trend rate -- -- 5.5% 5.0%

The health care cost trend rate of 5.5% is assumed to remain at that level.

PENSION BENEFITS POSTRETIREMENT BENEFITS (in thousands) 1999 1998 1997 1999 1998 1997 ------------- ------------- -------------- ------------- ------------- --------- COMPONENTS OF NET PERIODIC BENEFIT COST Service cost $1,996 $1,679 $1,536 $ 343 $ 298 $ 302 Interest cost 1,359 1,169 1,000 604 613 711 Expected return on plan assets (1,956) (1,422) (1,085) -- -- -- Amortization of prior service cost 26 27 32 -- -- -- Recognized net actuarial loss 32 35 20 112 31 -- Amortization of net transition obligation -- (42) (50) 111 175 421 ------------- ------------- -------------- ------------- ------------- --------- Benefit cost $1,457 $1,446 $1,453 $1,170 $1,117 $1,434 ============= ============= ============== ============= ============= =========

34 35 The assumed health care cost trend rate has a significant effect on the amounts reported for postretirement benefits. A one-percentage-point change in the assumed health care cost trend rate would have the following effects:

ONE-PERCENTAGE-POINT (in thousands) INCREASE DECREASE ---------------------------- --------------------------- Effect on total of service and interest cost components in 1999 $ 197 $ (153) Effect on postretirement benefit obligation as of December 31, 1999 $1,625 $(1,301)

To partially fund self-insured health care and other employee benefits, the Company makes payments to a trust. Assets of the trust amounted to $2.6 million and $2.8 million at December 31, 1999 and 1998, respectively, and are included in prepaid expenses. 12. FAIR VALUES OF FINANCIAL INSTRUMENTS The fair values of the Company's cash equivalents, margin deposits and long and short-term debt, approximate their carrying values since the instruments provide for short terms to maturity and/or variable interest rates based on market indexes. The Company's investments in affiliates are accounted for on the equity method that approximates fair value. The Company believes the fair value of its notes receivable, long-term notes payable and debentures, some of which bear fixed rates and terms of five or ten years, approximate their carrying values, based upon interest rates offered by the Company on similar notes receivable and bonds and rates currently available to the Company. The fair value of off-balance sheet interest rate contracts as described in Note 7, which are not recognized in the balance sheet, is estimated based on quoted market termination values. Fair values of these contracts amount to an asset of $.5 million at December 31, 1999 and a liability of $.7 million at December 31, 1998. The fair values of these interest rate contracts are substantially offset by unrealized appreciation and depreciation in the hedged items. 13. BUSINESS SEGMENTS The Company has evaluated its operations in accordance with Statement of Financial Accounting Standard No. 131 and has determined that its operations include four reportable business segments. This determination was made primarily on the basis of services offered and does include aggregation of operating segments. The Agriculture segment includes grain merchandising and the operation of terminal grain elevator facilities and the manufacture and distribution of agricultural inputs, primarily fertilizer, to dealers and farmers. The Processing segment includes the production and distribution of lawn care and corncob based products. The Manufacturing segment includes the leasing, marketing and fleet management of railcars, railcar repair and metal fabrication. The Retail segment includes the operation of six large retail stores and a distribution center. Included in the Other classification are the operations of several smaller businesses and corporate level amounts not attributable to an operating segment. These smaller businesses include the operations of ten 35 36 auto service centers (a joint venture), a lawn and garden equipment sales and service shop and the marketing of the Company's excess real estate. The segment information below (in thousands) includes the allocation of expenses shared by one or more 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. Intersegment sales are made at prices comparable to normal, unaffiliated customer sales. Operating income (loss) for each segment is based on net sales and merchandising revenues plus identifiable other income less all identifiable operating expenses, including interest expense for carrying working capital and long-term assets. Capital expenditures include additions to property, plant and equipment, software and intangible assets.

1999 AGRICULTURE PROCESSING MANUFACTURING RETAIL OTHER TOTAL - ---------------------------------------------------------------------------------------------------------------------- Revenues from external $640,181 $ 82,395 $ 60,082 $176,905 $ 15,178 $974,741 customers Inter-segment sales 3,867 1,373 969 -- -- 6,209 Other income 761 471 161 365 2,437 4,195 Interest expense (credit) (a) 6,036 1,720 1,132 1,705 (1,076) 9,517 Operating income (loss) 6,054 (95) 4,225 2,455 (680) 11,959 Identifiable assets 183,370 58,416 31,653 59,911 43,426 376,776 Capital expenditures 8,181 6,589 3,911 2,091 1,057 21,829 Depreciation and amortization 5,787 1,285 764 2,398 1,048 11,282

36 37

1998 AGRICULTURE PROCESSING MANUFACTURING RETAIL OTHER TOTAL - ------------------------------------------------------------------------------------------------------------------------- Revenues from external customers $ 788,133 $ 73,942 $ 52,324 $ 170,363 $ 13,960 $1,098,722 Inter-segment sales 5,753 1,001 1,073 -- -- 7,827 Other income 1,907 407 871 219 2,008 5,412 Interest expense (credit) (a) 6,212 1,231 907 1,974 (1,370) 8,954 Operating income (loss) 6,676 2,810 4,365 1,655 (2,500) 13,006 Identifiable assets 211,777 42,499 25,780 57,331 23,436 360,823 Capital expenditures 7,890 1,353 3,469 1,935 1,184 15,831 Depreciation and amortization 5,224 1,170 454 2,714 1,013 10,575

1997 AGRICULTURE PROCESSING MANUFACTURING RETAIL OTHER TOTAL - ---------------------------------------------------------------------------------------------------------------- Revenues from external customers $ 723,335 $ 60,920 $ 24,760 $ 169,907 $ 14,824 $ 993,746 Inter-segment sales 3,071 940 1,202 -- -- 5,213 Other income 1,577 606 421 239 2,256 5,099 Interest expense (credit) (a) 6,002 1,201 589 2,163 (1,461) 8,494 Asset impairment -- -- -- 1,121 -- 1,121 Operating income (loss) (b) 2,302 698 3,310 (624) 569 6,255 Identifiable assets 232,769 37,690 13,599 59,508 24,678 368,244 Capital expenditures 8,636 1,170 243 4,334 1,492 15,875 Depreciation and amortization 4,728 1,131 427 2,823 956 10,065

(a) The other category of interest expense includes net interest income at the Company-level representing a rate differential between the interest rate on which interest is allocated to the operating segments and the actual rate at which borrowings are made. (b) Operating loss for the retail segment includes the impairment writedown of $1.1 million in 1997. Grain sales for export to foreign markets amounted to approximately $146 million, $171 million and $177 million in 1999, 1998 and 1997, respectively. Also in 1999, sales of rail equipment totaling $18 million were made to a foreign customer. In each of 1999 and 1998, grain sales of $162 million were made to an unaffiliated customer. No unaffiliated customer accounted for more than 10% of sales and merchandising revenues in 1997. 37 38 CORPORATE OFFICERS Dennis J. Addis Vice President, Wholesale Fertilizer Division Christopher J. Anderson Executive Vice President, Strategy & Business Development Daniel T. Anderson President, Retail Group Michael J. Anderson President & Chief Executive Officer Richard M. Anderson President, Processing Group Richard P. Anderson Chairman Joseph C. Christen Vice President, Human Resource Development Dale W. Fallat Vice President, Corporate Services Philip C. Fox Vice President, Corporate Planning Charles E. Gallagher Vice President, Personnel Richard R. George Vice President & Controller Beverly J. McBride Vice President, General Counsel & Secretary Harold M. Reed Vice President, Grain Division Martin R. Rossol Vice President, Farm Center Division Rasesh H. Shah President, Manufacturing Group Gary L. Smith Vice President, Finance & Treasurer 38 39 BOARD OF DIRECTORS Donald E. Anderson (3) Director of Science, retired The Andersons, Inc. Michael J. Anderson (3) President & Chief Executive Officer The Andersons, Inc. Richard M. Anderson (3) President, Processing Group The Andersons, Inc. Richard P. Anderson (3) Chairman The Andersons, Inc. Thomas H. Anderson (3) Chairman Emeritus The Andersons, Inc. John F. Barrett (2), (3) President & Chief Executive officer The Western & Southern Life Insurance Co. Paul M. Kraus (3) Attorney Marshall & Melhorn Donald L. Mennel (1), (3) President & Treasurer The Mennel Milling Company David L. Nichols (1), (2), (3) Chairman Flooring America, Inc. Dr. Sidney A. Ribeau (1), (3) President Bowling Green State University Charles A. Sullivan (1), (2), (3) Chairman & Chief Executive Officer Interstate Bakeries Corp. Jacqueline F. Woods (3) President Ameritech Ohio (1) Audit Committee (2) Compensation Committee (3) Nominating Committee 39 40 Independent Auditors Ernst & Young LLP, Toledo, Ohio Nasdaq Symbol The Andersons, Inc. common shares are traded on the Nasdaq National Market tier of The Nasdaq Stock Market under the symbol: ANDE Shareholders As of March 1, 1999 there were 8,166,797 shares of common stock outstanding. At that date, there were 736 shareholders of record and approximately 2,500 shareholders for whom securities firms acted as nominees. Investor Information Corporate Offices The Andersons, Inc. 480 West Dussel Drive Maumee, Ohio 43537 419-893-5050 www.andersonsinc.com Transfer Agent & Registrar Harris Trust & Savings Bank Shareholder Services Division 311 West Monroe PO Box A-3504 Chicago, Illinois 60690-3504 312-360-5260 Form 10-K The Andersons' 1999 Form 10-K filed in mid March 1999 with the SEC, is available to stockholders and interested individuals without charge by writing or calling Investor Relations. Investor Relations Gary Smith Vice President, Finance & Treasurer 419-891-6417 gary_smith@andersonsinc.com Annual Meeting The annual shareholders' meeting of The Andersons, Inc. will be held at The Andersons' Activities building, 1833 S. Holland-Sylvania Rd., Toledo, Ohio at 7:00 p.m. on April 20, 2000. Our Mission We firmly believe that our company is a powerful vehicle through which we channel our time, talent, and energy in pursuit of the fundamental goal of serving God by serving others. Through our collective action we greatly magnify the impact of our individual efforts to: Provide extraordinary service to our customers Help each other improve Support our communities Increase the value of our Company 40 EX-21 3 EXHIBIT 21 1

Exhibit 21 SUBSIDIARIES OF THE ANDERSONS SUBSIDIARY STATE OF ORGANIZATION The Andersons Agriservices, Inc. Illinois (a corporation owned 100% by The Andersons, Inc.) The Andersons AgVantage Agency, LLC Ohio (a limited liability corporation owned 100% by Metamora Commodity Company, Incorporated) The Andersons ALACO Lawn, Inc. Alabama (a corporation owned 100% by The Andersons, Inc.) The Andersons Export Sales Corp. Barbados (a corporation owned 100% by The Andersons, Inc.) The Andersons Investment Services Corp. Ohio (a corporation owned 100% by The Andersons, Inc.) The Andersons Mower Center, Inc. Ohio (a corporation owned 100% by The Andersons, Inc.) The Andersons World Tire, d.b.a. The Andersons - Tireman Ohio Auto Centers (a joint venture owned 52.5% by The Andersons, Inc.) Crop & Soil Service, Inc. Ohio (a corporation owned 100% by The Andersons, Inc.) Kass Products, Inc. Ohio (a joint venture owned 50% by The Andersons, Inc.) Metamora Commodity Company Incorporated Ohio (a corporation owned 100% by The Andersons, Inc.) Poneto Tank Company, LLC Indiana (a limited liability company owned 67% by The Andersons, Inc.) Pottstown Distribution Company LLC (a limited liability company Pensylvania owned 60% by The Andersons, Inc.)

20 EX-23.1 4 EXHIBIT 23.1 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statements (Form S-8 No. 333-80785) pertaining to The Andersons, Inc. Amended and Restated Long-Term Performance Compensation Plan, (Form S-8 No. 333-00233) pertaining to The Andersons, Inc. Employee Share Purchase Plan, (Form S-8 No. 333-53137) pertaining to The Andersons, Inc. Retirement Savings and Investment Plan and (Form S-3 No. 333-79307) pertaining to the registration of debenture bonds of The Andersons, Inc. of our report dated January 24, 2000, with respect to the consolidated financial statements and schedule of The Andersons, Inc. and subsidiaries included in the Annual Report (Form 10-K) for the year ended December 31, 1999. /s/Ernst & Young LLP Toledo, Ohio March 10, 2000 EX-27 5 EXHIBIT 27

<ARTICLE> 5 <MULTIPLIER> 1,000 <PERIOD-TYPE> YEAR <FISCAL-YEAR-END> DEC-31-1999 <PERIOD-END> DEC-31-1999 <CASH> 25,614 <SECURITIES> 0 <RECEIVABLES> 57,131 <ALLOWANCES> 3,980 <INVENTORY> 178,323 <CURRENT-ASSETS> 268,525 <PP&E> 262,199 <DEPRECIATION> 159,542 <TOTAL-ASSETS> 376,776 <CURRENT-LIABILITIES> 200,586 <BONDS> 74,127 <PREFERRED-MANDATORY> 0 <PREFERRED> 0 <COMMON> 84 <OTHER-SE> 84,721 <TOTAL-LIABILITY-AND-EQUITY> 376,776 <SALES> 974,741 <TOTAL-REVENUES> 978,936 <CGS> 805,442 <TOTAL-COSTS> 805,442 <OTHER-EXPENSES> 152,018 <LOSS-PROVISION> 0 <INTEREST-EXPENSE> 9,517 <INCOME-PRETAX> 11,959 <INCOME-TAX> 3,580 <INCOME-CONTINUING> 8,379 <DISCONTINUED> 0 <EXTRAORDINARY> 0 <CHANGES> 0 <NET-INCOME> 8,379 <EPS-BASIC> 1.05 <EPS-DILUTED> 1.03

-----END PRIVACY-ENHANCED MESSAGE-----

EX-13

   1
                                                                      Exhibit 13

WE'RE GROWING PLACES
1999 ANNUAL REPORT
THE ANDERSONS, INC.

