The Andersons, Inc. Reports Record Earnings

Full-Year Net Income up 50% EPS of $1.79 vs. $1.21 in 2001

PRNewswire-FirstCall
MAUMEE, Ohio
Feb 5, 2003

The Andersons, Inc. , today reported net income of $13.3 million, or $1.79 per diluted share, for the 2002 calendar year. Both of these represented new performance records for the company. In 2001, The Andersons earned $8.9 million, or $1.21 per diluted share. Total revenues of $1.1 billion in the year just ended were $91 million higher than 2001.

Net income for the fourth quarter was $3.0 million, or $0.41 per diluted share, on revenues of $355 million. During the same three-month period of 2001, revenues were $307 million, and net income amounted to $4.3 million, or $0.59 per diluted share.

The company's Agriculture Group achieved an operating income of $19 million for the year, trailing its best year ever, 2001, by $0.8 million. With a drought affecting grain production in the region this past summer, fewer bushels were delivered to the group's elevators this year, and earnings from storing grain were lower than they were during 2001. Margins on grain sales remained strong, however, and the group continued to benefit from a marketing agreement that covers certain of the company's grain facilities. Plant nutrient and industrial volume increased in 2002 with gross margins comparable to the previous year. The group's farm centers applied fertilizer and other crop production inputs on more acres than in 2001 and again achieved a modest operating profit. Early in January of 2003, the group completed a previously-announced transaction with Lansing Grain, a grain trading company, to form a new limited liability company that will serve as a platform from which to launch future growth initiatives.

The Processing Group achieved a $6.3 million bottom-line improvement in 2002, reducing the $7.6 million operating loss it experienced in 2001 to $1.3 million this year. Although volumes in the lawn fertilizer industry were negatively impacted by the unusually dry summer throughout much of the country, The Andersons' lawn business achieved a 6 percent volume increase for the year. Average gross margins also increased due to lower ingredient costs and a shift toward higher-margin control products as a result of the drought conditions. The group's other businesses, the manufacture of cob-based chemical and feed ingredient carriers, animal bedding and litter products, also achieved modest bottom-line improvements in 2002.

Although sales of railcars by the company's Rail Group declined in 2002, its marketing unit continued to acquire railcars during the year, improved the utilization rate of its railcar fleet, and increased its operating income. The operating income generated by the group's railcar repair and fabrication businesses was comparable to their 2001 performance. In total, the group reported income of $1.6 million for the year, overcoming the previous year's loss of $0.3 million. The 2001 operating loss included an impairment charge of $1.5 million.

The Retail Group achieved a 1.8 percent increase in same-store sales for the year. While the number of customers shopping in The Andersons' stores was virtually unchanged from 2001, the average amount purchased by each customer increased. The group's average gross margins were also higher while expenses remained relatively flat. As a result, its operating income more than doubled for the year, increasing from $1.9 million in 2001 to $4.0 million in 2002.

"I'm really pleased with our performance in 2002," said President and Chief Executive Officer Mike Anderson. "Although the reduction in grain storage income that we foresaw did materialize, the Agriculture Group still had a fantastic year, and our Processing, Rail and Retail groups all achieved remarkable improvement from their prior-year results. In spite of healthcare, retirement and insurance cost increases, our total operating, administrative and general expenses were no higher than they were a year ago." Anderson added that the company's 2002 net income and earnings per share represented new records for the firm.

Anderson also referenced an earlier statement issued by the company. "In early December, I indicated that we expected earnings per share of $1.50 to $1.65 for the year. Finishing the year at $1.79 per diluted share is an accomplishment for which all of our employees should be both proud and commended. In the December announcement, I also stated that the company anticipates earnings in the range of $1.15 to $1.30 for the coming year, more in line with historical averages. Although some fourth quarter grain and lawn fertilizer sales were responding to market demand that would normally occur early in the following year, it appears that the strong finish we achieved in 2002 will not materially impair our ability to achieve the projected 2003 earnings."

"The company's cash flow was very good," added Vice President Finance & Treasurer Gary Smith. "Our strong earnings this year resulted in an EBITDA of $44.0 million, $6.2 million better than 2001. Excluding interest associated with carrying grain inventories, EBITDA amounted to $40.6 million, up $6.9 million from the prior year, an improvement of 20 percent. Working capital grew by $5.6 million, the current ratio improved, spending on plant and equipment was relatively modest, and long-term debt was reduced. In short, the company's balance sheet became even stronger."

The company will host a webcast on Thursday, February 6, 2003 at 11:00 A.M. EST, to discuss its 2002 performance and 2003 outlook. The webcast can be accessed under "Financial Information" on its website at www.andersonsinc.com or at www.firstcallevents.com/service/ajwz372929469gf12.html .

The Andersons, Inc. is a respected leader and dominant regional player in grain merchandising and agricultural fertilizer distribution. Its strong position in these businesses has allowed the company to diversify into lawn fertilizer production, rail equipment leasing, and general merchandise retailing. The company has been in operation since 1947.

This release contains forward-looking statements. These statements involve risks and uncertainties that could cause actual results to differ materially. Without limitation, these risks include economic, weather and regulatory conditions, competition, and the risk factors set forth from time to time in the company's filings with the Securities and Exchange Commission.

