SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 2010

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: Common Shares

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

     Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o   No þ

     Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o    No þ

     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 þ   No o

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files. Yes þ   No o

     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. o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

     Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes o    No þ

     The aggregate market value of the registrant’s voting stock which may be voted by persons other than affiliates of the registrant was $554.1 million on June 30, 2010, computed by reference to the last sales price for such stock on that date as reported on the Nasdaq Global Select Market.

     The registrant had 18.5 million common shares outstanding, no par value, at February 9, 2011.

DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the Proxy Statement for the Annual Meeting of Shareholders to be held on May 6, 2011, are incorporated by reference into Part III (Items 10, 11, 12 and 14) of this Annual Report on Form 10-K. The Proxy Statement will be filed with the Commission on or about March 13, 2011.

 

 

PART I

Item 1. Business

Company Overview

The Andersons, Inc. (the “Company”) is a diversified company with interests in the grain, ethanol and plant nutrient sectors of U.S. agriculture, as well as in railcar leasing and repair, turf products production and general merchandise retailing. Founded in Maumee, Ohio in 1947, the Company now has operations in 16 U.S. States and Puerto Rico, plus railcar leasing interests in Canada and Mexico.

The Company has experienced significant growth during the year. The Company acquired two grain cleaning and storage facilities from O’Malley Grain, Inc. (“O’Malley”) for a purchase price of $7.8 million. O’Malley is a supplier of consistent, high quality food-grade corn to the snack food and tortilla industries with facilities in Nebraska and Illinois. In addition, the Company purchased two grain storage facilities in Kearney and Riverdale, Nebraska, and took over a third leased facility in Paxton, Nebraska from B4 Grain, Inc. for a purchase price of $35.1 million. B4 Grain buys and sells corn, soybeans and wheat. These acquisitions expanded the Company’s footprint another step westward and contributed to the increase in total storage capacity to about 107 million bushels from 101 million bushels.

In addition, the Company invested $12.6 million for a 49.9% equity stake in Iowa Northern Railway Company (“IANR”) and $0.5 million for a 49.9% equity stake in an affiliate, Zephyr Holding Company (“Zephyr”). IANR operates a 163-mile short line railroad that runs diagonally through Iowa from northwest to southeast. With a fleet of 21 locomotives and 500 railcars, IANR primarily serves agribusiness customers and moves more than 50,000 car loads per year. Zephyr is involved in the development of storage and logistics terminals designed to aid the transloading of various products including ethanol and wind turbine components.

Segment Descriptions

The Company’s operations are classified into five reportable business segments: Grain & Ethanol, Rail, Plant Nutrient, Turf & Specialty, and Retail. Each of these segments is organized based upon the nature of products and services offered. See Note 16 to the consolidated financial statements in Item 8 for information regarding business segments.

Grain & Ethanol Group

The Grain & Ethanol Group provides merchandising and services to the grain industry primarily in the U.S. Corn Belt. It also is an investor in and operator of three ethanol facilities.

Grain— The Grain Division operates grain terminals in Ohio, Michigan, Indiana, Illinois, and Nebraska with storage capacity of approximately 107 million bushels at December 31, 2010. The division sold more than 353 million bushels in the U.S. and Canada during the year. Income is earned on grain bought and sold or “put thru” the elevator, grain that is purchased and conditioned for resale, grain held to earn market value appreciation until sold and grain stored for others upon which storage fees are earned. The Grain Division also offers a number of unique grain marketing, origination and risk management services to its customers for which it collects fees.

The Chicago Mercantile Exchange (“CME”) implemented a new methodology for calculating wheat storage rates. Storage rates are no longer static but now vary with the storage rate dependent upon the price spread relationship between the various trading months. The new variable storage rates were implemented by the CME and provided a significant source of income in 2010.

In 2008, the Company renewed the five-year lease agreement and the five-year marketing agreement (“the Agreement”) with Cargill, Incorporated (“Cargill”) for Cargill’s Maumee and Toledo, Ohio grain handling and storage facilities. As part of the agreement, Cargill is given the marketing rights to grain in the Cargill-

owned facilities as well as the adjacent Company-owned facilities in Maumee and Toledo. This lease covers 8.3%, or approximately 8.9 million bushels, of the Company’s total storage space. Grain sales to Cargill totaled $269 million in 2010, and include grain covered by the Agreement as well as grain sold to Cargill via normal forward sales from locations not covered by the Agreement.

The principal grains sold by the Company are yellow corn, yellow soybeans and soft red and white wheat. Approximately 85% of the grain bushels sold by the Company in 2010 were purchased by U.S. grain processors and feeders, and approximately 15% were exported. Most of the Company’s exported grain sales are done through intermediaries while 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 of Mexico or east coast. Boat shipments are from the Port of Toledo. Grain sales are made on a negotiated basis by the Company’s merchandising staff, except for grain sales subject to the Agreement with Cargill which are made on a negotiated basis with Cargill’s merchandising staff.

The Company’s grain operations rely on forward purchase contracts with producers, dealers and country elevators to ensure an adequate supply of grain to the Company’s facilities throughout the year. The Company makes grain purchases at prices referenced to the CME. Bushels contracted for future delivery at January 31, 2011 approximated 248.1 million.

The Company competes in the sale of grain with other grain merchants, other elevator operators and farmer cooperatives that operate elevator facilities. Some of the Company’s competitors are also its customers. Competition is based primarily on price, service and reliability. Because the Company generally buys in smaller lots, its competition is generally local or regional in scope, although there are some large national and international companies that maintain regional grain purchase and storage facilities. A significant portion of grain bushels purchased and sold are done so using forward contracts.

The grain business has a seasonal component in that a large portion of the principal grains are harvested and delivered in July, October and November although the balance of the principal grains continue to be delivered to The Andersons all year long.

Fixed price purchase and sale commitments for grain and grain held in inventory expose the Company to risks related to adverse changes in market prices. The Company attempts to manage these risks by entering into exchange-traded futures and option contracts with the CME. The contracts are economic hedges of price risk, but are not designated or accounted for as hedging instruments. The CME 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 grain risk management practices are designed to reduce the risk of changing commodity prices. In that regard, such practices also limit potential gains from further changes in market prices. Profitability is primarily derived from margins on grain sold, and revenues generated from other merchandising activities with its customers (including storage and service income), not from futures and options transactions. The Company has policies that specify the key controls over its risk management practices. These policies include a description of the objectives of the programs, mandatory review of positions by key management outside of the trading function on a biweekly basis, daily position limits, daily review and reconciliation and other internal controls. 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 monitors the parties to its purchase contracts on a regular basis for credit worthiness, defaults and non-delivery.