TABLE OF CONTENTS
HIGHLIGHTS                                                      1
LETTER TO SHAREHOLDERS                                          2
AGRICULTURE GROUP                                               4
PROCESSING GROUP                                                6
MANUFACTURING GROUP                                             8
RETAIL GROUP                                                   10
SELECTED FINANCIAL DATA                                        12
REPORT OF INDEPENDENT AUDITORS                                 13
AUDITED CONSOLIDATED FINANCIAL STATEMENTS                   14-17
MANAGEMENT'S DISCUSSION & ANALYSIS                          18-21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                  22-32
OFFICERS & DIRECTORS DATA                             INSIDE BACK

DILUTED EARNINGS PER SHARE [BAR CHART]
                  1997     1998     1999
                  .50      1.20     1.03

CORPORATE PROFILE
The Andersons, Inc. (Nasdaq: ANDE) is a diversified Agribusiness and Retailing
Compnay with annual revenues of approximately $1 billion. The Company, which
began operations in Maumee, Ohio in 1947 with one grain elevator and 500,000
bushels of storage capacity, today has four operating groups: Agriculture,
Processing, Manufacturing, and Retail. For more in-depth information about the
Company visit our website at www.andersonsinc.com.

1999 ACCOMPLISHMENTS

- -        Cash dividends increased 25%
- -        Announced the sale of the Tireman Auto Centers in effort to focus on
         core competencies
- -        Announced acquisition of the U.S. professional turf business of The
         Scotts Company
- -        Processing Group increased operating capacity by over 70%
- -        Invested in process engineering consulting to improve productive
         capacity
- -        Completed our largest rail-car deal to date
         -        Railcars controlled - 4,300
         -        Locomotives controlled - 30
- -        Increased grain storage capacity at two Michigan elevators and acquired
         a pelletized lime plant in Indiana
- -        Ended 1999 with 68 million bushels in storage - a 15% increase over
         1998
- -        Developed the Risk Profiler(TM) - a tool designed to manage pricing and
         volume risk for the grain producer
- -        All company systems transitioned to new millennium without disruptions
- -        Implementing a common information systems platform across all Farm
         Centers
- -        Completed first phase of ERP implementation in the Wholesale Fertilizer
         Division and select corporate accounting functions
- -        Rolled out new Point-of-Sales system in Retail stores to improve
         checkout, credit control and inventory management.
- -        Retail group recorded top line growth of 4% with operating income up
         significantly over 1998

                                                                               1

   2





Financial Highlights

(in thousands, except for per share & performance data)              1999            1998          % Change
                                                                                                
OPERATIONS
Grain sales & revenues                                               $ 477,799       $  630,507         -24.2%
Fertilizer, retail & other sales                                       496,942          468,215           6.1%
Other income                                                             4,195            5,412         -22.5%
                                                                 -------------------------------
TOTAL SALES & REVENUES                                                 978,936        1,104,134         -11.3%
Gross profit - grain                                                    41,586           40,748           2.1%
Gross profit - fertilizer, retail & other                              131,908          125,893           4.8%
                                                                 -------------------------------
TOTAL GROSS PROFIT                                                     173,494          166,641           4.1%
Income before income taxes                                              11,959           13,006          -8.1%
Net income                                                               8,379            9,752         -14.1%
Effective tax rate                                                       29.9%            25.0%          19.6%

PER SHARE DATA
Net income - basic                                                     $  1.05        $    1.21         -13.2%
Net income - diluted                                                      1.03             1.20         -14.2%
Dividends per share                                                       0.20             0.16          25.0%
Year end market value                                                     7.81            11.56         -32.4%

PERFORMANCE
Pretax return on beginning equity                                        14.5%            18.0%
Net income return on beginning equity                                    10.1%            13.5%
Long-term debt to equity ratio*                                       0.9-TO-1         0.9-to-1
Weighted average shares outstanding - basic                          7,996,000        8,059,000
Number of employees                                                      3,053            3,035



*Including pension and postretirement benefits



[Pie Charts]                               1999                    BEGINNING                 1999
                                         REVENUES              ALLOCATED CAPITAL           OPERATING
                                    YEAR: $979 MILLION          (AS OF 1/1/99)              INCOME
                                                                                   
Agriculture                                         65.5%              $ 75                $ 6,054
Processing                                           8.5%              $ 18                $   (95)
Manufacturing                                        6.1%              $ 14                $ 4,225
Retail                                              18.1%              $ 41                $ 2,455
Other                                                1.8%              $ 17                $  (680)
                                 -------------------------------------------------------------------------
                                                  100.00%            $  165                $11,959
                                 =========================================================================




                                                                               2
   3



TO OUR SHAREHOLDERS, EMPLOYEES AND FRIENDS

"WE ARE GROWING PLACES" is evident in the actions of our operating units in
1999. We experienced growth in the number of operating facilities, in service to
our customers and in our focus on core competencies. The Andersons, Inc. is a
company in transition, within industries in transition. Such times create
opportunity for those who see the value of change, and it is our intention to
make the most of every opportunity to improve the value of our company.

1999 RESULTS - The Andersons achieved superior earnings in the first two
quarters. However, the second half of the year was more difficult as business
conditions changed rapidly in the Agriculture (Ag) Group and we invested heavily
in the Processing Group. We recorded revenues of $975 million, down 11% from
1998, and earnings of $8.4 million compared with $9.8 million. Earnings per
share were $1.03 compared with $1.20. Dividends increased 25% to $0.20. Our cash
flow was strong, the year-end balance sheet was stronger than ever, and we
repurchased approximately 500,000 shares from the open market.

The Ag Group was the performance leader, with the Grain Division turning in its
best performance in seven years. However, historic low grain prices dampened
demand for inputs, putting pressure on earnings in the Wholesale Fertilizer and
Farm Center Divisions. The Manufacturing Group recorded another good year,
though flat relative to 1998. Processing, investing heavily for the future,
reported break-even performance. The Retail Group increased sales by 4% and
ended 1999 with operating income up 48% over 1998. 1999's performance will be
discussed in greater depth in the business review pages of this report.

As for our future, "WE ARE GROWING PLACES." Where do we see the best
opportunities? Our recent PROCESSING GROUP investments in additional operating
capacity and process engineering improvements, and our recent announcement to
acquire the U.S. professional turf business of The Scotts Company, demonstrates
that we believe that the lawn and garden industry offers significant growth
potential and opportunity for The Andersons. Our research indicates the U.S.
lawn and garden industry is growing at double-digit rates. Demographics are
positively affecting the industry as a generation of affluent empty nesters
spends more time and money on their lawn and gardens. In the last 12 months we
have increased capacity by 70%, adding manufacturing in the Southeast, Atlantic
Coast and the Midwest. We are looking for additional production capacity in the
West as well. The industry is consolidating and we stand ready to take a
leadership role in serving this growing, lucrative market.

Just before the end of 1999, the MANUFACTURING GROUP completed its largest lease
deal on record. We now control 4,300 rail cars and 30 locomotives that are in
service throughout the United States and Canada. Our position in the industry is
to source quality used operating equipment, configure it to meet the customer's
specifications, and bring the parties together through customized operating
leases. We are increasing our focus on fleet management services, which keeps us
very close to equipment specifications and customer demands. This focus puts us
in a good position to understand and serve future customer needs immediately.
The railroad industry is consolidating and trying to become more efficient, with
a focus on investing in infrastructure and power rather than railcars. These
market changes allow us to utilize our skills and play into our market niche.
The railroad consolidation has also stimulated the short-line railroad industry,
a market that is friendly to our equipment and lease structures. There are 1.4
million rail cars in the U.S., so we have just scratched the surface.

We also see opportunity as the financial services industry consolidates.
Financial institutions will be looking outside their traditional infrastructure
to build their portfolios, often to intermediaries such as The Andersons. We
believe there is an opportunity to source and place equipment with quality
credits in creative lease structures.

Our largest investment is in the AG GROUP with 42% of the total permanent
assets. The Grain Division started 2000 with 68 million bushels of inventory,
15% more than it held at the beginning of 1999. Since the Grain Division's
income is sensitive to bushels stored and handled, this puts us in a very good
position for 2000. In addition, we have added storage capacity at two of our
Michigan elevators, which will make those operations more efficient as we handle
more varieties of commodities. We developed the Risk Profiler(TM); a tool
designed to evaluate the pricing and volume risks for the producer. We will
continue to follow the evolution of genetically modified grain (GMO), to make
sure that we are in good position to serve the industry when specific GMO
commodity sourcing and segregation is required.


                                                                               3
   4

1999 was the first full year that The Andersons leased and operated two
neighboring Cargill elevators in Northwest Ohio. The lease agreement also gives
us access to Cargill's global grain-marketing network. The alliance has been a
success and we will continue to explore more opportunities as the industry
continues to consolidate.

We are adding material handling services at one of our Michigan elevators, which
will be dedicated to a major aggregate customer. The aggregate business is
counter-cyclical to the grain business. This will add revenue and make our
existing facility more efficient.

The agricultural fertilizer industry nationwide suffered with low margins and
low volume in 1999. All sectors of the industry have experienced extensive
consolidation and change. Most of this was driven by the low commodity prices at
the farm gate and excess fertilizer manufacturing capacity. Our Wholesale
Fertilizer and Farm Center Divisions suffered in 1999 along with the industry.
However, while they were dealing with operating performance issues they were
also positioning for a better 2000. Both divisions invested heavily in new
computer systems. Wholesale Fertilizer invested in additional storage capacity,
and value-added liquid fertilizer manufacturing capacity, and purchased a
pelletized lime manufacturing plant in Indiana.

In 1999 the AG GROUP recorded significant operating profit in the presence of a
serious downturn in the farm economy. However, we believe population growth,
along with demand for improved diets, and higher standards of living will, over
the long term, create demand for grain products and provide a promising future
for The Andersons.

The RETAIL GROUP continues to focus on "MORE FOR YOUR HOME" as its primary
product and customer service offering. Marketing and sales will get plenty of
attention in 2000 as we strive to improve the shopping experience. We are
focusing on the professionalism and product knowledge of our sales staff,
product selection and presentation, improved in-stock levels, and creating the
right blend of excitement and entertainment in our stores. We want our customers
to feel we are offering an exceptional balance of price, service, and quality
each and every time they enter our stores.

In 1999 we successfully completed the installation of new point-of-sale systems,
which will begin paying dividends with faster checkout, better customer and
inventory knowledge, and improved credit controls. The Marketing Partners Plus
Program was introduced to aggressively reach potential customers through a
variety of vendor assisted marketing alternatives. We also restructured to
reduce operating costs, improve inventory turns, and improve vendor support and
alliances.

Several ADMINISTRATIVE issues are on the docket for 2000. The entire business
world faced the Y2K issue as we approached the new millennium. Our employees
spent countless hours over the past few years getting ready. The preparation
paid off: our computer systems made the transition without disruption. Early in
2000, we announced the signing of a letter-of-intent to sell our investment in
The Andersons Tireman Auto Centers. This will allow us to focus on our core
competencies and reallocate resources into growth opportunities.

We will continue to repurchase our shares from the open market in 2000 because
we believe it's the best use for our cash. We also plan to start a dividend
re-investment program for the benefit of all investors in 2000.

With the initiatives we have in place and business conditions we believe are
ahead, WE ARE PLANNING FOR DOUBLE-DIGIT EARNINGS GROWTH FOR 2000. One key
element in every business success is people. Products, services, technology,
capital, and processes are only crafted into successful business strategies with
the most important resource - human capital. We would like to thank the 3,000
LOYAL TEAM MEMBERS who help to make The Andersons a success. Their creativity
and hard work assure our customer loyalty, and give us optimism for the future.

Sincerely,

/s/Mike                                              /s/Dick
Michael J. Anderson                                  Richard P. Anderson
President & Chief                                    Chairman
  Executive Officer


                                                                               4

   5


Agriculture Group

Founder Harold Anderson was a dreamer and a risk-taker who left a prestigious
job with Nabisco to become his own boss. He built a 500,000-bushel grain
elevator in Maumee, Ohio, in 1947 and began paying customers as much as 10 cents
a bushel more than the going price. Word spread quickly through the Midwest
about the innovative, farmer-friendly new business, which today offers products
and services that reach around the globe.

The AGRICULTURE GROUP operates grain elevators and wholesale fertilizer
distribution facilities in the four eastern corn belt states of Ohio, Michigan,
Indiana and Illinois. Its elevators purchase large quantities of grain and
oilseeds (primarily corn, soybeans and wheat) from farms and country elevators
in the region, store, condition and market it to domestic and export processors.
It's wholesale fertilizer facilities store and market large volumes of dry and
liquid agricultural fertilizers to dealers in the four-state region. The group
also operates farm centers in Ohio, Michigan and Indiana, which sell fertilizer,
crop protection chemicals, seed and field application services to farmers.

The group's total revenue declined by $151 million in 1999, primarily because of
lower average grain prices. Total operating income also declined somewhat, by
$0.6 million, due to a significant reduction in fertilizer usage by area
farmers, start-up costs at a terminal we acquired late in the fertilizer season
and some non-recurring operating costs.

1999 was the third successive year of relatively good growing seasons and
excellent crop yields in our eastern corn belt region. This has resulted in
improved demand for grain storage and enhanced our ability to earn a return on
our elevators. During the year, we added storage capacity at our Michigan
elevators, and completed the first full calendar year of operating the
Toledo-area elevators we leased from Cargill in mid-1998. As a result, our 1999
operating income from grain continued to improve significantly.

The wholesale fertilizer industry was hit hard by a reduction in the amount of
fertilizer that farmers in the region applied to their fields in the spring of
1999. Because of the unusually low grain prices, they chose to reduce their crop
production inputs significantly. With the industry's pipeline poised to support
higher levels of consumption, this reduction resulted in lower fertilizer
prices, margins and volume. With two additional facilities in 1999 (Waterloo and
Seymour, Indiana), our total wholesale fertilizer volume increased by about 9%.
However, for the reasons stated above, average margins and total gross profit
declined slightly from 1998 levels. Total expenses were higher due to the
addition of the two facilities and some non-recurring costs. As a result, our
wholesale fertilizer operating income dropped noticeably.

