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The Andersons, Inc. Reports Strong 4th-Quarter Net Income; '98 Full Year EPS of $1.20 vs. $0.50 in '97
Expects To Show Solid Earnings Growth In 1999

The Andersons, Inc. , today announced net income of $5.2 million, or $0.63 per diluted share, for the fourth quarter of 1998, slightly below the $5.4 million, or $0.68 per diluted share, for the comparable period last year. Because of the seasonal nature of several of its businesses, the company normally generates strong revenues and income in the fourth quarter. Total revenues of $367.3 million for the period were 8.2 percent below the $400.0 million reported for the fourth quarter of 1997, primarily due to the timing of grain sales.

Net income for 1998 was $9.8 million, or $1.20 per diluted share, on revenues of $1.104 billion. In 1997, the company had revenues of $998.8 million and net income of $4.1 million, or $0.50 per diluted share. Pretax income in 1998 more than doubled from the prior year, and the company also experienced a lower effective tax rate.


The Agriculture Group operates grain elevators, wholesale fertilizer distribution facilities and retail farm centers in four eastern corn belt states. Collectively these facilities handle about 160 million bushels of grain and more than 1 million tons of dry and liquid agricultural fertilizer annually. This year, the company leased two Toledo-area grain elevators from Cargill, opened a new fertilizer distribution facility in northeast Ohio, acquired four more retail farm centers in northwest Ohio and acquired a wholesale/retail fertilizer distribution center located in Waterloo, Ind.

The Agriculture Group experienced good grain sales and revenue. Corn and soybean yields in the region were excellent although somewhat dryer than normal. Operating income for the period was lower than in the fourth quarter of 1997 because of grain-sales timing and reduced drying income. For the full year, however, grain income was up substantially as a result of increased demand for, and utilization of, the company's storage space. Its elevators have a total storage capacity of 80 million bushels.

Wholesale fertilizer sales were somewhat soft during the fourth quarter, primarily as a result of the continued cautious reaction of farmers and dealers to low grain prices. Full-year operating income increased due to improved margins and higher overall shipments during 1998. With additional locations this year, the retail farm centers achieved fourth-quarter and full- year increases in revenues, fertilizer tons and application acres, but acquisition-related expenses impacted bottom-line results.

Processing & Manufacturing

The processing division produces granular lawn care products for retailers, professional lawn-care operators and golf courses. It also produces corncob-based chemical and feed ingredient carriers, animal bedding and litter products. With lawn fertilizer volume growth and the continuing shift of cob products to higher value-added applications, this division's top- and bottom- line performances improved slightly in the fourth quarter and were significantly higher for the full year.

The group's growing and very profitable manufacturing division repairs and markets various types of railcars and operates a custom steel fabrication business. Although fourth-quarter operating income was slightly lower than in the 1997 period, the division increased its railcar fleet and achieved substantial revenue and operating income growth for the third consecutive year.


This group operates six large retail stores in Ohio and characterizes its retail concept as "The Complete Home Store" -- "with more for your home than any other store." The product offering consists of traditional home center merchandise -- plumbing, electrical, building supplies, etc. -- and includes lawn and garden products, extensive lines of housewares and domestics, pet supplies, automotive supplies, sporting goods and a unique offering in food.

Supported by heavy customer traffic late in the Christmas season, the group registered a 2.7 percent same-store sales gain for the fourth quarter. For the full year, same-store sales grew by a more modest 0.3 percent. Average gross margins were higher than 1997 levels, for both the quarter and the full year. As a result, the group's fourth-quarter and 12-month operating income showed improvement from the year-earlier performance.


According to President and Chief Executive Officer Mike Anderson, "We're really pleased with the performance achieved by our company this year. While our overall results tend to fluctuate, all three of our operating groups achieved solid income growth in 1998. As a result both net income and earnings per share more than doubled. We're very optimistic about 1999 as well. With large quantities of grain in our elevators at the present time, the outlook for storage income is very good, and the hesitancy by farmers to make late- 1998 purchases of their spring fertilizer requirements bodes well for our wholesale and retail fertilizer operations. As always, we will be watching very closely the spring planting and growing conditions in our region. We're increasing production and distribution capacity to support growth of our lawn fertilizer products, and our railcar fleet continues to expand. In retail, our stores have experienced double-digit percentage increases in same-store sales in the first several weeks of 1999. For these reasons, we expect to show solid earnings improvement in 1999."