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 or at a price where a component of the purchase price is fixed via reference to a futures price on the CME, it also enters into an offsetting sale of a futures contract on the CME. Similarly, when the Company sells grain at a fixed price, the sale is offset with the purchase of a futures contract on the CME. At the close of business each day, inventory and open purchase and sale contracts as well as open futures and option positions are marked-to-market. Gains and losses in the value of the Company’s ownership positions due to changing market prices are netted with and

generally offset in the income statement by losses and 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 CME. The amount of the margin deposit is set by the CME and varies by commodity. If the market price of a futures contract moves in a direction that is adverse to the Company’s position, an additional margin deposit, called a maintenance margin, is required by the CME. Subsequent price changes could require additional maintenance margin deposits or result in the return of maintenance margin deposits by the CME. Significant increases in market prices, such as those that occur when grain supplies are affected by unfavorable weather conditions and/or when increases in demand occur, can have an effect on the Company’s liquidity and, as a result, require it to maintain appropriate short-term lines of credit. The Company may utilize CME option contracts to limit its exposure to potential required margin deposits in the event of a rapidly rising market.

Ethanol— The Ethanol Division operates three ethanol plants for Limited Liability Companies (“LLCs”) in Indiana, Michigan, and Ohio that are collectively capable of producing 275 million gallons of ethanol. The division offers facility operations, risk management, corn origination, ethanol and distiller dried grains marketing to the LLCs it operates as well as third parties.

The ethanol LLC investments are accounted for using the equity method of accounting. The Company holds a 50.01% interest in The Andersons Albion Ethanol LLC (“TAAE”) and a 38% interest in The Andersons Clymers Ethanol LLC (“TACE”). The Company holds a 50% interest The Andersons Marathon Ethanol LLC (“TAME”) through its majority owned subsidiary The Andersons Ethanol Investment LLC (“TAEI”). A third party owns 34% of TAEI.

The Company has a management agreement with each of the LLCs. As part of these agreements, the Company runs the day-to-day operations of the plants and provides all administrative functions. The Company is separately compensated for these services. In addition to the management agreements, the Company also has entered into ethanol and distillers dried grains (“DDG”) marketing agreements in which the Company markets the ethanol and DDG produced to external customers. As compensation for these services, the Company receives a fee based on each gallon of ethanol and each ton of DDG sold. Finally, the Company has entered into corn origination agreements with each of the LLCs under which the Company originates 100% of the corn used in the production of ethanol. For this service, the Company also receives a unit based fee.

Lansing — The Company also owns 52% of the equity in Lansing Trade Group LLC (“LTG”). LTG is an established grain merchandising business which continues to increase its trading capabilities, including ethanol trading and is exposed to the some of the same risks as the Company’s grain and ethanol businesses. LTG also trades in other commodities that the Company’s grain and ethanol business does not trade in, some of which are not exchange traded. In addition, they have a separate proprietary trading business. This investment provides the Company with further opportunity to expand outside of its traditional geographic regions. This investment is accounted for under the equity method.

Sales of grain and related service and merchandising revenues totaled $1,937.7 million, $1,734.6 million and $1,944.8 million for the years ended December 31, 2010, 2009 and 2008. Sales of ethanol and related service revenue totaled $467.8 million, $419.4 million and $466.3 million in 2010, 2009 and 2008.

The Company intends to further expand its trading and direct ship operations, increase its service offerings to the ethanol industry and grow its traditional grain business through business acquisitions. The Company may make additional investments in the ethanol and other grain processing industries through joint venture agreements and by providing origination, management, logistics, merchandising and other services.

Rail Group

The Company’s Rail Group ranks eighth in fleet size among privately-owned fleets in the U.S. This group repairs, sells, manages, and leases a fleet of almost 23,000 railcars of various types. There are eight railcar repair facilities across the country. It also offers fleet management services to private railcar owners and operates a custom steel fabrication business. The Rail Group is also an investor in the short-line railroad, IANR.

The Company has a diversified fleet of car types (boxcars, gondolas, covered and open top hoppers, tank cars and pressure differential cars) and locomotives serving a broad customer base. The Company operates in the used car market — purchasing used cars and repairing and refurbishing them for specific markets and customers. The Company plans to continue to diversify its fleet both in terms of car types and industries. The Rail Group will execute its strategy through expansion of its fleet of railcars and locomotives through targeted portfolio acquisitions and open market purchases as well as strategic selling or scrapping of railcars. The Company also plans to expand its repair and refurbishment operations by adding fixed and mobile facilities.

A significant portion of our railcars and locomotives managed by the Company are included on the balance sheet as long-lived assets. The others are either in off-balance sheet operating leases (with the Company leasing railcars from financial intermediaries and leasing those same railcars to the end-users of the railcars) or non-recourse arrangements (where the Company is not subject to any lease arrangement related to the railcars, but provides management services to the owner of the railcars). The Company generally holds purchase options on most railcars owned by financial intermediaries. We are under contract to provide maintenance services for many of the railcars that we own or manage. Refer to the Off-Balance Sheet Transactions section of Management’s Discussion and Analysis for a breakdown of our railcar and locomotive positions at December 31, 2010.

In the case of our off-balance sheet railcars, the risk management philosophy of the Company is to match-fund the lease commitments where possible. Match-funding (in relation to rail lease transactions) means matching the terms of the financial intermediary funding arrangement with the lease terms of the customer where the Company is both lessee and sublessor. If the Company is unable to match-fund, it will try to get an early buyout provision within the funding arrangement to match the underlying customer lease. The Company does not attempt to match-fund lease commitments for railcars that are on our balance sheet.

Competition for railcar marketing and fleet maintenance services is based primarily on service ability, and access to both used rail equipment and third party financing. Repair and fabrication shop competition is based primarily on price, quality and location.

For the years ended December 31, 2010, 2009 and 2008, lease revenues and railcar sales in the Company’s railcar marketing business were $82.6 million, $82.5 million and $117.2 million, respectively. Sales in the railcar repair and fabrication shops were $12.2 million, $10.3 million and $16.7 million for 2010, 2009 and 2008, respectively.

Plant Nutrient Group

The Company’s Plant Nutrient Group is a leading manufacturer and distributor of agricultural plant nutrients in the U.S. Corn Belt and Florida. It operates 30 facilities in Ohio, Michigan, Indiana, Illinois, Florida, Wisconsin, Minnesota and Puerto Rico.

Wholesale — The Wholesale business manufactures, stores, and distributes about 2 million tons of dry and liquid agricultural nutrients, and pelleted lime and gypsum products primarily to agricultural farm supply dealers. The Group purchases basic nitrogen, phosphate, potassium and sulfur materials for resale and uses some of these same materials in its manufactured nutrient products.

Farm Centers — The Farm Centers offer a variety of essential crop nutrients, crop protection chemicals and seed products in addition to application and agronomic services to commercial and family farmers. Soil and tissue sampling along with global satellite assisted services provide for pinpointing crop or soil deficiencies and prescriptive agronomic advice is provided to farmer customers.

Industrial Products — The Plant Nutrient Group also manufactures and distributes a variety of industrial products throughout the U.S. and Puerto Rico including nitrogen reagents for air pollution control systems

used in coal-fired power plants, water treatment and dust abatement products, and de-icers and anti-icers for airport runways, roadways, and other commercial applications.