Performance of the group's farm centers was also influenced heavily by the
downturn in agricultural fertilizer consumption in 1999. Gross profit increased
by more than 25% for the year, due to increases in total fertilizer tons and
application acres from market share gains and full year operation of several
locations we acquired in 1998. With the additional locations and some one-time
costs, total expenses increased, creating an operating loss for the farm center
unit.



                               [Bar Charts]     1995         1996        1997        1998         1999
SALES & REVENUES
                                                                                
      Grain                                  $ 660.2      $ 701.0     $ 567.1     $ 631.4      $ 478.1
      Wholesale Fertilizer                   $ 143.1      $ 139.5     $ 130.5     $ 128.2      $ 123.6
      Farm Centers                           $  28.1      $  28.6     $  30.4     $  36.2      $  42.9
                                            -----------------------------------------------------------
                                             $ 831.4      $ 869.1     $ 728.0     $ 795.8      $ 644.6
                                            ===========================================================
OPERATING INCOME
      Grain                                  $   3.3      $   0.2     $   0.1     $   4.9      $   7.2
      Wholesale Fertilizer                   $   2.7      $   3.3     $   1.8     $   2.4      $   0.7
      Farm Centers                           $     -      $   0.2     $   0.4     $  (0.7)     $  (1.9)
                                            -----------------------------------------------------------
                                             $   6.0      $   3.7     $   2.3     $   6.7      $   6.1
                                            ===========================================================
UNIT VOLUMES
      Grain Bushel Receipts (Millions)           163          126         145         157          158
      Grain Bushels Shipped (Millions)           163          148         118         157          150
      Wholesale Fertilizer Tons Sold (000)       879          908         845         850          926
      Farm Center Application Acres (000)        241          273         319         383          552




                                                                               5

   6



Processing

The grain handling business gave rise to the Company's fertilizer business,
which in turn spawned the development of the turf care and garden fertilizer
products for consumer and professional markets. The agriculture business also
led to our corncob milling operation which turns leftover cobs into useful
products used the world over - in cosmetics, as a chemical carrier, in cattle
and pet foods, as an industrial absorbent, and most recently in retail lines of
all-natural cat litters and pet bedding.

The PROCESSING GROUP produces granular lawn care products for retailers,
professional lawn care operators and golf courses. It also produces ice-melter
products, corncob-based chemical and feed ingredient carriers, animal bedding
and litter products. The group operates processing and distribution facilities
in Indiana, Alabama, Pennsylvania and three locations in Ohio.

In 1999, the group's total revenue grew by almost $9 million, or 11.8%. While
the cob and pet business segments both achieved revenue growth for the year,
most of the increase was generated by volume gains in the lawn products
business. The bottom line declined by $2.9 million, however, primarily due to
two specific expenditures made to improve capacity and support future growth.
One of these was an intensive effort to improve productivity in our Maumee
plant. While it involved a sizable up-front expense, it has already
significantly increased available capacity by improving efficiency and
production throughput rates. We also incurred start-up costs in conjunction with
line expansion in Maumee and the new production facilities in Alabama and
Pennsylvania.

The lawn products industry has been consolidating recently, and our capacity
expansion and efficiency-improvement investments clearly demonstrate our intent
to be a significant player in this industry. We have also just announced our
intent to acquire the Pro Turf (R) business from The Scotts Company. Once
completed, the acquisition of this premium golf course turf care product line
will establish The Andersons as the market leader in premium golf course turf
products.

The focus in our cob and pet businesses continues to be the steady shift to
higher value-added product applications including premium cat litter products.
We recently announced an agreement with the American Colloid Division of AMCOL
International, a leading manufacturer and marketer of clay-based cat litter in
the U.S., whereby they will distribute, promote and merchandise our proprietary
cob-based cat litter products into the independent pet and specialty pet market
channels.

The significant investments and product announcements we have made recently
reflect our confidence and commitment to future profitable growth in this
group's various businesses.



[Bar Chart]
SALES & REVENUES                                1995         1996        1997        1998         1999
                                                                                 
        Lawn                                  $ 50.6       $ 57.6      $ 52.0      $ 65.5       $ 73.7
        Cob                                   $  7.7       $  8.5      $  8.5      $  8.9       $  9.5
        Pet                                   $  1.2       $  1.9      $  1.6      $  0.9       $  1.0
        Other                                 $  7.1       $  7.4      $  0.3      $    -       $    -
                                         --------------------------------------------------------------
                                              $ 66.6       $ 75.4      $ 62.4      $ 75.3       $ 84.2
                                         ==============================================================
OPERATING INCOME
        Lawn                                  $  0.9       $  2.5      $  1.8      $  3.0       $  0.6
        Cob                                   $ (0.2)      $  0.1      $ (1.0)     $  0.3       $  0.5
        Pet                                   $    -       $    -      $ (0.1)     $ (0.6)      $ (0.2)
        Other                                 $ (0.7)      $  0.3      $    -      $ (0.0)      $ (1.0)
                                         --------------------------------------------------------------
                                              $    -       $  2.9      $  0.7      $  2.7       $ (0.1)
                                         ==============================================================




                                                                               6

   7


Manufacturing

The growing grain business prompted the addition of an elevator in 1960 on the
Maumee river - and construction of tracks and development of a fleet of railcars
to move grain from Maumee to the Port of Toledo. Our railcar business unit
provides fleet management services and buys, repairs, sells, or leases railcars
to fleet owners, private companies and some of the best-known railroad companies
in North America.

The MANUFACTURING GROUP sells and leases railroad rolling stock in North
America. It also repairs, refurbishes and reconfigures various types of railcars
to meet customer specifications, and it operates a custom steel fabrication
business. The group now controls a fleet of about 4,300 railcars of various
types and 30 locomotives.

The group's total revenue grew by almost $7 million, or 12.8%, in 1999. Because
of a slowdown in repair shop volume, however, operating income, which had grown
dramatically in recent years, was relatively unchanged for the year.

The recent railroad industry consolidations have not gone smoothly, and as a
result, some rail traffic was diverted to over-the-road trucks. As a result,
demand for certain types of railcars was soft in 1999 and railcar market values
experienced a downturn. With lower lease rates most lessors, including
ourselves, were not interested in tying up railcars in three to five-year leases
- - the term in which we are most active. These cyclical swings caused the group's
fleet marketing income to be flat for the year. Late in the year, however, these
market conditions began to improve. Railroads are working through the glitches
of consolidation and the demand for railcars is starting to rebound. We are
taking advantage of the lower railcar market values to acquire good, quality
railcar inventory that we believe will provide a good feedstock for 2000 and
beyond.

In the fourth quarter, we completed this group's largest deal to-date, involving
several hundred railcars and 30 locomotives. In addition to its sheer size, this
deal was also a first in two other respects. The locomotives were a new type of
equipment - until now, our fleet consisted entirely of railcars. In addition,
they were our first equipment leasing commitment outside the United States.
Consummation of this deal confirmed the confidence of financial institutions and
the rail industry in our ability to participate reliably and effectively in this
business.

Our intent is to continue to profitably build our fleet, diversifying it in
terms of lease duration, car types, industries, customers and geographic
dispersion. We will continue to monitor credit quality diligently, and to
match-fund assets and liabilities as much as possible to effectively manage
risk.



[Bar Chart]
SALES & REVENUES                                1995         1996        1997        1998         1999
                                                                                 
        Rail Marketing                        $ 15.3       $ 16.8      $ 20.8      $ 49.0       $ 57.0
        Rail Shop                             $  1.6       $  1.3      $  1.0      $  1.9       $  1.0
        Fab Shop                              $  3.4       $  3.2      $  3.5      $  3.4       $  3.2
                                         --------------------------------------------------------------
                                              $ 20.4       $ 21.2      $ 25.2      $ 54.3       $ 61.2
                                         ==============================================================
OPERATING INCOME
        Rail Marketing                       $  1.3        $  1.8      $  2.9      $  3.5       $  3.9
        Rail Shop                            $  0.5        $  0.4      $  0.1      $  0.7       $  0.0
        Fab Shop                             $ (0.1)       $  0.1      $  0.3      $  0.2       $  0.3
                                         --------------------------------------------------------------
                                             $  1.7        $  2.3      $  3.3      $  4.4       $  4.2
                                         ==============================================================




                                                                               7

   8

Retail

The success of the Company's first elevator was the catalyst for an entirely
different enterprise: general merchandising. Astute Company founders who
observed the farmers heading for home with empty trucks after delivering their
grain at the elevator in Maumee decided in 1952 to place a general store next to
the elevator where farmers could spend some of the rewards they'd just reaped
for their harvests. That was the beginning of the Company's popular and
successful six-store chain in Ohio.

The RETAIL GROUP operates six large stores in Ohio. Three are located in the
Toledo area, two in Columbus and one in Lima. Our central message to the retail
customer is "MORE FOR YOUR HOME". We strive to offer the broadest assortment of
products that people need to take care of the projects they deal with around
their homes. In addition, we strive to make the shopping experience for our
customers unique and enjoyable. "MORE FOR YOUR HOME" is more than just a phrase,
it's our mission.

The foundation of our product offering is home remodeling and home
maintenance-based. Extensive offerings in kitchen, bath, lighting, flooring,
paint and wallcoverings as well as tools, hardware plumbing, electrical and
storage are the core. In addition, we have a dominant lawn and garden offering
featuring a much broader selection of live plants than traditional big-box home
centers. Our housewares department has been upgraded significantly including
upscale tabletop and cookware as well as a great assortment of bed and bath
domestics. In addition, we offer a complete line of pet food and supplies, basic
sporting goods and toys, and casual and work clothing. Our Uncommon Market
features fresh fruits and vegetables, an extensive deli, fresh baked European
style hard crusted breads and the most dominant selection of wines and specialty
beers in the marketplaces that we serve.

Total sales for the Retail Group increased by $6.7 million in 1999, up 3.9% from
1998. While we are susceptible to the competitive pressure that new big-box
competition puts on us, we feel very good about 1999. Average gross margins were
higher than year earlier levels, led by volume increases in higher margin
product categories. Total gross profit was up 5.2%. Operating efficiency
improved slightly this year due to increased sales volume and good expense
control in spite of a tight labor market.

We are very encouraged by the progress made in 1999. We continued to advance on
many of the objectives that we have set. We improved our on shelf in-stock
performance by a full percent and improved our inventory turns by nearly 6%. Our
suppliers showed their willingness to partner with us on advertising initiatives
by participating aggressively in our new Marketing Partners Plus program.
Merchandising initiatives in Lawn and Garden and Automotive produced sales per
square foot advances in excess of 10%. We continued to roll our "We Load It"
program which makes our stores much easier to shop for our customers. New and
different fixtures in our promotional aisles allowed us to present merchandise
in a more appealing manner and with much more aggressive price presentation.

In the year 2000 we will continue our advance on increasing sales, improving our
productivity per square foot of retail space and improving our operating
efficiency.
                            1995       1996       1997       1998       1999
SALES & REVENUES
        Retail           $ 168.3    $ 176.1    $ 170.1    $ 170.6    $ 177.3
OPERATING INCOME
        Retail            $  1.8     $  3.8     $  0.5     $  1.7     $  2.5


                                                                               8

   9


Selected Financial Data



                                                 1999             1998          1997                1996                1995
                                                                                                        

(in thousands, except for per share data)
Operating Results
  Total sales & revenues                         $ 978,936      $1,104,134      $ 998,845          $  1,154,956        $1,097,730
  Income from continuing operations (a)              8,379           9,752          4,074(d)              6,406(e)          6,273
  Per share data:
    Income from continuing operations (b)             1.05            1.21           0.50                  0.76              0.74
    Dividends paid (c)                                0.20            0.16           0.12                    --                --

Balance Sheet Data
  Total assets                                   $ 376,776       $ 360,823      $ 368,244           $   346,591         $ 455,518
  Working capital                                   67,939          65,898         53,595                61,649            58,897
  Long-term debt                                    74,127          71,565         65,709                68,568            74,139
  Shareholders' equity (c)                          84,805          82,734         72,201                73,249            67,260



(a)  Includes pro forma taxes of $3,915 thousand for 1995.
(b)  Amounts are net of pro forma income taxes of $.47 for 1995. Amounts for
     1995 were calculated using the actual number of shares outstanding on the
     date of the January 2, 1996 merger.
(c)  There were no dividends paid in 1996. Distributions made to partners prior
     to 1996 are not included in this table.
(d)  Non-recurring charge of $1.1 million for asset impairment is included
     ($0.7 million after tax).
(e)  Income taxes for 1996 include a charge of $0.8 million to establish
     deferred income taxes on assets of the partnership at the time of the
     merger.




Quarterly Financial Data and Market for Common Stock
   (in thousands, except for per share data)             Net Income (Loss)             Common Stock Quote       Dividends
  Quarter Ended      Net Sales     Gross Profit      Amount       Per Share-Basic      High          Low        Declared
      1999
                                                                                               
March 31            $ 200,755          $ 38,866     $     44                $  0.01      $ 12.75      $ 11.00        $0.05
June 30               260,325            51,781        7,459                   0.92        14.50        11.94         0.05
September 30          174,674            34,690       (2,511)                 (0.32)       12.88         8.63         0.05
December 31           343,182            48,157        3,387                   0.43         9.38         7.50         0.06
                   --------------- -------------- --------------                                              --------------
Year                $ 978,936          $173,494       $8,379                   1.05                                  $0.21
                   =============== ============== ==============                                              ==============
      1998
March 31            $ 222,189          $ 33,860      $  (824)               $ (0.10)     $  9.50       $ 8.25        $0.04
June 30               283,839            48,762        6,370                   0.80        11.00         8.94         0.04
September 30          230,792            36,917         (972)                 (0.12)        1.50         9.88         0.04
December 31           367,314            47,102        5,178                   0.64        11.75         9.69         0.05
                   --------------- -------------- --------------                                              --------------
Year               $1,104,134          $166,641       $9,752                   1.21                                  $0.17
                   =============== ============== ==============                                              ==============



                                                                               9
   10



                         Report of Independent Auditors

Board of Directors
The Andersons, Inc.