  The Andersons, Inc. is located on the Internet at www.andersonsinc.com


                             The Andersons, Inc.
                      Consolidated Statements of Income

                                       Three Months ended     Year ended
                                         December 31          December 31
  (in thousands, except for per
   share amounts)                      2002      2001        2002      2001

  Sales and merchandising revenues $355,183  $307,038  $1,075,834  $984,627
  Cost of sales and merchandising
   revenues                         309,385   262,382     910,458   825,282
  Gross profit                       45,798    44,656     165,376   159,345

  Operating, administrative and
   general expenses                  39,095    37,816     139,471   139,685
  Interest expense                    2,484     2,626       9,812    11,570
  Other income/Gains:
    Other income                      1,075     1,314       3,439     3,503
    Gain on involuntary conversion      302       -           302       338

  Income before income taxes and
   cumulative effect
    of accounting change              5,596     5,528      19,834    11,931
  Income taxes                        2,562     1,225       6,515     2,889
  Income before cumulative effect
   of accounting change               3,034     4,303      13,319     9,042
  Cumulative effect of accounting
   change, net of income tax
   benefit                                -         -           -      (185)
  Net income                         $3,034    $4,303     $13,319    $8,857

  Per common share:
        Basic earnings                $0.42     $0.60       $1.83     $1.22
        Diluted earnings              $0.41     $0.59       $1.79     $1.21
        Dividends paid               $0.065    $0.065      $0.260    $0.260

  Weighted average shares
   outstanding-basic                  7,227     7,227       7,283     7,281
  Weighted average shares
   outstanding-diluted                7,434     7,321       7,429     7,316

               EBITDA
  Income before income taxes                              $19,834   $11,931
  Depreciation and amortization                            14,314    14,264
  Interest                                                  9,812    11,570
  EBITDA                                                   43,960    37,765
  Interest to carry grain inventories                      (3,398)   (4,065)
  EBITDA (net of interest to carry
   grain inventories)                                     $40,562   $33,700


                            The Andersons, Inc.
                         Consolidated Balance Sheets
                                 (Unaudited)

                                               December 31       December 31
             (in thousands)                       2002              2001
  Assets
  Current assets:
    Cash and cash equivalents                     $6,095            $5,697
    Accounts receivable (net) and
     margin deposits                              59,800            54,836
    Inventories                                  256,275           238,291
    Other current assets                          15,716            27,849
  Total current assets                           337,886           326,673

  Other assets                                     6,763             6,300
  Railcar assets leased to others (net)           26,399            26,102
  Property, plant and equipment (net)             92,939            95,001
                                                $463,987          $454,076

  Liabilities and shareholders' equity
  Current liabilities:
    Notes payable                                $70,000           $82,600
    Other current liabilities                    187,056           168,845
  Total current liabilities                      257,056           251,445

  Deferred items, long-term liabilities
   and minority interest                          17,819            16,381
  Long-term debt                                  84,272            91,316
  Shareholders' equity                           104,840            94,934
                                                $463,987          $454,076


                               Segment Data

  Quarter ended December 31, 2002        Agriculture  Processing    Rail

  Revenues from external customers        $279,153     $20,585     $5,412
  Other income/expense                         513         149        (16)
  Gain on involuntary conversion
                                          $279,666     $20,734     $5,396

  Operating income (loss)                   $5,696     $(2,269)      $310

  Quarter ended December 31, 2001
  Revenues from external customers        $232,217     $14,699    $10,199
  Other income                                 364          27        235
                                          $232,581     $14,726    $10,434

  Operating income (loss)                   $6,380     $(3,444)      $856

  Year ended December 31, 2002
  Revenues from external customers        $761,575    $114,315    $18,747
  Other income                               1,340         501         41
  Gain on involuntary conversion
                                          $762,915    $114,816    $18,788

  Operating income (loss)                  $18,986     $(1,322)    $1,563

  Year ended December 31, 2001
  Revenues from external customers        $662,790    $112,827    $31,061
  Other income                               1,196         300        248
  Gain on involuntary conversion               338         -          -
                                          $664,324    $113,127    $31,309

  Operating income (loss)                  $19,765     $(7,654)     $(349)


                                 Segment Data

  Quarter ended December 31, 2002           Retail      Other       Total

  Revenues from external customers         $50,033       $-        $355,183
  Other income/expense                         138        291         1,075
  Gain on involuntary conversion                          302           302
                                           $50,171       $593      $356,560

  Operating income (loss)                   $1,495       $364        $5,596

  Quarter ended December 31, 2001
  Revenues from external customers         $49,923       $-        $307,038
  Other income                                 153        535         1,314
                                           $50,076       $535      $308,352

  Operating income (loss)                   $1,782       $(46)       $5,528

  Year ended December 31, 2002
  Revenues from external customers        $181,197       $-      $1,075,834
  Other income                                 685        872         3,439
  Gain on involuntary conversion                          302           302
                                          $181,882     $1,174    $1,079,575

  Operating income (loss)                   $4,003    $(3,396)      $19,834

  Year ended December 31, 2001
  Revenues from external customers        $177,949       $-        $984,627
  Other income                                 618      1,141         3,503
  Gain on involuntary conversion               -          -             338
                                          $178,567     $1,141      $988,468

  Operating income (loss)                   $1,868    $(1,699)      $11,931

SOURCE: The Andersons, Inc.

CONTACT: Gary Smith of The Andersons, Inc., +1-419-891-6417


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