Storage capacity at the Company’s wholesale and farm center facilities was approximately 15.2 million cubic feet for dry nutrients and approximately 69.9 million gallons for liquid nutrients at December 31, 2010. The Company reserves 7.9 million cubic feet of its dry storage capacity and 24.5 million gallons of its liquid nutrient capacity for basic manufacturers and customers. The agreements for reserved space provide the Company storage and handling fees and are generally for one to three year terms, renewable at the end of each term. The Company also leases 0.8 million gallons of liquid fertilizer capacity under arrangements with other distributors, farm supply dealers and public warehouses where the Company does not have facilities. Sales and warehouse shipments of agricultural nutrients are heaviest in the spring and fall.

In its plant nutrient businesses, the Company competes with regional and local cooperatives wholesalers and retailers, predominantly publicly owned basic manufacturers and privately owned retailers, wholesalers and importers. Some of these competitors are also suppliers and have considerably larger resources than the Company. Competition in the nutrient business of the Company is based largely on depth of product offering, price, location and service.

For the years ended December 31, 2010, 2009 and 2008, sales and service revenues in the wholesale business totaled $509.8 million, $381.1 million and $547.8 million, respectively. Sales of crop production inputs and service revenues in the farm center business totaled $109.5 million, 110.2 million and $104.7 million in 2010, 2009 and 2008, respectively.

Turf & Specialty Group

The Turf & Specialty Group produces granular fertilizer and control products for the turf and ornamental markets. It also produces private label fertilizer and control products, and corncob-based animal bedding and cat litter for the consumer markets.

Turf Products — Proprietary professional turf care products are produced for the golf course and professional turf care markets, serving both U.S. and international customers. These products are sold both directly and through distributors to golf courses under The Andersons Golf Products^TM label and lawn service applicators. The Company also produces and sells fertilizer and control products for “do-it-yourself” application, to mass merchandisers, small independent retailers and other lawn fertilizer manufacturers and performs contract manufacturing of fertilizer and control products.

The turf products industry is seasonal with the majority of sales occurring from early spring to early summer. Principal raw materials for the turf care products are nitrogen, phosphate and potash, which are purchased primarily from the Company’s Plant Nutrient Group. Competition is based principally on merchandising ability, logistics, service, quality and technology.

The Company attempts to minimize the amount of finished goods inventory it must maintain for customers, however, because demand is highly seasonal and influenced by local weather conditions, it may be required to carry inventory that it has produced into the next season. Also, because a majority of the consumer and industrial businesses use private label packaging, the Company closely manages production to anticipated orders by product and customer.

The Company intends to focus on leveraging its position in the golf fertilizer market and its research and development capabilities to develop higher value, proprietary products.

For the years ended December 31, 2010, 2009 and 2008, sales of granular plant fertilizer and control products totaled $104.0 million, $109.5 million and $103.1 million, respectively.

Cob Products- The Company is one of a limited number of processors of corncob-based 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 corncobs are seed corn producers.

For the years ended December 31, 2010, 2009 and 2008, sales of corncob and related products totaled $19.6 million, $15.8 million and $15.8 million, respectively.

Retail Group

The Company’s Retail Group includes large retail stores operated as “The Andersons,” which are located in the Columbus and Toledo, Ohio markets. The retail concept is More for Your Home^® and the stores focus on providing significant product breadth with offerings in home improvement and other mass merchandise categories as well as specialty foods, wine and indoor and outdoor garden centers. Each store carries more than 80,000 different items, has 100,000 square feet or more of in-store display space plus 40,000 or more square feet of outdoor garden center space, and features do-it-yourself clinics, special promotions and varying merchandise displays. The Company also operates a specialty food store operated as “The Andersons Market”™ located in the Toledo, Ohio market area. The specialty food store concept has product offerings with a strong emphasis on “freshness” that features produce, deli and bakery items, fresh meats, specialty and conventional dry goods and wine. The majority of the Company’s non-perishable merchandise is received at a distribution center located in Maumee, Ohio.

The retail merchandising business is highly competitive. The Company competes with a variety of retail merchandisers, including grocery stores, home centers, department and hardware stores. Many of these competitors have substantially greater financial resources and purchasing power than the Company. 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 in the spring and during the Christmas season.

The Company also operates a sales and service facility for outdoor power equipment near one of its retail stores.

For the years ended December 31, 2010, 2009 and 2008, sales of retail merchandise including commissions on third party sales totaled $150.6 million, $161.9 million and $173.1 million respectively.

The Company intends to continue to refine its More for Your Home^® concept and focus on expense control and customer service.

Employees

The Andersons offers a broad range of full-time and part-time career opportunities. Each position in the Company is important to our success, and we recognize the worth and dignity of every individual. We strive to treat each person with respect and utilize his or her unique talents. At December 31, 2010 the Company had 1,614 full-time and 1,329 part-time or seasonal employees.

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, which include acreage control and price support programs of the USDA. For our investments in ethanol production facilities, the U.S. Government provides incentives to the ethanol blender, has mandated certain volumes of ethanol be produced and has imposed tariffs on ethanol imported from other countries. 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 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 U.S. Food and Drug Administration (“FDA”) has developed bioterrorism prevention regulations for food facilities, which require that we register our grain operations with the FDA, provide prior notice of any imports of food or other agricultural commodities coming into the United States and maintain records to be made available upon request that identifies the immediate previous sources and immediate subsequent recipients of our grain commodities.

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 facilities and could restrict the expansion of future facilities or significantly increase the cost of their operations. The Company spent approximately $1.9 million, $1.8 million and $4.1 million in both capital and expense in order to comply with these regulations in 2010, 2009 and 2008, respectively.

Available Information

Our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports are available on our Company website soon after filing with the Securities and Exchange Commission. Our Company website is http://www.andersonsinc.com. The public may read and copy any materials the Company files with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. These reports are also available at the SEC’s website: http://www.sec.gov.

Item 1A. Risk Factors

Our operations are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in this Form 10-K and could have a material adverse impact on our financial results. These risks can be impacted by factors beyond our control as well as by errors and omissions on our part. The following risk factors should be read carefully in connection with evaluating our business and the forward-looking statements contained elsewhere in this Form 10-K.

Certain of our business segments are affected by the supply and demand of commodities, and are sensitive to factors outside of our control. Adverse price movements could negatively affect our profitability and results of operations.

Our Grain & Ethanol and Plant Nutrient Groups buy, sell and hold inventories of various commodities, some of which are readily traded on commodity futures exchanges. In addition, our Turf & Specialty Group uses some of these same fertilizer commodities as base raw materials in manufacturing golf course and landscape fertilizer. Unfavorable weather conditions, both local and worldwide, as well as other factors beyond our control, can affect the supply and demand of these commodities and expose us to liquidity pressures to finance hedges in the Grain business in rapidly rising markets. In our Plant Nutrient and Turf & Specialty Groups, changes in the supply and demand of these commodities can also affect the value of inventories that we hold, as well as the price of raw materials as we are unable to effectively hedge these commodities. Increased costs of inventory and prices of raw material would decrease our profit margins and adversely affect our results of operations.