We have audited the accompanying consolidated balance sheets of The Andersons,
Inc. and subsidiaries as of December 31, 1999 and 1998, and the related
consolidated statements of income, shareholders' equity, and cash flows for each
of the three years in the period ended December 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of The
Andersons, Inc. and subsidiaries at December 31, 1999 and 1998, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.

                                               /s/Ernst & Young LLP

Toledo, Ohio
January 24, 2000


                                                                              10

   11

                               The Andersons, Inc.

                        Consolidated Statements of Income




                                                                      YEAR ENDED DECEMBER 31
     (in thousands, except per share data)                      1999               1998             1997
                                                       --------------------------------------------------------
                                                                                            
    Sales and merchandising revenues                     $        974,741         1,098,722          993,746
    Other income                                                    4,195             5,412            5,099
                                                       --------------------------------------------------------
                                                                  978,936         1,104,134          998,845

    Cost of sales and merchandising revenues                      805,442           937,493          851,157
                                                       --------------------------------------------------------
    Gross profit                                                  173,494           166,641          147,688

    Operating, administrative and general expenses
                                                                  152,018           144,681          131,818
    Asset impairment charge                                            --                --            1,121
    Interest expense                                                9,517             8,954            8,494
                                                       --------------------------------------------------------
                                                                  161,535           153,635          141,433
                                                       --------------------------------------------------------
    Income before income taxes                                     11,959            13,006            6,255
    Income taxes                                                    3,580             3,254            2,181
                                                       --------------------------------------------------------
    Net income                                           $          8,379             9,752            4,074
                                                       ========================================================

    Per common share
        Basic earnings                                   $           1.05              1.21              .50
                                                       ========================================================
        Diluted earnings                                 $           1.03              1.20              .50
                                                       ========================================================
        Dividends paid                                   $            .20               .16              .12
                                                       ========================================================


The Notes to Consolidated Financial Statements on pages 22-32 are an
integral part of this statement.



                                                                              11

   12



                               The Andersons, Inc.

                           Consolidated Balance Sheets

                                                                                              DECEMBER 31
                                 (in thousands)                                          1999              1998
                                                                                  -------------------------------------
                                                                                                     
ASSETS
Current assets:
   Cash and cash equivalents                                                            $  25,614          $   3,253
   Accounts and notes receivable:
     Trade receivables, less allowance for doubtful accounts
         of $3,980 in 1999;  $4,455 in 1998                                                51,812             62,647
     Margin deposits                                                                        1,339                248
                                                                                  -------------------------------------
                                                                                           53,151             62,895
   Inventories                                                                            178,323            184,990
   Deferred income taxes                                                                    5,641              4,634
   Prepaid expenses                                                                         5,796              5,502
                                                                                  -------------------------------------
Total current assets                                                                      268,525            261,274

Other assets:
   Notes receivable and other assets, less allowance for doubtful notes
     receivable of $583 in 1999; $515 in 1998                                               4,640              6,543
   Investments in and advances to affiliates                                                  954              1,057
                                                                                  -------------------------------------
                                                                                            5,594              7,600
Property, plant and equipment, net                                                        102,657             91,949
                                                                                  -------------------------------------
                                                                                         $376,776           $360,823
                                                                                  =====================================

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Notes payable                                                                        $  45,000          $   7,700
   Accounts payable for grain                                                              68,883             88,978
   Other accounts payable                                                                  65,079             75,301
   Accrued expenses                                                                        17,465             17,079
   Current maturities of long-term debt                                                     4,159              6,318
                                                                                  -------------------------------------
Total current liabilities                                                                 200,586            195,376

Deferred income                                                                             4,026                 --
Pension and postretirement benefits                                                         3,255              3,113
Long-term debt, less current maturities                                                    74,127             71,565
Deferred income taxes                                                                       8,742              7,330
Minority interest                                                                           1,235                705
Shareholders' equity
   Common shares, without par value
     Authorized -- 25,000 shares
     Issued -- 8,430 shares at stated value of $.01 per share                                  84                 84
   Additional paid-in capital                                                              67,227             67,180
   Treasury shares (723 and 290 in 1999 and 1998, respectively)                            (7,158)            (2,665)
   Accumulated other comprehensive income                                                    (144)               (29)
   Unearned compensation                                                                     (158)               (83)
   Retained earnings                                                                       24,954             18,247
                                                                                  -------------------------------------
                                                                                           84,805             82,734
                                                                                  -------------------------------------
                                                                                         $376,776           $360,823
                                                                                  =====================================


The Notes to Consolidated Financial Statements on pages 22-32 are an integral
part of this statement.


                                                                              12

   13




                               The Andersons, Inc.

                      Consolidated Statements of Cash Flows

                                                                                    YEAR ENDED DECEMBER 31
                            (in thousands)                                   1999          1998         1997
                                                                        -----------------------------------------
OPERATING ACTIVITIES
                                                                                               
Net income                                                                    $8,379        $9,752      $  4,074
Adjustments to reconcile net income to net cash provided by (used in)
   operating activities:
     Depreciation and amortization                                            11,282        10,575        10,065
     Provision for losses on accounts and notes receivable                     1,180         3,757         1,767
     Asset impairment charge                                                      --            --         1,121
     Gain on sale of property, plant and equipment                              (476)         (116)         (529)
     Deferred income taxes                                                       854        (1,696)          478
     Other                                                                       307            98            36
                                                                        -----------------------------------------
     Cash provided by operations before changes in operating assets
       and liabilities                                                        21,526        22,370        17,012
     Changes in operating assets and liabilities:
       Trade accounts receivable                                               8,564         4,953         2,839
       Inventories                                                             3,022         6,810       (41,170)
       Prepaid expenses and other assets                                         897          (437)         (811)
       Accounts payable for grain                                            (20,095)      (32,254)       24,301
       Other accounts payable and accrued expenses                            (5,723)       14,381       (16,737)
                                                                        -----------------------------------------
Net cash provided by (used in) operating activities                            8,191        15,823       (14,566)

INVESTING ACTIVITIES
Purchases of property, plant and equipment                                   (17,963)      (11,630)      (15,858)
Proceeds from sale of property, plant and equipment                              772           347         1,221
                                                                        -----------------------------------------
Net cash used in investing activities                                        (17,191)      (11,283)      (14,637)

FINANCING ACTIVITIES
Net increase (decrease) in short-term borrowings                              37,300       (11,940)       15,572
Proceeds from issuance of long-term debt                                     102,082       110,157       150,982
Payments of long-term debt                                                  (101,679)     (106,389)     (151,795)
Proceeds from sale of treasury shares to employees                               380           440           423
Dividends paid                                                                (1,616)       (1,291)         (985)
Purchase of common shares for the treasury                                    (5,106)         (542)       (4,240)
                                                                        -----------------------------------------
Net cash provided by (used in) financing activities                           31,361        (9,565)        9,957
                                                                        -----------------------------------------

Increase (decrease) in cash and cash equivalents                              22,361        (5,025)      (19,246)
Cash and cash equivalents at beginning of year                                 3,253         8,278        27,524
                                                                        -----------------------------------------
Cash and cash equivalents at end of year                                     $25,614      $  3,253      $  8,278
                                                                        =========================================


The Notes to Consolidated Financial Statements on pages 22-32 are an integral
part of this statement.


                                                                              13

   14


                               The Andersons, Inc.


                 Consolidated Statements of Shareholders' Equity




                                                                                Accumulated
                                                         Additional                Other
                                                 Common    Paid-in    Treasury Comprehensive   Unearned      Retained
               (in thousands)                    Shares    Capital     Shares     Income     Compensation    Earnings     Total
                                              -------------------------------------------------------------------------------------
                                                                                                   
Balances at January 1, 1997                      $  84    $  66,659  $   (600)     $    --       $    --   $   7,106    $  73,249
   Net and comprehensive income                                                                                4,074        4,074
   Sale of 49 shares to Employee Share
     Purchase Plan participants                                   1       422                                                 423
   Purchase of 470 shares for treasury                                 (4,240)                                             (4,240)
   Dividends declared                                                                                         (1,305)      (1,305)
                                              -------------------------------------------------------------------------------------
Balances at December 31, 1997                       84       66,660    (4,418)          --            --       9,875       72,201
   Net income                                                                                                  9,752        9,752
   Other comprehensive income:
     Minimum pension liability, net of $19
       income taxes                                                                    (29)                                   (29)
                                                                                                                       ------------
   Comprehensive income                                                                                                     9,723
   Sale of 47 shares to Employee Share
     Purchase Plan participants                                   3       410                                                 413
   Exercise of share options                                     (1)       27                                                  26
   Restricted stock issued, net of                               13        90                       (103)                      --
     forfeitures
   Amortization of unearned compensation                                                              20                       20
   Issuance of 193 shares in an acquisition                     502     1,748                                               2,250
   Issuance of common shares to directors in
     lieu of retainer                                             3        20                                                  23
   Purchase of 54 shares for treasury                                    (542)                                               (542)
   Dividends declared                                                                                         (1,380)      (1,380)
                                              -------------------------------------------------------------------------------------
Balances at December 31, 1998                       84       67,180    (2,665)         (29)          (83)     18,247       82,734
   Net income                                                                                                  8,379        8,379
   Other comprehensive income:
     Minimum pension liability, net of $76
       income taxes                                                                   (115)                                  (115)
                                                                                                                       ------------
   Comprehensive income                                                                                                     8,264
   Sale of 36 shares to Employee Share
     Purchase Plan participants                                 (12)      334                                                 322
   Exercise of share options                                      3        55                                                  58
   Restricted stock issued, net of                               48       183                        (231)                      -
     forfeitures
   Amortization of unearned compensation                                                              156                     156
   Issuance of common shares to directors in
     lieu of retainer                                             8        41                                                  49
   Purchase of 499 shares for treasury                                 (5,106)                                             (5,106)
   Dividends declared                                                                                         (1,672)      (1,672)
                                              -------------------------------------------------------------------------------------
Balances at December 31, 1999                    $  84    $  67,227  $ (7,158)     $  (144)      $   (158)   $ 24,954     $ 84,805
                                              =====================================================================================


The Notes to Consolidated Financial Statements on pages 22-32 are an integral
part of this statement.


                                                                              14

   15


                      MANAGEMENT'S DISCUSSION AND ANALYSIS

OPERATING RESULTS

Operating results for The Andersons, Inc. business segments are discussed in the
Business Review on pages 4-10 of this annual report. In addition, Note 13 to the
consolidated financial statements displays sales and revenues to external
customers, intersegment sales, other income, interest expense, operating income,
identifiable assets, capital expenditures and depreciation and amortization for
each of the Company's business segments. The following discussion focuses on the
operating results as shown in the consolidated statements of income.

COMPARISON OF 1999 WITH 1998

Sales and merchandising revenues for 1999 totaled $975 million, a decrease of
$124 million, or 11%, from 1998. Sales in the Agriculture Segment were down $154
million, or 20%. Grain sales were down $156.9 million, or 20%, due to a 11%
volume decrease and a 16% decrease in the average price per bushel sold. This
significant decrease was caused by lower market prices and some change in the
mix of grain sold by the Company. Fertilizer sales were up $3 million, or 2%,
due to an 11% increase in volume offset by an 8% decrease in average price per
ton sold. In addition, merchandising revenues were up $5.9 million, or 19%, due
to basis appreciation of grain inventory offset by a reduction in income from
drying and mixing grain, increases in income from storing grain and fertilizer
for others and fees for custom fertilizer application. Grain bushels on hand at
December 31, 1999 were 68 million, a 15% increase from December 31, 1998. Total
acres, on which custom application was performed, increased 44% from 1998. The
1999 results include a full year of operations from two grain elevators, a
wholesale fertilizer distribution facility and four farm centers that were
opened or acquired in the first half of 1998. Two additional wholesale
distribution facilities and a farm center were opened or acquired in the first
half of 1999.

The Processing Segment had a sales increase of $8.5 million, or 11%. The
majority of this increase, or $7.8 million, was due to a 12% increase in lawn
fertilizer volume. This volume increase more than offset a 1% reduction in the
average price per ton sold. Sales were up $.7 million, or 7%, in the cob-based
businesses. The Company began producing and warehousing lawn fertilizer at a
third facility (a joint venture located in Pennsylvania) in mid-1999 and a
fourth facility, located in Alabama, in the fourth quarter of 1999. In February
2000, the Company announced its intent to acquire the intangible assets,
including fertilizer brands, distribution network and customer lists, of The
Scott's Company U.S. professional turf business.

The Manufacturing Segment had a sales increase of $7.8 million, or 15%. The
majority of this increase was generated by railcar and locomotive sales.
Revenues2 from the Segment's leasing and service business were flat due to a
soft market. This soft market also contributed to reduced revenue and car volume
through the Segment's railcar repair shop.

The Retail Segment experienced a $6.6 million, or 4%, increase in sales with all
markets (Toledo, Columbus and Lima Ohio) up. Sales increases were due to
weather-related sales in January 1999, strong demand for lawn and garden,
nursery and home improvement merchandise in the second quarter and a strong
Christmas season.

In January 2000, the Company announced its intent to sell its interest in The
Andersons Tireman Auto Centers, one of its businesses classified as an other
business in Note 13 to the consolidated financial statements.



                                                                              15

   16

Gross profit for 1999 totaled $173.5 million, an increase of $6.9 million, or
4%, from 1998. The Agriculture Segment had a gross profit increase of $3 million
or 4% due to the increase in merchandising revenues described above and a 17%
increase in volume in the farm centers from the acquisitions described
previously.

Gross profit for the Processing Segment increased $1.2 million, or 4%, from the
prior year. In the lawn fertilizer businesses, the increase was due to increased
volume. Gross profit in the cob-based businesses was flat.