The Andersons, Inc. recently paid a cash dividend of $0.05 per share to shareholders of record as of January 4, 1999. In 1998, the quarterly dividend was $0.04. The company has repurchased shares on the open market from time to time.

The Andersons, Inc. is a respected leader and dominant regional player in the grain industry. This strong position in its basic business has allowed the company to diversify into other agribusiness operations, several processing and manufacturing businesses, and general merchandise retailing. The company has been in operation since 1947.

This release contains forward-looking statements, including statements with respect to anticipated revenue growth, adequacy of cash flows and profitability. These statements involve risks and uncertainties that could cause actual results to differ materially, including, without limitation, economic and weather conditions in agriculture, economic conditions and competition in its retail stores' markets, risks associated with acquisitions, and the risk factors set forth from time to time in the company's filings with the Securities and Exchange Commission.

For further information regarding The Andersons free of charge via fax dial 1-800-PRO-INFO and enter company code "ANDE."

                           The Andersons, Inc.
                    Consolidated Statements of Income

                                Three Months Ended         Year Ended
                                   December 31             December 31
  (in thousands, except for
   per share amounts)            1998       1997        1998         1997
                             (unaudited) (unaudited) (unaudited) (unaudited)

  Sales and merchandising
    revenues                   $365,486   $398,576    $1,098,722   $993,746
  Other income                    1,828      1,385         5,412      5,099

    Total                       367,314    399,961     1,104,134    998,845

  Cost of sales and
    merchandising revenues      320,212    353,271       937,493    851,157

  Gross profit                   47,102     46,690       166,641    147,688
  Operating, administrative
    and general expenses         38,518     34,976       144,681    131,818
  Asset impairment charge            --      1,121            --      1,121
  Interest expense                2,457      2,176         8,954      8,494

    Total                        40,975     38,273       153,635    141,433

  Income before income taxes      6,127      8,417        13,006      6,255
  Income taxes                      949      2,991         3,254      2,181

  Net income                     $5,178     $5,426          $752     $4,074

  Per common share:
       Basic earnings             $0.64      $0.68         $1.21      $0.50

       Basic earnings before
        asset impairment             --      $0.77            --      $0.59

        Diluted earnings           $.63      $0.68         $1.20      $0.50

      Dividends paid              $0.04      $0.03         $0.16      $0.12

  Weighted average shares
    outstanding - basic           8,142      7,945         8,059      8,160

  Weighted average shares
    outstanding - diluted         8,235      7,957         8,118      8,167

                           The Andersons, Inc.
                       Consolidated Balance Sheets
                                                  December 31    December 31
  (in thousands)                                      1998          1997

  Current assets:
    Cash and cash equivalents                        $3,253        $8,278
    Accounts receivable:
    Trade accounts and notes receivables (net)       62,647        68,643
    Margin deposits                                     248           771

      Total                                          62,895        69,414
    Inventories                                     184,990       191,467
    Deferred income taxes                             4,634         1,408
    Prepaid expenses                                  5,502         4,521

  Total current assets                              261,274       275,088

  Other assets:
    Notes receivable (net) and other assets           8,435         6,333
    Investments in and advances to affiliates         1,057         1,026

      Total                                           9,492         7,359
  Property, plant and equipment (net)                90,057        85,797

      Total                                        $360,823      $368,244

  Liabilities and owners' equity
  Current liabilities:
    Notes payable                                    $7,700       $15,572
    Accounts payable for grain                       88,978       121,233
    Other accounts payable                           75,301        63,309
    Accrued expenses                                 17,079        12,973
    Current maturities of long-term debt              6,318         8,406

  Total current liabilities                         195,376       221,493

  Pension and postretirement benefits                 3,113         2,799
  Long-term debt                                     71,565        65,709
  Deferred income taxes                               7,330         5,393
  Minority interest                                     705           649
  Owners' equity                                     82,734        72,201

      Total                                        $360,823      $368,244

SOURCE: The Andersons, Inc.

Contact: Gary Smith of The Andersons, Inc., 419-891-6417; or Marilyn
Windsor of The Financial Relations Board, 312-640-6692