Corn — The principal raw material the ethanol LLCs use to produce ethanol and co-products, including DDG, is corn. As a result, changes in the price of corn can significantly affect our business. In general, rising corn prices will produce lower profit margins for our ethanol business. Because ethanol competes with non-corn-based fuels, we generally will be unable to pass along increased corn costs to our customers. At certain levels, corn prices may make ethanol uneconomical to use in fuel markets. The price of corn is influenced by weather conditions and other factors affecting crop yields, farmer planting decisions and general economic, market and regulatory factors. These factors include government policies and subsidies with respect to agriculture and international trade, and global and local demand and supply. The significance and relative effect of these factors on the price of corn is difficult to predict. Any event that tends to negatively affect the supply of corn, such as adverse weather or crop disease, could increase corn prices and potentially harm our share of the ethanol LLC results. The Company will attempt to lock in ethanol margins as far out as practical in order to secure reasonable returns using whatever risk management tools are available in the marketplace. In addition, we may also have difficulty, from time to time, in physically sourcing corn on economical terms due to supply shortages. High costs or shortages could require us to suspend our ethanol operations until corn is available on economical terms, which would have a material adverse effect on our operating results.

Grains — While we attempt to manage the risk associated with commodity price changes for our grain inventory positions with derivative instruments, including purchase and sale contracts, we are unable to offset 100% of the price risk of each transaction due to timing, availability of futures and options contracts and third party credit risk. Furthermore, there is a risk that the derivatives we employ will not be effective in offsetting the changes associated with the risks we are trying to manage. This can happen when the derivative and the underlying value of grain inventories and purchase and sale contracts are not perfectly matched. Our grain derivatives, for example, do not perfectly correlate with the basis pricing component of our grain inventory and contracts. (Basis is defined as the difference between the cash price of a commodity in our facility and the nearest exchange-traded futures price.) Differences can reflect time periods, locations or product forms. Although the basis component is smaller and generally less volatile than the futures component of our grain market price, significant unfavorable basis moves on a grain position as large as ours can significantly impact the profitability of the Grain & Ethanol Group and our business as a whole.

Our futures, options and over-the-counter contracts are subject to margin calls. If there is a significant movement in the commodities market, we could be required to post significant levels of margin, which would impact our liquidity. There is no assurance that the efforts we have taken to mitigate the impact of

the volatility of the prices of commodities upon which we rely will be successful and any sudden change in the price of these commodities could have an adverse affect on our business and results of operations.

Natural Gas — We rely on third parties for our supply of natural gas, which is consumed in the manufacturing of ethanol, dry wet grain, and plant nutrients. The prices for and availability of natural gas are subject to volatile market conditions. These market conditions often are affected by factors beyond our control such as higher prices resulting from colder than average weather conditions and overall economic conditions. Significant disruptions in the supply of natural gas could impair our ability to manufacture ethanol for our customers. Furthermore, increases in natural gas prices or changes in our natural gas costs relative to natural gas costs paid by competitors may adversely affect our future results of operations and financial position.

Gasoline — In addition, we market ethanol as a fuel additive to reduce vehicle emissions from gasoline, as an octane enhancer to improve the octane rating of gasoline with which it is blended and as a substitute for oil derived gasoline. As a result, ethanol prices will be influenced by the supply and demand for gasoline and our future results of operations and financial position may be adversely affected if gasoline demand or price decreases.

Potash, phosphate and nitrogen — Raw materials used by our Plant Nutrient Group include potash, phosphate and nitrogen, for which prices are volatile and driven by global and local supply and demand. Significant increases in the price of these commodities may result in lower customer demand and higher than optimal inventory levels. In contrast, reductions in the price of these commodities may create lower-of-cost-or-market inventory adjustments to inventories.

Some of our business segments operate in highly regulated industries. Changes in government regulations or trade association policies could adversely affect our results of operations.

Many of our business segments are subject to government regulation and regulation by certain private sector associations, compliance with which can impose significant costs on our business. Failure to comply with such regulations can result in additional costs, fines or criminal action.

A significant part of our operations is regulated by environmental laws and regulations, including those governing the labeling, use, storage, discharge and disposal of hazardous materials. Because we use and handle hazardous substances in our businesses, changes in environmental requirements or an unanticipated significant adverse environmental event could have a material adverse effect on our business. We cannot assure you that we have been, or will at all times be, in compliance with all environmental requirements, or that we will not incur material costs or liabilities in connection with these requirements. Private parties, including current and former employees, could bring personal injury or other claims against us due to the presence of, or exposure to, hazardous substances used, stored or disposed of by us, or contained in our products. We are also exposed to residual risk because some of the facilities and land which we have acquired may have environmental liabilities arising from their prior use. In addition, changes to environmental regulations may require us to modify our existing plant and processing facilities and could significantly increase the cost of those operations.

Grain & Ethanol — In our Grain & Ethanol Group, agricultural production and trade flows can be affected by government programs and legislation. Production levels, markets and prices of the grains we merchandise can be affected by U.S. government programs, which include acreage controls and price support programs administered by the USDA. Other examples of government policies that can have an impact on our business include tariffs, duties, subsidies, import and export restrictions and outright embargoes. Because a portion of our grain sales are to exporters, the imposition of export restrictions could limit our sales opportunities. In addition, we have invested in the ethanol industry where development has been stimulated by Federal mandates for refiners to blend ethanol and excise tax credits paid to those blenders to encourage the use of ethanol. Future changes in those mandates and tax credits can have an impact on ethanol processing margins. Furthermore, there is a risk that if the CME repealed the variable storage rates in the wheat futures contracts, there could be a negative impact on liquidity.

Rail- Our Rail Group is subject to regulation by the American Association of Railroads and the Federal Railroad Administration. These agencies regulate rail operations with respect to health and safety matters. New regulatory rulings could negatively impact financial results through higher maintenance costs or reduced economic value of railcar assets.

The Rail Group is also subject to risks associated with the demands and restrictions of the Class 1 railroads, a group of rail companies owning a high percentage of the existing rail lines. These companies exercise a high degree of control over whether private railcars can be allowed on their lines and may reject certain railcars or require maintenance or improvements to the railcars. This presents risk and uncertainty for our Rail Group and it can increase the Group’s maintenance costs. In addition, a shift in the railroad strategy to investing in new rail cars and improvements to existing railcars, instead of investing in locomotives and infrastructure, could adversely impact our business by causing increased competition and creating an oversupply of railcars. Our rail fleet consists of a range of railcar types (boxcars, gondolas, covered and open top hoppers, tank cars and pressure differential cars) and locomotives. However a large concentration of a particular type of railcar could expose us to risk if demand were to decrease for that railcar type. Failure on our part to identify and assess risks and uncertainties such as these could negatively impact our business.