Gross profit in the Manufacturing Segment increased $1.1 million, or 9%, from
the prior year in spite of softness in the rail repair business.

Gross profit in the Retail Segment improved by $2.6 million, or 5%, from 1998.
This was due primarily to increased sales and a slight increase in gross margin
percentage.

Operating, administrative and general expenses for 1999 totaled $152 million, a
$7.3 million, or 5%, increase from 1998. Full time employees increased 3% from
the prior year with the majority of the increase due to acquisitions or added
capacity in the Processing Segment. Operating, administrative and general
expenses as a percent of gross profit increased slightly from 87% in 1998 to 88%
in 1999. New facilities required additional labor and benefits expense of $2.5
million, occupancy expense of $2.1 million and other expense of $1.8 million.

Interest expense for 1999 was $9.5 million, a $.6 million, or 6%, increase from
1998. Average daily short-term borrowings increased 42% from 1998 while the
average short-term interest rate decreased from 5.9% in 1998 to 5.7% in 1999.

Income before income taxes of $12 million decreased $1 million, or 8%, from the
1998 pretax income of $13 million. Income tax expense was $3.6 million, a $.3
million, or 10%, increase from 1998. The effective tax rate increased from the
1998 rate of 25% to the 1999 rate of 29.9%. The lower 1998 rate of 25% was due
to refinements in the method used to calculate the benefit from the captive
foreign sales corporation.

Net income for 1999 decreased $1.4 million, or 14%, from the $9.8 million in
1998. Basic earnings per share decreased $.16 from 1998 and diluted earnings per
share decreased $.17 from 1998.

COMPARISON OF 1998 WITH 1997

Sales and merchandising revenues for 1998 totaled $1.1 billion, an increase of
$105 million, or 11%, from 1997. Sales in the Agriculture Segment were up $58.5
million, or 8%, due to a 55% volume increase in grain. This significant volume
increase was offset by a decrease in the average price per bushel sold caused by
lower market prices and a change in the mix of grain sold by the Company.
Fertilizer sales were relatively constant from year to year as a decrease in
average price per wholesale ton sold offset sales from additional locations. In
addition, merchandising revenues were up $6.3 million, or 25%, due to increases
in income from storing grain and fertilizer for others and fees for custom
application. During 1998, the Company leased two grain elevators (increasing
total grain storage capacity from 69 million to 80 million bushels), added a
fertilizer distribution facility and leased or purchased four farm centers. Near
the end of 1998, the Company completed the purchase of a combined fertilizer
distribution / farm center facility. The Company had 59 million bushels of grain
owned or stored for others at December 31, 1998 as compared to 52 million at
December 31, 1997.

The Processing Segment had a $13 million, or 21%, increase in sales. The
majority of this increase, or $10.8 million, was due to a 74% increase in lawn
fertilizer volume sold into the consumer market. This


                                                                              16

   17

volume increase more than offset a 13% reduction in the average price per
consumer market ton sold. Sales were up $2.5 million in the other fertilizer
market segments while the cob-based businesses had decreased sales and revenues
of $.3 million.

The Manufacturing Segment had a significant sales increase of $27.6 million, or
111%. Of this increase, $22.8 million was due to a 59% increase in railcars sold
in 1998. The Segment's leasing and service business generated additional
revenues of $4.3 million due to its steadily increasing railcar fleet. The
remaining increase was due to additional revenue in the Manufacturing Segment's
railcar repair shop.

The Retail Segment experienced a slight increase in sales, with both the Toledo
and Columbus, Ohio markets up. The Segment ended 1998 with a strong Christmas
season including a 6% increase in December same-store sales. This sales increase
carried into January due primarily to weather-related sales.

Gross profit for 1998 totaled $166.6 million, an increase of $19 million, or
13%, from 1997. The Agriculture Segment had a gross profit increase of $9.9
million or 17% due to the $6.3 million increase in merchandising revenues
described above and improved margins on sales of grain and fertilizer.

Gross profit for the Processing Segment increased $3.9 million, or 17%, from the
prior year. All operations of the Processing Segment experienced increased gross
profit. In the lawn fertilizer businesses, the increase was due to increased
volume, even though gross profit per ton decreased. The cob-based businesses are
transitioning to higher margin, value-added products and had a gross profit
increase of $.3 million in spite of decreased volumes.

Gross profit in the Manufacturing Segment increased $3.8 million, or 50%, from
the prior year. This was due primarily to the railcar sales, greater volume of
railcars repaired and higher gross profit per railcar repaired.

Gross profit in the Retail Segment improved by $1 million, or 2%, from 1997.
This was due primarily to a 2% increase in margins resulting from changes in the
product mix, including the addition of home soft goods and similar products in
the 1998 reset of the stores.

Operating, administrative and general expenses for 1998 totaled $144.7 million,
a $12.9 million, or 10%, increase from 1997. Full time employees increased over
10% from the prior year with the majority of the increase due to acquisitions or
added capacity in the Agriculture Segment and growth in the Manufacturing
Segment. Included in the total increase are additional labor and benefits
charges of $5.5 million, maintenance charges of $2.5 million, an increase in the
provision for bad debts of $2 million and an increase in depreciation and
amortization of $.5 million. All of these increases reflect growth in the
underlying businesses. Additional operating expenses relating specifically to
the facilities added in 1998 were $3.5 million.

Interest expense for 1998 was $9 million, a $.5 million, or 5%, increase from
1997. Average daily short-term borrowings increased 12% from 1997 while the
average interest rate decreased slightly.

Income before income taxes of $13 million increased $6.8 million, or 108%, from
the 1997 pretax income of $6.3 million. Income tax expense was $3.3 million, a
$1.1 million, or 49%, increase from 1997. The effective tax rate of 25%
represents a significant decrease from the 1997 effective tax rate of 35%. This
was due to refinements in the method used to calculate the benefit from the
captive foreign sales corporation.

Net income more than doubled to $9.8 million from $4.1 million. Basic and
diluted earnings per share also more than doubled from the 1997 amounts.


                                                                              17

   18

LIQUIDITY AND CAPITAL RESOURCES

The Company's operations (before changes in operating assets and liabilities)
provided cash of $21.5 million in 1999, a decrease of $.8 million from 1998.
Working capital at December 31, 1999 was $67.9 million, an increase of $2
million or 3% from December 31, 1998.

The Company has significant short-term lines of credit available to finance
working capital, primarily inventories and accounts receivable. Lines of credit
available on December 31, 1999 were $175 million. The Company had drawn $45
million on its short-term lines of credit at December 31, 1999. The Company's
peak short-term borrowing of $111 million occurred on April 26. Typically, the
Company's highest borrowing occurs in the spring due to seasonal inventory
requirements in several of the Company's businesses, credit sales of fertilizer
and a customary reduction in grain liabilities due to customer cash needs and
market strategies.

The Company utilizes interest rate contracts to manage a portion of its interest
rate risk on both its long and short term debt and lease commitments. As of
December 31, 1999, the Company had swaps with a total notional amount of $16.4
million that convert variable rates to fixed rates on long and short-term
borrowings. The Company has also purchased short and long-term interest rate
caps with a notional amount of $29.4 million at December 31, 1999.

Cash dividends of $1.6 million were paid in 1999 ($.20 per share). The Company
made income tax payments of $4.3 million in 1999. The Company purchased 498,800
of its common shares on the open market at an average price of $10.24 per share.
The Company issued approximately 67,000 shares to employees, directors and
former employees under stock compensation plans.

During 1999, the Company acquired property, plant, equipment and intangible
assets (customer lists, goodwill, software) with a value of $21.8 million. To
accomplish this, it paid cash, gave up working capital and incurred additional
long-term debt. Included in these assets are $2 million in retail store
improvements, $3.6 million in railcars and railcar improvements, $5.2 million
for additional processing lines and facilities in the Processing Group, $2.8
million in additional capacity and facilities in the Agriculture Group and $1.1
million in safety and environmental improvements. Approximately $25 million is
budgeted for capital spending in 2000 including $5 million for additional
Processing Group capacity and businesses, $1 million for computer hardware and
software and $5 million to increase the railcar fleet. These expenditures are
expected to be funded by cash generated from operations or additional debt.

Certain of the Company's long-term debt is secured by first mortgages on various
facilities. In addition, some of the long-term borrowings include provisions
that impose minimum levels of working capital and equity, limitations on
additional debt and require that the Company be substantially hedged in its
grain transactions.

The Company's liquidity is enhanced by the fact that grain inventories are
readily marketable and the lines of credit that it has available. In the opinion
of management, the Company's liquidity is adequate to meet short-term and
long-term needs.

MARKET RISK SENSITIVE INSTRUMENTS AND POSITIONS

The market risk inherent in the Company' market risk sensitive instruments and
positions is the potential loss arising from adverse changes in commodity prices
and interest rates as discussed below.


                                                                              18

   19

COMMODITIES
The availability and price of agricultural commodities are subject to wide
fluctuations due to unpredictable factors such as weather, plantings, government
(domestic and foreign) farm programs and policies, changes in global demand
created by population growth and higher standards of living, and global
production of similar and competitive crops. To reduce price risk caused by
market fluctuations, the Company follows a policy of hedging its inventories and
related purchase and sale contracts. The instruments used are readily marketable
exchange traded futures contracts that are designated as hedges. To a lesser
degree, the Company uses exchange traded option contracts, also designated as
hedges. The changes in market value of such contracts have a high correlation to
the price changes of the hedged commodity. The Company's accounting policy for
these hedges, as well as the underlying inventory positions, and purchase and
sale contracts is to mark them to the market price daily and include gains and
losses in the statement of income in sales and merchandising revenues.

A sensitivity analysis has been prepared to estimate the Company's exposure to
market risk of its commodity position. The Company's daily net commodity
position consists of inventories, related purchase and sale contracts and
exchange traded contracts. The fair value of such position is a summation of the
fair values calculated for each commodity by valuing each net position at quoted
futures market prices. Market risk is estimated as the potential loss in fair
value resulting from a hypothetical 10% adverse change in such prices. The
result of this analysis, which may differ from actual results, is as follows:

                                                        DECEMBER 31
                      (in thousands)           1999            1998
                                       -------------------------------------
Net short position                               $153              $1,961
Market risk                                        15                 196

INTEREST
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. In
addition, the Company has off-balance sheet interest rate contracts established
as hedges. The fair value of these contracts is estimated based on quoted market
termination values. Market risk, which is estimated as the potential increase in
fair value resulting from a hypothetical one-half percent decrease in interest
rates, is summarized below:



                                                                                       DECEMBER 31
                          (in thousands)                                       1999                    1998
                                                                        ----------------------- -----------------------
                                                                                                     
Fair value of long-term debt and interest rate contracts                           $77,964                 $78,521
Fair value in excess of (less than) carrying value                                   (322)                     638
Market risk                                                                            595                     403




                                                                              19

   20


IMPACT OF YEAR 2000

In prior years, the Company discussed the nature and progress of its plans to
become Year 2000 ready. In late 1999, the Company completed its remediation and
testing of systems. As a result of those planning and implementation efforts,
the Company experienced no significant disruptions in information technology and
non-information technology systems and believes those systems successfully
responded to the Year 2000 date change. The Company is not aware of any material
problems resulting from Year 2000 issues, either with its products, its internal
systems, or the products and services of third parties. The Company will
continue to monitor its mission critical computer applications and those of its
suppliers and vendors throughout the year 2000 to ensure that any latent Year
2000 matters that may arise are addressed promptly.

FORWARD LOOKING STATEMENTS

The preceding Letter to Shareholders, Business Review and Management's
Discussion and Analysis contain various "forward-looking statements" which
reflect the Company's current views with respect to future events and financial
performance. These forward-looking statements are subject to certain risks and
uncertainties, including but not limited to those identified below, which could
cause actual results to differ materially from historical results or those
anticipated. The words "believe," "expect," "anticipate" and similar expressions
identify forward-looking statements. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of their
dates. The Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. The following factors could cause actual results to differ
materially from historical results or those anticipated; weather, supply and
demand of commodities including grains, fertilizer and other basic raw
materials, market prices for grains and the potential for increased margin
requirements, competition, economic conditions, risks associated with
acquisitions, interest rates and income taxes.


                                                                              20

   21


                               The Andersons, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 1999

1. BASIS OF FINANCIAL PRESENTATION

These consolidated financial statements include the accounts of The Andersons,
Inc. and its majority owned subsidiaries. All significant intercompany accounts
and transactions are eliminated in consolidation.

On July 1, 1998, the Company issued 193 thousand of its common shares to effect
an acquisition of a farm center operation. The acquisition was accounted for as
a purchase, and the results of operations have been included in the consolidated
statements of income from July 1, 1998.

2. SIGNIFICANT ACCOUNTING POLICIES

ESTIMATES AND ASSUMPTIONS

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash and all highly liquid debt instruments
purchased with an initial maturity of three months or less. The carrying value
of these assets approximates their fair values.

INVENTORIES AND INVENTORY COMMITMENTS

Grain inventories in the Company's balance sheet are hedged to the extent
practicable and are valued on the basis of market prices prevailing at the end
of the year. Such inventories are adjusted for the amount of gain or loss (also
based on year-end market price quotations) on open commodity contracts at the
end of the year. These contracts require performance in future periods.
Contracts to purchase grain from producers generally relate to the current or
future crop years for delivery periods quoted by regulated commodity exchanges.
Contracts for the sale of grain to processors or other consumers generally do
not extend beyond one year. The terms of contracts for the purchase and sale of
grain are consistent with industry standards.

All other inventories are stated at the lower of cost or market. Cost is
determined by the average cost method.


                                                                              21
   22



COMMODITY AND INTEREST RATE CONTRACTS

For the purpose of hedging its market price risk exposure on grain owned and
related forward grain purchase and sale contracts, the Company holds regulated
commodity contracts in the form of futures and options contracts for corn,
soybeans and wheat. The Company accounts for all commodity contracts using a
daily mark-to-the-market method; the same method it uses to value grain
inventory and forward purchase and sale contracts. Company policy limits the
Company's unhedged grain position.

Gains and losses in the value of commodity contracts (whether due to changes in
commodity prices or due to sale, maturity, or extinguishment of the commodity
contract) and grain inventories and related forward grain contracts are included
in sales and merchandising revenues in the statements of income.

The Company also periodically enters into interest rate contracts to manage
interest rate risk on borrowing or financing activities. Income or expense
associated with interest rate swap contracts is recognized on the accrual basis
over the term of the agreement as a component of interest expense. The Company
expenses the cost of short-term interest rate caps at the date of purchase and
long-term interest rate caps over their term. Gains or losses upon settlement of
treasury rate locks, hedging the interest component of firm commitment lease
transactions, are recognized over the term of the ensuing lease transaction. The
balance of deferred losses on settled treasury rate locks totaled $1.4 million
and $1.7 million at December 31, 1999 and 1998, respectively. All interest rate
contracts are entered into for hedging purposes. The fair value of interest rate
contracts is not recognized in the balance sheet.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are carried at cost. Depreciation is provided over
the estimated economic useful lives of the individual assets, principally by the
straight-line method.

INTERNAL USE SOFTWARE

In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-1, "Accounting for the Costs of Computer Software
Developed for or Obtained for Internal Use" (SOP 98-1). The Company adopted SOP
98-1 as of the beginning of 1998. Certain costs incurred in the development of
internal use software that were previously expensed are now being capitalized.
The effect of this accounting change was not material to net income or earnings
per share for 1999 or 1998. Internal use software is included in property, plant
and equipment and amortized over its estimated useful life (3 to 10 years).

ACCOUNTS PAYABLE FOR GRAIN

The liability for grain purchases on which price has not been established
(delayed price) has been computed on the basis of market prices at the end of
the year, adjusted for the applicable premium or discount.



                                                                              22

   23

REVENUE RECOGNITION

Sales of grain and other products are recognized at the time of shipment. Gross
profit on grain sales is recognized when sales are contracted. Revenues from
other merchandising activities are recognized as open contracts are marked to
market or as services are provided.

INCOME TAXES

Deferred income taxes are determined based on temporary differences between
financial reporting and tax bases of assets and liabilities and are measured
using the tax rates and laws that will be in effect when the differences are
expected to reverse.

ADVERTISING

Advertising costs are expensed as incurred. Advertising expense of $2.9 million
in 1999 and 1998 and $3.2 million in 1997 is included in operating,
administrative and general expense.

DEFERRED INCOME

Certain of the Company's agriculture facilities are subject to a long-term (five
year) marketing agreement with a third party that provides for a base-level
income guarantee and equal sharing of income earned over the base level. The
Company defers cumulative income in excess of the cumulative base level
guarantee due to a lookback feature in the marketing agreement that places the
excess at risk for the term of the agreement. The Company measures the
cumulative net deferral at the end of each contract year and amortizes that
amount to income over the remaining term of the agreement.

GOODWILL

Goodwill, representing the excess of purchase cost over the fair value of net
assets of acquired companies, is amortized over the estimated period of benefit
(ranging from 5 to 12 years) by the straight-line method. Goodwill of $1 million
and $.9 million at December 31, 1999 and 1998, respectively, is included in
notes receivable and other assets in the balance sheet. Accumulated amortization
at December 31, 1999 and 1998 was $.1 million.



                                                                              23

   24


EARNINGS PER SHARE

Basic earnings per share is equal to net income divided by the weighted average
shares outstanding. Diluted earnings per share is equal to basic earnings per
share plus the incremental per share effect of dilutive options.



                     (in thousands)                             1999            1998             1997
                                                              -------------- ---------------- ---------------
Net income available for common shareholders                      $ 8,379        $ 9,752          $ 4,074
                                                              ============== ================ ===============

                                                                                           
Weighted average shares outstanding - basic                         7,996          8,059            8,160
Additional shares contingently issuable upon exercise
    of options                                                        102             59                7
                                                              -------------- ---------------- ---------------
Weighted average shares outstanding - diluted                       8,098          8,118            8,167
                                                              ============== ================ ===============


COMPREHENSIVE INCOME

As of January 1, 1998, the Company adopted Financial Accounting Standards Board
Statement No. 130, "Reporting Comprehensive Income" which requires reporting and
displaying comprehensive income and its components. The adoption of this
Statement had no effect on the Company's net income or shareholders' equity.
Statement No. 130 requires the effect of changes in the minimum pension
liability to be included in other comprehensive income. Prior to 1998, there
were no components of other comprehensive income.

NEW ACCOUNTING STANDARDS

The Financial Accounting Standards Board issued Statement No. 133 "Accounting
for Derivative Instruments and Hedging Activities", which is effective for
fiscal years beginning after June 15, 2000. The effect that this statement will
have on the Company has not been determined.

RECLASSIFICATIONS

Certain amounts in the 1998 and 1997 financial statements have been reclassified
to conform to the 1999 presentation. These reclassifications had no effect on
net income or shareholders' equity.


                                                                              24

   25


3. INVENTORIES

Major classes of inventories are as follows:



                                                                           DECEMBER 31
                         (in thousands)                               1999               1998
                                                                --------------------------------------

                                                                                     
     Grain                                                            $  83,796            $  91,218
     Agricultural fertilizer and supplies                                17,766               27,127
                                                                --------------------------------------
         Agriculture                                                    101,562              118,345
     Processing                                                          28,386               22,428
     Manufacturing                                                       17,365               16,039
     Retail                                                              28,418               25,863
     Other                                                                2,592                2,315
                                                                --------------------------------------
                                                                      $ 178,323            $ 184,990
                                                                ======================================


4. PROPERTY, PLANT AND EQUIPMENT

The components of property, plant and equipment are as follows:



                                                                            DECEMBER 31
                         (in thousands)                               1999                1998
                                                                ----------------------------------------

                                                                                     
     Land                                                             $  12,237            $  12,095
     Land improvements and leasehold improvements                        27,266               26,056
     Buildings and storage facilities                                    91,374               88,818
     Machinery and equipment                                            118,872              112,561
     Software                                                             3,555                3,258
     Construction in progress                                             8,895                3,059
                                                                ----------------------------------------
                                                                        262,199              245,847
     Less allowances for depreciation and amortization                  159,542              153,898
                                                                ----------------------------------------
                                                                      $ 102,657            $  91,949
                                                                ========================================


5. ASSET IMPAIRMENT CHARGE

Based upon an assessment of historical and projected operating results, the
Company determined in 1997 that the carrying value of certain retail store
assets were impaired under the criteria defined in FASB Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of." As a result, the Company recorded a pretax impairment charge of
$1.1 million ($.7 million after tax or $.09 per share) to write down the
carrying value of these assets to their estimated fair value. Fair value was
estimated through market price comparisons for similar assets.


                                                                              25
   26


6. BANKING AND CREDIT ARRANGEMENTS

The Company has available lines of credit for unsecured short-term debt with
banks aggregating $175 million. The credit arrangements, the amounts of which
are adjusted from time to time to meet the Company's needs, do not have
termination dates but are reviewed at least annually for renewal. The terms of
certain of the lines of credit provide for annual commitment fees.

The following information relates to borrowings under short-term lines of
credit.



                                                               YEAR ENDED DECEMBER 31
                                                   ---------------------------------------------------
  (in thousands, except for interest rates)           1999             1998              1997
                                                   ---------------------------------------------------

                                                                                  
Maximum amount borrowed                                  $110,500         $94,100          $110,500
Average daily amount borrowed (total of daily
   borrowings divided by number of days in
   year)                                                   81,042          57,134            51,237
Average interest rate (computed by dividing
   interest expense by average daily amount
   borrowed)                                             5.70%             5.92%            5.98%


7. LONG-TERM DEBT



Long-term debt consists of the following:
                                                                                DECEMBER 31
                 (in thousands, except percentages)                        1999             1998
                                                                       ----------------------------------

                                                                                         
  Note payable under revolving line of credit                                 $25,000          $25,500
  Note payable, 7.8%, payable $398 quarterly, due 2004                         10,120           11,712
  Notes payable, variable rate (7.3% at December 31, 1999),
     payable $336 quarterly, due 2002                                           6,391            7,737
  Other notes payable                                                             249              762
  Industrial development revenue bonds:
     Variable rate (5.7% at December 31, 1999), due 2019                        4,650               --
     6.5%, due 1999                                                                --            1,000
     Variable rate (5.7% at December 31, 1999), payable $882
       annually through 2004                                                    3,707            4,588
     Variable rate (6.0% at December 31, 1999), due 2025                        3,100            3,100
  Debenture bonds, 6.3% to 8.7%, due 2000 through 2009                         25,012           23,049
  Other bonds, 4% to 10%                                                           57              435
                                                                       ----------------------------------
                                                                               78,286           77,883
  Less current maturities                                                       4,159            6,318
                                                                       ----------------------------------
                                                                              $74,127          $71,565
                                                                       ==================================



                                                                              26

   27


The Company has a $40 million revolving line of credit with a bank that bears
interest based on the LIBOR rate (effective rate of 6.7% at December 31, 1999).
The revolving line of credit expires on July 1, 2001.

The notes payable due 2002 and 2004, and the industrial development revenue
bonds are collateralized by first mortgages on certain facilities and related
equipment with a book value of approximately $32.8 million.

The various underlying loan agreements, including the Company's revolving credit
line, contain certain provisions that require the Company to, among other
things, maintain minimum working capital of $32 million and net equity (as
defined) of $43 million, limit the addition of new long-term debt, limit its
unhedged grain position to 2 million bushels, and restrict the amount of
dividends. The Company was in compliance with these covenants at December 31,
1999.

The aggregate annual maturities of long-term debt, including sinking fund
requirements, are as follows: 2000--$4 million; 2001--$32 million; 2002--$11
million; 2003--$9 million; 2004--$7 million and $15 million thereafter.

Interest paid (including interest on short-term lines of credit) amounted to $9
million in 1999, 1998 and 1997.

The Company has interest rate contracts to manage interest rate risk on
short-term borrowings converting variable interest rates to short-term fixed
rates, consistent with projected borrowing needs. At December 31, 1999, the
Company has a short-term interest rate swap agreement with a total notional
amount of $10 million. The interest rate swap expires in February 2000 and
converts variable interest rates to a fixed rate of 5.68%. The Company purchased
a short-term interest rate cap in 1999 with a total notional amount of $10
million to hedge short-term borrowing costs. The cap expires in April, 2000 and
caps interest rates at 6.08%

The Company entered into a long-term interest rate swap in December 1996 to
convert its variable rate note payable to a fixed rate of 6.84%. This swap
expires in October 2002. The notional amount of this swap equals the outstanding
balance of the long-term note and amortizes in the same manner as the note
principal. The Company entered into treasury rate locks in 1997 and 1998 to
hedge the interest component on lease transactions that closed in 1998 and 1999.
There are currently no open treasury rate locks. The Company entered into a
long-term interest rate cap in December 1999 with an initial notional amount of
$19.4 million to hedge the interest rate component of a lease transaction. The
notional amount on this cap amortizes monthly to approximate the reduction in
the underlying long-term lease obligation. The effect of long-term and
short-term interest rate contracts on interest expense is not significant.


                                                                              27

   28


8. INCOME TAXES



Income tax expense (credit) consists of the following:

                                                            YEAR ENDED DECEMBER 31
              (in thousands)                         1999             1998             1997
                                                ---------------- --------------- ------------------
                                                                               
Current:
   Federal                                               $2,766         $4,919          $1,728
   State and local                                          (40)            31             (25)
                                                ---------------- --------------- ------------------
                                                          2,726          4,950           1,703

Deferred:
   Federal                                                  718         (1,415)            393
   State and local                                          136           (281)             85
                                                ---------------- --------------- ------------------
                                                            854         (1,696)            478
                                                ---------------- --------------- ------------------
Total:
   Federal                                                3,484          3,504           2,121
   State and local                                           96           (250)             60
                                                ---------------- --------------- ------------------
                                                         $3,580         $3,254          $2,181
                                                ================ =============== ==================


A reconciliation from the statutory U.S. federal tax rate of 35% to the
effective tax rate is as follows:




                                                                     1999           1998          1997
                                                                   -------------- ------------- -------------
                                                                                           
Statutory U.S. Federal tax rate                                        35.0%          35.0%         35.0%
Increase (decrease) in rate resulting from:
  Effect of commissions paid to foreign sales corporation              (5.3)         (10.3)         (1.4)
  State and local income taxes net of related federal taxes             0.5            0.4           0.6
  Other (net)                                                          (0.3)          (0.1)          0.7
                                                                   -------------- ------------- -------------
Effective tax rate                                                     29.9%          25.0%         34.9%
                                                                   ============== ============= =============


In 1998, the Company refined its method for calculating commissions payable to
its foreign sales corporation as provided under current regulations of the
Internal Revenue Service. As a result of this refinement in calculation, the
Company reduced its federal income tax liability for 1997 and 1996 by
approximately $.5 million and $.3 million, respectively. These reductions are
reflected in 1998 income taxes as an increased effect of commissions paid to its
foreign sales corporation.

Income taxes paid in 1999, 1998 and 1997 were $4.3 million, $4.0 million, and
$4.1 million.



                                                                              28

   29

Significant components of the Company's deferred tax liabilities and assets are
as follows:



                                                                                          DECEMBER 31
                               (in thousands)                                          1999             1998
                                                                                  ---------------- ----------------
                                                                                               
Deferred tax liabilities:
  Tax depreciation in excess of book depreciation                                     $(10,629)      $ (8,968)
  Prepaid employee benefits                                                             (2,279)        (2,122)
  Deferred income                                                                         (709)          (570)
  Other                                                                                   (454)          (408)
                                                                                  ---------------- ----------------
                                                                                       (14,071)       (12,068)
Deferred tax assets:
  Employee benefits accrual                                                              3,832          3,366
  Deferred income                                                                        2,795          1,776
  Allowance for doubtful accounts and notes receivable                                   1,778          1,636
  Inventory reserve                                                                      1,474          1,337
  Investments                                                                              660            495
  Other                                                                                    431            762
                                                                                  ---------------- ----------------
                                                                                        10,970          9,372
                                                                                  ---------------- ----------------
Net deferred tax liability                                                            $ (3,101)      $ (2,696)
                                                                                  ================ ================


9. STOCK COMPENSATION PLANS

The Company has elected to account for its two stock compensation plans using
the recognition and measurement principles of Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), and
related Interpretations because the alternative fair value accounting provided
for under FASB Statement No. 123, "Accounting for Stock-Based Compensation,"
("Statement 123") requires use of option valuation models that were not
developed for use in valuing employee stock options. With the exception of the
restricted shares described below, no compensation expense is recognized for
either plan under APB 25, because the exercise price of the Company's stock
options equaled the market price of the underlying stock on the date of grant..