Turf & Specialty — Our Turf & Specialty Group manufactures lawn fertilizers and weed and pest control products and uses potentially hazardous materials. All products containing pesticides, fungicides and herbicides must be registered with the U.S. Environmental Protection Agency (“EPA”) and state regulatory bodies before they can be sold. The inability to obtain or the cancellation of such registrations could have an adverse impact on our business. In the past, regulations governing the use and registration of these materials have required us to adjust the raw material content of our products and make formulation changes. Future regulatory changes may have similar consequences. Regulatory agencies, such as the EPA, may at any time reassess the safety of our products based on new scientific knowledge or other factors. If it were determined that any of our products were no longer considered to be safe, it could result in the amendment or withdrawal of existing approvals, which, in turn, could result in a loss of revenue, cause our inventory to become obsolete or give rise to potential lawsuits against us. Consequently, changes in existing and future government or trade association polices may restrict our ability to do business and cause our financial results to suffer.

We are required to carry significant amounts of inventory across all of our businesses. If a substantial portion of our inventory becomes damaged or obsolete, its value would decrease and our profit margins would suffer.

We are exposed to the risk of a decrease in the value of our inventories due to a variety of circumstances in all of our businesses. For example, within our Grain & Ethanol Group, there is the risk that the quality of our grain inventory could deteriorate due to damage, moisture, insects, disease or foreign material. If the quality of our grain were to deteriorate below an acceptable level, the value of our inventory could decrease significantly. In our Plant Nutrient Group, planted acreage, and consequently the volume of fertilizer and crop protection products applied, is partially dependent upon government programs and the perception held by the producer of demand for production. Technological advances in agriculture, such as genetically engineered seeds that resist disease and insects, or that meet certain nutritional requirements, could also affect the demand for our crop nutrients and crop protection products. Either of these factors could render some of our inventory obsolete or reduce its value. Within our Rail Group, major design improvements to loading, unloading and transporting of certain products can render existing (especially old) equipment obsolete. A significant portion of our rail fleet is composed of older railcars. In addition, in our Turf & Specialty Group, we build substantial amounts of inventory in advance of the season to prepare for customer demand. If we were to forecast our customer demand incorrectly, we could build up excess inventory which could cause the value of our inventory to decrease.

Our substantial indebtedness could negatively affect our financial condition, decrease our liquidity and impair our ability to operate the business.

If cash on hand is insufficient to pay our obligations or margin calls as they come due at a time when we are unable to draw on our credit facility, it could have an adverse effect on our ability to conduct our

business. Our ability to make payments on and to refinance our indebtedness will depend on our ability to generate cash in the future. Our ability to generate cash is dependent on various factors. These factors include general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Certain of our long-term borrowings include provisions that require minimum levels of working capital and equity, and impose limitations on additional debt. Our ability to satisfy these provisions can be affected by events beyond our control, such as the demand for and fluctuating price of grain. Although we are and have been in compliance with these provisions, noncompliance could result in default and acceleration of long-term debt payments.

Adoption of new accounting rules can affect our financial position and results of operations.

The Company’s implementation of and compliance with changes in accounting rules and interpretations could adversely affect its operating results or cause unanticipated fluctuations in its results in future periods. The accounting rules and regulations that the Company must comply with are complex and continually changing. The Financial Accounting Standards Board has recently introduced several new or proposed accounting standards, or is developing new proposed standards, such as International Financial Reporting Standards convergence projects, which would represent a significant change from current industry practices. Potential changes in accounting for leases, for example, will eliminate the accounting classification of operating leases, which would not only impact the way we account for leases, but may also impact our customers lease versus buy decisions and could have a negative impact on demand for our rail leases.

The Company cannot predict the impact of future changes to accounting principles or its accounting policies on its financial statements going forward.

We face increasing competition and pricing pressure from other companies in our industries. If we are unable to compete effectively with these companies, our sales and profit margins would decrease, and our earnings and cash flows would be adversely affected.

The markets for our products in each of our business segments are highly competitive. While we have substantial operations in our region, some of our competitors are significantly larger, compete in wider markets, have greater purchasing power, and have considerably larger financial resources. We also may enter into new markets where our brand is not recognized and do not have an established customer base. Competitive pressures in all of our businesses could affect the price of, and customer demand for, our products, thereby negatively impacting our profit margins and resulting in a loss of market share.

Our grain and ethanol business uses derivative contracts to reduce volatility in the commodity markets. Non-performance by the counter-parties to those contracts could adversely affect our future results of operations and financial position.

A significant amount of our grain and ethanol purchases and sales are done through forward contracting. In addition, the Company uses exchange traded and over-the-counter contracts to reduce volatility in changing commodity prices. A significant adverse change in commodity prices could cause a counter-party to one or more of our derivative contracts not to perform on their obligation.

We rely on a limited number of suppliers for certain of our raw materials and other products and the loss of one or several of these suppliers could increase our costs and have a material adverse effect on any one of our business segments.

We rely on a limited number of suppliers for certain of our raw materials and other products. If we were unable to obtain these raw materials and products from our current vendors, or if there were significant increases in our supplier’s prices, it could significantly increase our costs and reduce our profit margins.

Our investments in limited liability companies are subject to risks beyond our control.

We currently have investments in six limited liability companies. By operating a business through this arrangement, we have less control over operating decisions than if we were to own the business outright.

Specifically, we cannot act on major business initiatives without the consent of the other investors who may not always be in agreement with our ideas.

The Company may not be able to effectively integrate additional businesses it acquires in the future.

We continuously look for opportunities to enhance our existing business through strategic acquisitions. The process of integrating an acquired business into our existing business and operations may result in unforeseen operating difficulties and expenditures as well as require a significant amount of management resources. There is also the risk that our due diligence efforts may not uncover significant business flaws or hidden liabilities. In addition, we may not realize the anticipated benefits of an acquisition and they may not generate the anticipated financial results. Additional risks may include the inability to effectively integrate the operations, products, technologies and personnel of the acquired companies. The inability to maintain uniform standards, controls, procedures and policies would also negatively impact operations.

Our business involves considerable safety risks. Significant unexpected costs and liabilities would have a material adverse effect on our profitability and overall financial position.

Due to the nature of some of the businesses in which we operate, we are exposed to significant safety risks such as grain dust explosions, fires, malfunction of equipment, abnormal pressures, blowouts, pipeline ruptures, chemical spills or run-off, transportation accidents and natural disasters. Some of these operational hazards may cause personal injury or loss of life, severe damage to or destruction of property and equipment or environmental damage, and may result in suspension of operations and the imposition of civil or criminal penalties. If one of our elevators were to experience a grain dust explosion or if one of our pieces of equipment were to fail or malfunction due to an accident or improper maintenance, it could put our employees and others at serious risk.

The Company’s information technology systems may impose limitations or failures which may affect the Company’s ability to conduct its business.