The Amended and Restated Long-Term Performance Compensation Plan (the "LT Plan")
authorizes the Board of Directors to grant options and share awards to employees
and outside directors for up to 1,400,000 common shares of the Company. Options
granted under the LT Plan have a maximum term of 10 years. Options granted to
outside directors have a fixed term of five years and vest after one year.
Options granted to management personnel under the LT Plan have a five-year term
and vest 40% immediately, 30% after one year and the remaining 30% after two
years.

The LT Plan also permits awards of restricted stock. The Company issued 20,980
and 17,445 restricted shares during 1999 and 1998, respectively, of which 27,855
remain outstanding at December 31, 1999. These shares carry voting and dividend
rights; however, sale of the shares is restricted prior to vesting. Shares
issued under the plan were recorded at their fair value on the grant date with a
corresponding charge to shareholders' equity representing the unearned portion
of the award. The unearned portion is being amortized as compensation expense on
a straight-line basis over the related vesting period. Compensation expense
related to this plan amounted to $156 thousand and $20 thousand during 1999 and
1998, respectively.


                                                                              29

   30

Certain Company executives and outside directors have elected to receive a
portion of their cash compensation in stock options and/or restricted stock
issued under the LT Plan. These options and restricted stock vest immediately.
The options have a ten-year term. There were 57,958 and 50,756 options issued in
lieu of cash compensation in 1998 and 1997, respectively. There were 2,169 and
3,531 restricted shares issued in lieu of cash compensation in 1999 and 1998,
respectively.

The Company's Employee Share Purchase Plan (the "ES Plan") allows employees to
purchase common shares through payroll withholdings. The ES Plan also contains
an option component. The share purchase price is the lower of the market price
at the beginning or end of the year. The Company records a liability for
withholdings not yet applied towards the purchase of common stock.

Pro forma information regarding net income and earnings per share required by
Statement 123 is determined as if the Company has accounted for its employee
stock options granted under the fair value method of that Statement. The fair
value of each option grant is estimated at the date of grant using a
Black-Scholes option pricing model with the following weighted average
assumptions by year.



                                                             1999             1998              1997
                                                          --------------- ------------------ ----------------
                                                                                            
      LONG TERM PERFORMANCE COMPENSATION PLAN
Risk free interest rate                                           4.58%           5.61%              6.22%
Dividend yield                                                    1.73%           1.79%              1.33%
Volatility  factor of the  expected  market price of
   the Company's common shares                                     .313            .266               .272
Expected life for the options (in years)                          5.00            6.43               6.49

            EMPLOYEE SHARE PURCHASE PLAN
Risk free interest rate                                           4.58%           5.46%              6.08%
Dividend yield                                                    1.73%           1.80%              1.35%
Volatility  factor of the  expected  market price of
   the Company's common shares                                     .313            .266               .272
Expected life for the options (in years)                          1.00            1.00               1.00


For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period. The Company's pro
forma information follows (in thousands, except for per share information):



                                                    1999               1998               1997
                                                 ---------------- ------------------- -----------------
                                                                                      
Pro forma net income                                      $7,936           $9,348              $3,700
Pro forma earnings per share:
    Basic                                                 $.99            $1.16                $.45
    Diluted                                               $.98            $1.15                $.45




                                                                             30

   31

A summary of the Company's stock option activity, and related information for
the years ended December 31 follows (in thousands, except for prices):



                                                               LONG TERM PERFORMANCE COMPENSATION PLAN
                                      --------------------------------------------------------------------------------------------
                                                 1999                           1998                            1997
                                      ------------------------------- ------------------------------ -----------------------------
                                                      WEIGHTED                       WEIGHTED                         WEIGHTED
                                                      AVERAGE                         AVERAGE                         AVERAGE
                                                      EXERCISE                       EXERCISE                         EXERCISE
                                       SHARES          PRICE           SHARES          PRICE          SHARES           PRICE
                                      ------------- ----------------- ------------- ---------------- -------------- --------------
                                                                                                         
Outstanding at beginning of year          499              $8.89          305             $8.85           137              $8.60
Granted / subscribed                      183              11.56          202              8.93           170               9.05
Exercised                                  (6)              9.00           (3)             8.76            --                 --
Expired/forfeited                          (5)             11.30           (5)             8.63            (2)              8.60
                                      ------------- ----------------- ------------- ---------------- -------------- --------------
Outstanding at end of year                671              $9.60          499             $8.89           305              $8.85
                                      ============= ================= ============= ================ ============== ==============


Options available for grant at December 31, 1999                  684
Options price range at December 31, 1999             $8.60 TO $12.375
Weighted average remaining contractual life                      3.52
Weighted average fair value of options granted
   during 1999                                                  $3.44
Options exercisable at December 31, 1999                          519
Weighted average exercise price of options
   exercisable at December 31, 1999                             $9.23



                                                                     EMPLOYEE SHARE PURCHASE PLAN
                                      -------------------------------------------------------------------------------------------
                                                 1999                            1998                            1997
                                      ------------------------------- -------------------------------- --------------------------
                                                      WEIGHTED                        WEIGHTED                        WEIGHTED
                                                      AVERAGE                          AVERAGE                         AVERAGE
                                                      EXERCISE                        EXERCISE                        EXERCISE
                                       SHARES          PRICE           SHARES           PRICE           SHARES          PRICE
                                      ------------- ----------------- ------------- ------------------ ------------- ------------
                                                                                                       
Outstanding at beginning of year           36             $8.875           47              $8.875            49          $8.60
Granted / subscribed                       43              8.250           38               8.875            52           8.875
Exercised                                 (36)             8.875          (47)              8.875           (49)          8.60
Expired                                    (4)             8.250           (2)              8.875            (5)          8.875
                                      ------------- ----------------- ------------- ------------------ ------------- ------------
Outstanding at end of year                 39             $8.250           36              $8.875            47          $8.875
                                      ============= ================= ============= ================== ============= ============


Options available for grant at December 31, 1999                   129
Options price at December 31, 1999                               $8.25
Weighted average fair value of options granted
   during 1999                                                   $1.50
Options exercisable at December 31, 1999                            39


                                                                              31

   32

10. LEASES AND RELATED COMMITMENTS

The Company leases certain equipment and real property under operating leases,
including railcars. Many of the Company's leasing arrangements provide for
renewals and purchase options, including a majority of the railcar leases.
Rental expense and rental income under operating leases was as follows:



               (in thousands)                        1999              1998               1997
                                                  -----------------------------------------------------

                                                                                       
Rental expense - railcars                                $5,405             $8,883              $7,160
Rental expense - other                                    5,558              4,522               4,819
                                                  -----------------------------------------------------
Total rental expense                                    $10,963            $13,405             $11,979
                                                  =====================================================

Rental income - railcars                                 $8,639            $10,552              $8,555
Rental income - other                                        69                 69                  69
                                                  -----------------------------------------------------
Total rental income                                      $8,708            $10,621              $8,624
                                                  =====================================================


At December 31, 1999, the Company's property, plant and equipment included
railcars with a cost of $8.8 million and accumulated depreciation of $1.6
million that were held for leasing purposes.

Future minimum rentals for all noncancelable operating leases, for which the
Company is liable, and future rental income from noncancelable subleases are as
follows:



           (in thousands)                   Future Minimum               Future Rental
                                                Rentals                      Income
                                         ---------------------------------------------------------
Year ended December 31
                                                                         
2000                                                 $10,851                   $ 7,365
2001                                                   9,702                     7,067
2002                                                   8,743                     6,702
2003                                                   7,865                     5,998
2004                                                   5,155                     3,749
Future years                                           9,882                     8,517
                                         ---------------------------------------------------------
                                                     $52,198                   $39,398
                                         =========================================================


11. PENSION AND OTHER POSTRETIREMENT BENEFITS

The Company provides retirement benefits for substantially all of its employees
under several defined benefit and defined contribution pension plans. The
Company's expense for its defined contribution plans amounted to $1.3 million in
1999 and $1.1 million in 1998 and 1997. The Company also provides certain health
insurance benefits to employees including retirees. The Company elected to
recognize the accrued benefits earned by employees, as of January 1, 1993
(transition obligation) prospectively, which means this cost will be recognized
as a component of the net periodic postretirement benefit cost over a period of
approximately 20 years.


                                                                              32

   33


Following are the details of the defined benefit pension (Pension Benefits)
plans and postretirement benefit plan liability and funding status.



                                                                                        POSTRETIREMENT BENEFITS
                 (in thousands)                           PENSION BENEFITS
                                                         1999           1998             1999             1998
                                                      --------------- -------------- ----------------- ----------------
                                                                                               
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year                   $21,030         $16,440         $8,585           $10,294
Service cost                                                1,996           1,679            343               298
Interest cost                                               1,359           1,169            604               613
Actuarial (gains)/losses                                     (457)          2,832            426             2,555
Plan amendment                                                 --              --             --            (4,585)
Participant contributions                                      --              --             17                15
Benefits paid                                              (2,552)         (1,090)          (585)             (605)
                                                      --------------- -------------- ----------------- ----------------
Benefit obligation at end of year                          21,376          21,030          9,390             8,585

CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year             21,782          16,800             --                --
Actual return on plan assets                                4,592           3,925             --                --
Company contributions                                       2,542           2,147            568               590
Participant contributions                                      --              --             17                15
Benefits paid                                              (2,552)         (1,090)          (585)             (605)
                                                      --------------- -------------- ----------------- ----------------
Fair value of plan assets at end of year                   26,364          21,782             --                --
                                                      --------------- -------------- ----------------- ----------------

Funded status of plans (underfunded)                        4,988             752         (9,390)           (8,585)
Unrecognized net actuarial (gain) loss                     (2,884)            240          2,657             2,344
Unrecognized prior service cost                               169             195             --                --
Unrecognized net transition obligation                         --              --          1,439             1,550
Additional minimum liability                                 (407)           (244)            --                --
                                                      --------------- -------------- ----------------- ----------------
Prepaid (accrued) benefit cost                             $1,866         $   943       $ (5,294)         $ (4,691)
                                                      =============== ============== ================= ================


Amounts recognized in the consolidated balance sheets consist of:



                                                                                         POSTRETIREMENT BENEFITS
                 (in thousands)                            PENSION BENEFITS
                                                         1999            1998             1999             1998
                                                      --------------- ---------------- ---------------- ---------------
                                                                                            
Accrued expenses                                         $ (1,021)        $  (897)     $                $
                                                                                                --               --
Pension and postretirement asset (liability)                2,887           1,840           (5,294)          (4,691)
                                                      --------------- ---------------- ---------------- ---------------
Net amount recognized                                    $  1,866         $   943         $ (5,294)        $ (4,691)
                                                      =============== ================ ================ ===============


In March 1998, the Company amended its postretirement benefit plan to provide
eligible retirees the option of enrolling in a Medicare HMO. Subsequent to the
initial enrollment period, the Company re-measured its accumulated benefit
obligation incorporating the Medicare HMO enrollment and cost


                                                                              33

   34

assumptions. The $4.6 million reduction in the accumulated benefit obligation
resulting from the re-measurement reduced the unrecognized net transition
obligation.

Included in pension and postretirement benefits is $848 thousand and $262
thousand at December 31, 1999 and 1998, respectively, of deferred compensation
for certain employees who, due to Internal Revenue Service guidelines, may not
take full advantage of the Company's defined benefit plan. Assets funding this
plan are recorded at fair value in prepaid expenses.

Amounts applicable to a Company pension plan with accumulated benefit
obligations in excess of plan assets are as follows:



                         (in thousands)                                    1999                1998
                                                                      -------------------- ------------------
                                                                                                
Projected benefit obligation                                                     $1,131               $1,160
Accumulated benefit obligation and additional liability                             328                  760

Minimum liability addition                                                          163                  244
Intangible asset adjustment                                                          28                 (195)
                                                                      -------------------- ------------------
                                                                                    191                   49
Tax benefit                                                                          76                   20
                                                                      -------------------- ------------------
Other comprehensive income                                                      $   115              $    29
                                                                      ==================== ==================





                                                                                        POSTRETIREMENT
                                                          PENSION BENEFITS                 BENEFITS
                                                         1999           1998          1999          1998
                                                      --------------- -------------- ------------ -------------
                                                                                            
WEIGHTED AVERAGE ASSUMPTIONS AS OF DECEMBER 31
Discount rate                                                7.5%            6.8%          7.5%         6.8%
Expected return on plan assets                               9.0%            8.0%            --          --
Rate of compensation increases                               4.0%            4.0%            --          --
Health care cost trend rate                                   --              --           5.5%         5.0%


The health care cost trend rate of 5.5% is assumed to remain at that level.