The Company’s information technology systems, some of which are dependent on services provided by third-parties, provide critical data connectivity, information and services for internal and external users. These interactions include, but are not limited to, ordering and managing materials from suppliers, converting raw materials to finished products, inventory management, shipping products to customers, processing transactions, summarizing and reporting results of operations, complying with regulatory, legal or tax requirements, and other processes necessary to manage the business. The Company has put in place business continuity plans for its critical systems. However, if the Company’s information technology systems are damaged, or cease to function properly due to any number of causes, such as catastrophic events, power outages, security breaches, and the Company’s business continuity plans do not effectively recover on a timely basis, the Company may suffer interruptions in the ability to manage its operations, which may adversely impact the Company’s revenues and operating results. In addition, although the system has been refreshed periodically, the infrastructure is outdated and may not be adequate to support new business processes, accounting for new transactions, or implementation of new accounting standards if requirements are complex or materially different than what is currently in place. In addition, the Company is exploring new ERP systems, which could pose risks relating to implementation.

Item 2. Properties

The Company’s principal agriculture, retail and other properties are described below.

Agriculture Facilities

						Agricultural Fertilizer
(in thousands)		Grain Storage				Dry Storage				Liquid Storage
Location		(bushels)				(cubic feet)				(gallons)
Florida			—				134				4,021
Illinois			17,497				2,233				—
Indiana			24,489				4,207				22,364
Michigan			15,381				1,787				5,293
Minnesota			—				—				10,794
Nebraska			3,967				—				—
Ohio			46,023				6,759				9,204
Puerto Rico			—				—				3,339
Wisconsin			—				57				14,932
			107,357				15,177				69,947

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, maintenance buildings and truck scales and dumps. Approximately 92% of the total storage capacity is owned, while the remaining 8% of the total capacity is leased from third parties.

The Plant Nutrient Group’s wholesale fertilizer and farm center properties consist mainly of fertilizer warehouse and distribution facilities for dry and liquid fertilizers. The Maumee, Ohio; Champaign, Illinois; Seymour, Indiana; Lordstown, Ohio; and Walton, Indiana locations have fertilizer mixing, bagging and bag storage facilities. The Maumee, Ohio; Webberville, Michigan; Logansport, Walton and Poneto, Indiana; Wisconsin Rapids, Arena and Kaukauna, Wisconsin and all of the Florida locations also include liquid manufacturing facilities. The Company owns all dry storage facilities and owns ninety-five percent of the total liquid storage facilities. The tanks located in Puerto Rico are leased.

Retail Store Properties

Name		Location		Square Feet
Maumee Store		Maumee, OH			166,000
Toledo Store		Toledo, OH			162,000
Woodville Store (1)		Northwood, OH			120,000
Sawmill Store		Columbus, OH			159,000
Brice Store		Columbus, OH			159,000
The Andersons Market (1)		Sylvania, OH			30,000
Distribution Center (1)		Maumee, OH			245,000

The leases for the two stores and the distribution center are operating leases with several renewal options and provide for minimum aggregate annual lease payments approximating $1.4 million. In addition, the Company owns a service and sales facility for outdoor power equipment adjacent to its Maumee, Ohio retail store.

Other Properties

The Company also operates railcar repair facilities in Maumee, Ohio; Darlington, South Carolina; Macon, Georgia; Valdosta, Georgia; Bay St. Louis, Mississippi; Ogden, Utah; North Las Vegas, Nevada; and Woodland, California, and a steel fabrication facility in Maumee, Ohio.

The Company owns lawn fertilizer production facilities in Maumee, Ohio; Bowling Green, Ohio; and Montgomery, Alabama. It also owns a corncob processing and storage facility in Delphi, Indiana. The Company leases a lawn fertilizer warehouse facility in Toledo, Ohio.

The Company also owns an auto service center that is leased to its former venture partner. The Company’s administrative office building is leased under a net lease expiring in 2015. The Company owns approximately 1,233 acres of land on which the above properties and facilities are located and approximately 327 acres of farmland and land held for sale or future use.

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

Item 3. Legal Proceedings

The Company has received, and is cooperating fully with, a request for information from the United States Environmental Protection Agency (“U.S. EPA”) regarding the history of its grain and fertilizer facility along the Maumee River in Toledo, Ohio. The U.S. EPA is investigating the possible introduction into the Maumee River of hazardous materials potentially leaching from rouge piles deposited along the riverfront by glass manufacturing operations that existed in the area prior to the Company’s initial acquisition of its land in 1960. The Company has on several prior occasions cooperated with local, state and federal regulators to install or improve drainage systems to contain storm water runoff and sewer discharges along its riverfront property to minimize the potential for such leaching. Other area land owners and the successor to the original glass making operations have also been contacted by the U.S. EPA for information. No claim or finding has been asserted thus far.

The Company is also currently subject to various claims and suits arising in the ordinary course of business, which include environmental issues, employment claims, contractual disputes, and defensive counter claims. The Company accrues expenses where litigation losses are deemed probable and estimable. The Company believes it is unlikely that the results of its current legal proceedings, even if unfavorable, will be materially different from what it currently has accrued. There can be no assurance, however, that any claims or suits arising in the future, whether taken individually or in the aggregate, will not have a material adverse effect on our financial condition or results of operations.

Item 4. (Reserved)

Executive Officers of the Registrant

The information is furnished pursuant to Instruction 3 to Item 401(b) of Regulation S-K. The executive officers of The Andersons, Inc., their positions and ages (as of March 1, 2011) are presented in the table below.

								Year
Name		Position		Age				Assumed
Dennis J. Addis		President, Plant Nutrient Group			58				2000
Daniel T. Anderson		President, Retail Group and Vice President, Corporate Operations Services President, Retail Group			55				2009 1996
Michael J. Anderson		President and Chief Executive Officer			59				1999
Naran U. Burchinow		Vice President, General Counsel and Secretary			57				2005
Tamara S. Sparks		Vice President, Corporate Business /Financial Analysis Internal Audit Manager			42				2007 1999
Arthur D. DePompei		Vice President, Human Resources			57				2008
Richard R. George		Vice President, Controller and CIO			61				2002
Harold M. Reed		President, Grain & Ethanol Group			54				2000
Rasesh H. Shah		President, Rail Group			56				1999
Nicholas C. Conrad		Vice President, Finance and Treasurer Assistant Treasurer			58				2009 1996
Thomas L. Waggoner		President, Turf & Specialty Group Vice President, Sales & Marketing, Turf & Specialty Group			56				2005 2002

PART II

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

The Common Shares of The Andersons, Inc. trade on the Nasdaq Global Select Market under the symbol “ANDE.” On February 9, 2011, the closing price for the Company’s Common Shares was $44.69 per share. The following table sets forth the high and low bid prices for the Company’s Common Shares for the four fiscal quarters in each of 2010 and 2009.

		2010								2009
		High				Low				High				Low
Quarter Ended
March 31		$	35.36			$	24.59			$	18.38			$	11.00
June 30			37.99				29.90				31.88				13.24
September 30			40.16				31.28				36.82				26.48
December 31			42.44				32.01				37.56				24.00

The Company’s transfer agent and registrar is Computershare Investor Services, LLC, 2 North LaSalle Street, Chicago, IL 60602. Telephone: 312-588-4991.

Shareholders

At February 9, 2011, there were approximately 18.5 million common shares outstanding, 1,312 shareholders of record and approximately 16,000 shareholders for whom security firms acted as nominees.

Dividends

The Company has declared and paid 57 consecutive quarterly dividends since the end of 1996, its first year of trading on the Nasdaq market. Dividends paid from January 2009 to January 2011 are as follows:

Dividend		Amount
01/23/09		$	0.0850
04/22/09		$	0.0875
07/22/09		$	0.0875
10/22/09		$	0.0875
01/25/10		$	0.0875
04/22/10		$	0.0900
07/22/10		$	0.0900
10/22/10		$	0.0900
01/24/11		$	0.1100

While the Company’s objective is to pay a quarterly cash dividend, dividends are subject to Board of Director approval and loan covenant restrictions.

Equity Plans

The following table gives information as of December 31, 2010 about the Company’s Common Shares that may be issued upon the exercise of options under all of its existing equity compensation plans.

		Equity Compensation Plan Information
		(a)								Number of securities remaining
		Number of securities to be				Weighted-average				available for future issuance
		issued upon exercise of				exercise price of				under equity compensation
		outstanding options,				outstanding options,				plans (excluding securities
Plan category		warrants and rights				warrants and rights				reflected in column (a))
Equity compensation plans approved by security holders			1,039,552	(1)		$	32.18				526,708	(2)
Equity compensation plans not approved by security holders			—				—				—
Total			1,039,552			$	32.18				526,708

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

In 1996, the Company’s Board of Directors approved the repurchase of 2.8 million shares of common stock for use in employee, officer and director stock purchase and stock compensation plans. This resolution was superseded by the Board in October 2007 to add an additional 0.3 million shares. Since the beginning of this repurchase program, the Company has purchased 2.2 million shares in the open market.

Performance Graph

The graph below compares the total shareholder return on the Corporation’s Common Shares to the cumulative total return for the Nasdaq U.S. Index and a Peer Group Index. The indices reflect the year-end market value of an investment in the stock of each company in the index, including additional shares assumed to have been acquired with cash dividends, if any. The Peer Group Index, weighted for market capitalization, includes the following companies:

•		Agrium, Inc.		•		Greenbrier Companies, Inc.
•		Archer-Daniels-Midland Co.		•		The Scott’s Miracle-Gro Company
•		Corn Products International, Inc.		•		Lowes Companies, Inc.
•		GATX Corp.

The graph assumes a $100 investment in The Andersons, Inc. Common Shares on December 31, 2005 and also assumes investments of $100 in each of the Nasdaq U.S. and Peer Group indices, respectively, on December 31 of the first year of the graph. The value of these investments as of the following calendar year-ends is shown in the table below the graph.

		Base Period				Cumulative Returns
		December 31, 2005				2006				2007				2008				2009				2010
The Andersons, Inc.		$	100.00			$	197.68			$	210.09			$	78.16			$	124.29			$	176.88
NASDAQ U.S.			100.00				110.38				122.14				73.31				106.57				125.92
Peer Group Index			100.00				106.19				108.71				82.60				96.67				110.68

Item 6. Selected Financial Data

The following table sets forth selected consolidated financial data of the Company. The data for each of the five years in the period ended December 31, 2010 are derived from the consolidated financial statements of the Company. The data presented below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in Item 7, and the Consolidated Financial Statements and notes thereto included in Item 8.

		For the years ended December 31,
(in thousands)		2010				2009				2008				2007				2006
Operating results
Grain and ethanol sales and revenues (a)		$	2,405,452			$	2,153,978			$	2,411,144			$	1,498,652			$	791,207
Fertilizer, rail, retail and other sales			988,339				871,326				1,078,334				880,407				666,846
Total sales and revenues			3,393,791				3,025,304				3,489,478				2,379,059				1,458,053
Gross profit — grain & ethanol			118,490				106,804				110,954				79,367				62,809
Gross profit — fertilizer, rail, retail and other (b)			163,189				148,702				146,875				160,345				136,431
Total gross profit			281,679				255,506				257,829				239,712				199,240
Equity in earnings of affiliates			26,007				17,463				4,033				31,863				8,190
Other income, net (c)			11,652				8,331				6,170				21,731				13,914
Net income			64,881				39,566				30,097				67,428				36,347
Net income attributable to The Andersons, Inc.			64,662				38,351				32,900				68,784				36,347

(in thousands, except for per share and		For the years ended December 31,
ratios and other data)		2010				2009				2008				2007				2006
Financial position
Total assets		$	1,699,390			$	1,284,391			$	1,308,773			$	1,324,988			$	879,048
Working capital			301,815				307,702				330,699				177,679				162,077
Long-term debt (d)			263,675				288,756				293,955				133,195				86,238
Long-term debt, non-recourse (d)			13,150				19,270				40,055				56,277				71,624
Shareholders’ equity			464,559				406,276				365,107				356,583				270,175
Cash flows / liquidity
Cash flows from (used in) operations			(239,285	)			180,241				278,664				(158,395	)			(54,283	)
Depreciation and amortization			38,913				36,020				29,767				26,253				24,737
Cash invested in acquisitions / investments in affiliates			39,688				31,680				60,370				36,249				34,255
Investments in property, plant and equipment			30,897				16,560				20,315				20,346				16,031
Net investment in (proceeds from) railcars (e)			(1,748	)			16,512				29,533				8,751				20,643
EBITDA (f)			162,702				116,989				110,372				151,162				95,505
Per share data: (g)
Net income — basic			3.51				2.10				1.82				3.85				2.27
Net income — diluted			3.48				2.08				1.79				3.75				2.19
Dividends paid			0.3575				0.3475				0.325				0.220				0.178
Year-end market value			36.35				25.82				16.48				44.80				42.39
Ratios and other data
Net income attributable to The Andersons, Inc. return on beginning equity attributable to The Andersons, Inc.			16.4	%			10.9	%			9.6	%			25.4	%			22.9	%
Funded long-term debt to equity ratio (h)		0.6-to-1				0.8-to-1				0.9-to-1				0.5-to-1				0.6-to-1
Weighted average shares outstanding (000’s)			18,356				18,190				18,068				17,833				16,007
Effective tax rate			37.7	%			35.7	%			35.4	%			35.5	%			33.3	%

The following table sets forth (1) our calculation of EBITDA and (2) a reconciliation of EBITDA to our net cash flow provided by (used in) operations.