                                                           PENSION BENEFITS                       POSTRETIREMENT BENEFITS
              (in thousands)                       1999          1998          1997           1999          1998          1997
                                                 ------------- ------------- -------------- ------------- ------------- ---------
                                                                                                        
COMPONENTS OF NET PERIODIC BENEFIT COST
Service cost                                       $1,996        $1,679        $1,536         $  343       $  298         $  302
Interest cost                                       1,359         1,169         1,000            604          613            711
Expected return on plan assets                     (1,956)       (1,422)       (1,085)            --           --             --
Amortization of prior service cost                     26            27            32             --           --             --
Recognized net actuarial loss                          32            35            20            112           31             --
Amortization of net transition obligation              --           (42)          (50)           111          175            421
                                                 ------------- ------------- -------------- ------------- ------------- ---------
Benefit cost                                       $1,457        $1,446        $1,453         $1,170       $1,117         $1,434
                                                 ============= ============= ============== ============= ============= =========



                                                                              34

   35

The assumed health care cost trend rate has a significant effect on the amounts
reported for postretirement benefits. A one-percentage-point change in the
assumed health care cost trend rate would have the following effects:



                                                                    ONE-PERCENTAGE-POINT
                (in thousands)
                                                            INCREASE                     DECREASE
                                                     ---------------------------- ---------------------------
                                                                                      
Effect on total of service  and  interest  cost
    components in 1999                                          $   197                     $   (153)
Effect on postretirement  benefit obligation as
    of December 31, 1999                                         $1,625                      $(1,301)


To partially fund self-insured health care and other employee benefits, the
Company makes payments to a trust. Assets of the trust amounted to $2.6 million
and $2.8 million at December 31, 1999 and 1998, respectively, and are included
in prepaid expenses.

12. FAIR VALUES OF FINANCIAL INSTRUMENTS

The fair values of the Company's cash equivalents, margin deposits and long and
short-term debt, approximate their carrying values since the instruments provide
for short terms to maturity and/or variable interest rates based on market
indexes. The Company's investments in affiliates are accounted for on the equity
method that approximates fair value.

The Company believes the fair value of its notes receivable, long-term notes
payable and debentures, some of which bear fixed rates and terms of five or ten
years, approximate their carrying values, based upon interest rates offered by
the Company on similar notes receivable and bonds and rates currently available
to the Company. The fair value of off-balance sheet interest rate contracts as
described in Note 7, which are not recognized in the balance sheet, is estimated
based on quoted market termination values. Fair values of these contracts amount
to an asset of $.5 million at December 31, 1999 and a liability of $.7 million
at December 31, 1998. The fair values of these interest rate contracts are
substantially offset by unrealized appreciation and depreciation in the hedged
items.

13. BUSINESS SEGMENTS

The Company has evaluated its operations in accordance with Statement of
Financial Accounting Standard No. 131 and has determined that its operations
include four reportable business segments. This determination was made primarily
on the basis of services offered and does include aggregation of operating
segments. The Agriculture segment includes grain merchandising and the operation
of terminal grain elevator facilities and the manufacture and distribution of
agricultural inputs, primarily fertilizer, to dealers and farmers. The
Processing segment includes the production and distribution of lawn care and
corncob based products. The Manufacturing segment includes the leasing,
marketing and fleet management of railcars, railcar repair and metal
fabrication. The Retail segment includes the operation of six large retail
stores and a distribution center.

Included in the Other classification are the operations of several smaller
businesses and corporate level amounts not attributable to an operating segment.
These smaller businesses include the operations of ten


                                                                              35

   36

auto service centers (a joint venture), a lawn and garden equipment sales and
service shop and the marketing of the Company's excess real estate.

The segment information below (in thousands) includes the allocation of expenses
shared by one or more 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.
Intersegment sales are made at prices comparable to normal, unaffiliated
customer sales. Operating income (loss) for each segment is based on net sales
and merchandising revenues plus identifiable other income less all identifiable
operating expenses, including interest expense for carrying working capital and
long-term assets. Capital expenditures include additions to property, plant and
equipment, software and intangible assets.



        1999              AGRICULTURE       PROCESSING    MANUFACTURING       RETAIL         OTHER            TOTAL
- ----------------------------------------------------------------------------------------------------------------------
                                                                                         
Revenues from
   external                 $640,181        $ 82,395         $ 60,082        $176,905        $ 15,178         $974,741
   customers
Inter-segment sales            3,867           1,373              969              --              --            6,209
Other income                     761             471              161             365           2,437            4,195
Interest expense
   (credit) (a)                6,036           1,720            1,132           1,705          (1,076)           9,517
Operating income
   (loss)                      6,054             (95)           4,225           2,455            (680)          11,959
Identifiable assets          183,370          58,416           31,653          59,911          43,426          376,776
Capital expenditures           8,181           6,589            3,911           2,091           1,057           21,829
Depreciation and
   amortization                5,787           1,285              764           2,398           1,048           11,282



                                                                              36

   37



         1998               AGRICULTURE      PROCESSING    MANUFACTURING       RETAIL           OTHER             TOTAL
- -------------------------------------------------------------------------------------------------------------------------
                                                                                             
Revenues from external
   customers                 $  788,133      $   73,942      $   52,324      $  170,363       $   13,960       $1,098,722
Inter-segment sales               5,753           1,001           1,073              --               --            7,827
Other income                      1,907             407             871             219            2,008            5,412
Interest expense
   (credit) (a)                   6,212           1,231             907           1,974           (1,370)           8,954
Operating income (loss)
                                  6,676           2,810           4,365           1,655           (2,500)          13,006
Identifiable assets             211,777          42,499          25,780          57,331           23,436          360,823
Capital expenditures              7,890           1,353           3,469           1,935            1,184           15,831
Depreciation and
   amortization                   5,224           1,170             454           2,714            1,013           10,575





         1997            AGRICULTURE    PROCESSING   MANUFACTURING      RETAIL           OTHER           TOTAL
- ----------------------------------------------------------------------------------------------------------------
                                                                                     
Revenues from external
   customers              $ 723,335      $  60,920      $  24,760      $ 169,907       $  14,824       $ 993,746
Inter-segment sales           3,071            940          1,202             --              --           5,213
Other income                  1,577            606            421            239           2,256           5,099
Interest expense
   (credit) (a)               6,002          1,201            589          2,163          (1,461)          8,494
Asset impairment                 --             --             --          1,121              --           1,121
Operating income
   (loss) (b)                 2,302            698          3,310           (624)            569           6,255
Identifiable assets         232,769         37,690         13,599         59,508          24,678         368,244
Capital expenditures          8,636          1,170            243          4,334           1,492          15,875
Depreciation and
   amortization               4,728          1,131            427          2,823             956          10,065


(a)  The other category of interest expense includes net interest income at the
     Company-level representing a rate differential between the interest rate on
     which interest is allocated to the operating segments and the actual rate
     at which borrowings are made.
(b)  Operating loss for the retail segment includes the impairment writedown of
     $1.1 million in 1997.

Grain sales for export to foreign markets amounted to approximately $146
million, $171 million and $177 million in 1999, 1998 and 1997, respectively.
Also in 1999, sales of rail equipment totaling $18 million were made to a
foreign customer. In each of 1999 and 1998, grain sales of $162 million were
made to an unaffiliated customer. No unaffiliated customer accounted for more
than 10% of sales and merchandising revenues in 1997.


                                                                              37

   38

CORPORATE OFFICERS

Dennis J. Addis
Vice President,
Wholesale Fertilizer Division

Christopher J. Anderson
Executive Vice President,
Strategy & Business Development

Daniel T. Anderson
President, Retail Group

Michael J. Anderson
President & Chief Executive Officer

Richard M. Anderson
President,
Processing Group

Richard P. Anderson
Chairman

Joseph C. Christen
Vice President, Human Resource Development

Dale W. Fallat
Vice President, Corporate Services

Philip C. Fox
Vice President, Corporate Planning

Charles E. Gallagher
Vice President, Personnel

Richard R. George
Vice President & Controller

Beverly J. McBride
Vice President, General Counsel & Secretary

Harold M. Reed
Vice President,
Grain Division

Martin R. Rossol
Vice President,
Farm Center Division

Rasesh H. Shah
President,
Manufacturing Group

Gary L. Smith
Vice President, Finance & Treasurer


                                                                              38

   39

BOARD OF DIRECTORS

Donald E. Anderson (3)
Director of Science, retired
The Andersons, Inc.

Michael J. Anderson (3)
President & Chief Executive Officer
The Andersons, Inc.

Richard M. Anderson (3)
President,
Processing Group
The Andersons, Inc.

Richard P. Anderson (3)
Chairman
The Andersons, Inc.

Thomas H. Anderson (3)
Chairman Emeritus
The Andersons, Inc.

John F. Barrett (2), (3)
President & Chief Executive officer
The Western & Southern Life Insurance Co.

Paul M. Kraus (3)
Attorney
Marshall & Melhorn

Donald L. Mennel (1), (3)
President & Treasurer
The Mennel Milling Company

David L. Nichols (1), (2), (3)
Chairman
Flooring America, Inc.

Dr. Sidney A. Ribeau (1), (3)
President
Bowling Green State University

Charles A. Sullivan (1), (2), (3)
Chairman & Chief Executive Officer
Interstate Bakeries Corp.

Jacqueline F. Woods (3)
President
Ameritech Ohio

(1)      Audit Committee
(2)      Compensation Committee
(3)      Nominating Committee


                                                                              39

   40


Independent Auditors
Ernst & Young LLP, Toledo, Ohio

Nasdaq Symbol
The Andersons, Inc. common shares are traded on the Nasdaq National Market tier
of The Nasdaq Stock Market under the symbol: ANDE

Shareholders
As of March 1, 1999 there were 8,166,797 shares of common stock outstanding. At
that date, there were 736 shareholders of record and approximately 2,500
shareholders for whom securities firms acted as nominees.

Investor Information

Corporate Offices
The Andersons, Inc.
480 West Dussel Drive
Maumee, Ohio 43537
419-893-5050
www.andersonsinc.com

Transfer Agent & Registrar
Harris Trust & Savings Bank
Shareholder Services Division
311 West Monroe
PO Box A-3504
Chicago, Illinois 60690-3504
312-360-5260

Form 10-K
The Andersons' 1999 Form 10-K filed in mid March 1999 with the SEC, is available
to stockholders and interested individuals without charge by writing or calling
Investor Relations.

Investor Relations
Gary Smith
Vice President, Finance & Treasurer
419-891-6417
gary_smith@andersonsinc.com

Annual Meeting
The annual shareholders' meeting of The Andersons, Inc. will be held at The
Andersons' Activities building, 1833 S. Holland-Sylvania Rd., Toledo, Ohio at
7:00 p.m. on April 20, 2000.

Our Mission

We firmly believe that our company is a powerful vehicle through which we
channel our time, talent, and energy in pursuit of the fundamental goal of
serving God by serving others.

Through our collective action we greatly magnify the impact of our individual
efforts to:

Provide extraordinary service to our customers

Help each other improve

Support our communities

Increase the value of our Company


                                                                              40

EX-21

   1



                                                                                            Exhibit 21
                          SUBSIDIARIES OF THE ANDERSONS

          SUBSIDIARY                                                    STATE OF ORGANIZATION
                                                                      
The Andersons Agriservices, Inc.                                                Illinois
(a corporation owned 100% by The Andersons, Inc.)

The Andersons AgVantage Agency, LLC                                             Ohio
(a limited liability corporation owned 100% by Metamora
         Commodity Company, Incorporated)

The Andersons ALACO Lawn, Inc.                                                  Alabama
(a corporation owned 100% by The Andersons, Inc.)

The Andersons Export Sales Corp.                                                Barbados
(a corporation owned 100% by The Andersons, Inc.)

The Andersons Investment Services Corp.                                         Ohio
(a corporation owned 100% by The Andersons, Inc.)

The Andersons Mower Center, Inc.                                                Ohio
(a corporation owned 100% by The Andersons, Inc.)

The Andersons World Tire, d.b.a. The Andersons - Tireman                        Ohio
Auto Centers (a joint venture owned 52.5% by The Andersons, Inc.)

Crop & Soil Service, Inc.                                                       Ohio
(a corporation owned 100% by The Andersons, Inc.)

Kass Products, Inc.                                                             Ohio
(a joint venture owned 50% by The Andersons, Inc.)

Metamora Commodity Company Incorporated                                         Ohio
(a corporation owned 100% by The Andersons, Inc.)

Poneto Tank Company, LLC                                                        Indiana
(a limited liability company owned 67% by The Andersons, Inc.)

Pottstown Distribution Company LLC (a limited liability company                 Pensylvania
owned 60% by The Andersons, Inc.)




                                       20

EX-23.1

   1


                                                                    EXHIBIT 23.1



                         CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration Statements
(Form S-8 No. 333-80785) pertaining to The Andersons, Inc. Amended and Restated
Long-Term Performance Compensation Plan, (Form S-8 No. 333-00233) pertaining to
The Andersons, Inc. Employee Share Purchase Plan, (Form S-8 No. 333-53137)
pertaining to The Andersons, Inc. Retirement Savings and Investment Plan and
(Form S-3 No. 333-79307) pertaining to the registration of debenture bonds of
The Andersons, Inc. of our report dated January 24, 2000, with respect to the
consolidated financial statements and schedule of The Andersons, Inc. and
subsidiaries included in the Annual Report (Form 10-K) for the year ended
December 31, 1999.


                                             /s/Ernst & Young LLP



Toledo, Ohio
March 10, 2000

EX-27

 

<ARTICLE> 5
<MULTIPLIER> 1,000

                             
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          DEC-31-1999
<PERIOD-END>                               DEC-31-1999
<CASH>                                          25,614
<SECURITIES>                                         0
<RECEIVABLES>                                   57,131
<ALLOWANCES>                                     3,980
<INVENTORY>                                    178,323
<CURRENT-ASSETS>                               268,525
<PP&E>                                         262,199
<DEPRECIATION>                                 159,542
<TOTAL-ASSETS>                                 376,776
<CURRENT-LIABILITIES>                          200,586
<BONDS>                                         74,127
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                            84
<OTHER-SE>                                      84,721
<TOTAL-LIABILITY-AND-EQUITY>                   376,776
<SALES>                                        974,741
<TOTAL-REVENUES>                               978,936
<CGS>                                          805,442
<TOTAL-COSTS>                                  805,442
<OTHER-EXPENSES>                               152,018
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                               9,517
<INCOME-PRETAX>                                 11,959
<INCOME-TAX>                                     3,580
<INCOME-CONTINUING>                              8,379
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     8,379
<EPS-BASIC>                                       1.05
<EPS-DILUTED>                                     1.03