		For the years ended December 31,
(in thousands)		2010				2009				2008				2007				2006
Net income attributable to The Andersons, Inc.		$	64,662			$	38,351			$	32,900			$	68,784			$	36,347
Add:
Provision for income taxes			39,262				21,930				16,466				37,077				18,122
Interest expense			19,865				20,688				31,239				19,048				16,299
Depreciation and amortization			38,913				36,020				29,767				26,253				24,737
EBITDA			162,702				116,989				110,372				151,162				95,505
Add/(subtract):
Provision for income taxes			(39,262	)			(21,930	)			(16,466	)			(37,077	)			(18,122	)
Interest expense			(19,865	)			(20,688	)			(31,239	)			(19,048	)			(16,299	)
Realized gains on railcars and related leases			(7,771	)			(1,758	)			(4,040	)			(8,103	)			(5,887	)
Deferred income taxes			12,205				16,430				4,124				5,274				7,371
Excess tax benefit from share-based payment arrangement			(876	)			(566	)			(2,620	)			(5,399	)			(5,921	)
Equity in earnings of unconsolidated affiliates, net of distributions received			(17,594	)			(15,105	)			19,307				(23,583	)			(4,340	)
Minority interest in income (loss) of affiliates			219				1,215				(2,803	)			(1,356	)			—
Changes in working capital and other			(329,043	)			105,654				202,029				(220,265	)			(106,590	)
Net cash (used in) provided by operations		$	(239,285	)		$	180,241			$	278,664			$	(158,395	)		$	(54,283	)

The Company has included its Computation of Earnings to Fixed Charges in Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K as Exhibit 12.

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

Forward Looking Statements

The following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contains forward-looking statements which relate to future events or future financial performance and involve known and unknown risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by these forward-looking statements. You are urged to carefully consider these risks and factors, including those listed under Item 1A, “Risk Factors.” In some cases, you can identify forward-looking statements by terminology such as “may,” “anticipates,” “believes,” “estimates,” “predicts,” or the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. These forward-looking statements relate only to events as of the date on which the statements are made and the Company undertakes no obligation, other than any imposed by law, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

Executive Overview

Grain & Ethanol Group

The Grain & Ethanol Group operates grain elevators in various states, primarily in the U.S. Corn Belt. In addition to storage, merchandising and grain trading, the Group performs risk management and other services for its customers. During 2010, the Group increased its grain storage capacity by approximately 6.4 million bushels through business acquisitions and expansion at existing locations. The Group now has over 107 million bushels of storage capacity. The Group is a significant investor in three ethanol facilities located in Indiana, Michigan and Ohio with a nameplate capacity of 275 million gallons. In addition to its investment in these facilities, the Group operates the facilities under management contracts and provides grain origination, ethanol and distillers dried grains (“DDG”) marketing and risk management services for which it is separately compensated. The Group is also a significant investor in Lansing Trade Group LLC (“LTG”), an established grain merchandising business with operations throughout the country and

internationally. LTG continues to increase its capabilities, including ethanol trading, and is exposed to many of the same risks as the Company’s Grain & Ethanol Group. This investment provides the Group a further opportunity to expand outside of its traditional geographic regions.

The agricultural commodity-based business is one in which changes in selling prices generally move in relationship to changes in purchase prices. Therefore, increases or decreases in prices of the agricultural commodities that the Company deals in will have a relatively equal impact on sales and cost of sales and a minimal impact on gross profit. As a result, changes in sales for the period may not necessarily be indicative of the Group’s overall performance and more focus should be placed on changes to merchandising revenues and service income.

The ethanol industry has been impacted by the rising corn prices during the year caused by global supply and demand. Several existing factors that contribute to greater ethanol production and use are tax credits for blending corn ethanol into gasoline and tariffs that limit the importation of sugar ethanol. In addition, subsequent to year-end, the EPA approved an increase in the use of ethanol blends from 10% to 15% for light vehicle models 2001 and newer. As the high demand for corn continues into 2011, the Company will continue to monitor the volatility in corn and ethanol prices and its impact on the ethanol LLCs closely.

Rail Group

The Rail Group buys, sells, leases, rebuilds and repairs various types of used railcars and rail equipment. The Group also provides fleet management services to fleet owners and operates a custom steel fabrication business. The Group has a diversified fleet of car types (boxcars, gondolas, covered and open top hoppers, tank cars and pressure differential cars) and locomotives and also serves a wide range of customers.

During the year, the Company purchased a 49.9% equity stake in the Iowa Northern Railway Company (“IANR”) and an affiliate, Zephyr Holding Company (“Zephyr”). IANR operates a 163-mile short line railroad that runs diagonally through Iowa from northwest to southeast. With a fleet of 21 locomotives and 500 railcars, IANR primarily serves agribusiness customers and moves more than 50,000 car load per year. Zephyr is involved in the development of storage and logistics terminals designed to aid the transloading of various products including ethanol and wind turbine components.

Railcars and locomotives under management (owned, leased or managed for financial institutions in non-recourse arrangements) at December 31, 2010 were 22,475 compared to 23,804 at December 31, 2009. The Group’s average utilization rate (railcars and locomotives under management that are in lease service, exclusive of railcars managed for third party investors) has decreased from 78.1% for the year ended December 31, 2009 to 73.6% for the year ended December 31, 2010. However, the Group ended the year with an improved utilization rate of 81.7%. After registering nearly a 20% drop during all of 2009, rail traffic during all of 2010 posted gains of over 7% compared to 2009, but still remains over 12% behind 2008. We expect the upward trend to continue as the U.S. and world economies continue their recovery .

Although the Company has experienced a decline in utilization in its railcar business, due to the nature of these long-lived assets (low carrying values and 17 year average remaining useful lives), the current economic environment impacting the rail industry would have to persist on a long-term basis for the Company’s railcar assets to be impaired and the Company does not believe this will occur. The Company is optimistic about future utilization as the Group ended the year with an improved utilization rate of 81.7%. The Company also continues to evaluate its railcar portfolio to determine if it would be more cost effective to scrap certain cars rather than continue to incur storage costs. The Company is currently, and expects to continue to scrap additional railcars throughout 2011, however, the Company does not expect that this will have a significant financial impact to the Company’s results of operations.

Plant Nutrient Group

The Company’s Plant Nutrient Group is a leading manufacturer, distributor and retailer principally of agricultural plant nutrients and pelleted lime and gypsum products in the U.S. Corn Belt and Florida. It operates 30 facilities in Ohio, Michigan, Indiana, Illinois, Florida, Wisconsin, Minnesota and Puerto Rico. The Group provides warehousing, packaging and manufacturing services to basic manufacturers and other

distributors. The Group also manufactures and distributes a variety of industrial products in the U.S. including nitrogen reagents for air pollution control systems used in coal-fired power plants, water treatment products, and de-icers and anti-icers for airport runways, roadways, and other commercial applications. The major nutrient products sold by the Company principally contain nitrogen, phosphate, potassium and sulfur.

The Group saw the continuation of a tight pipeline for most major ingredients through the fourth quarter of 2010 due to high demand. Fall application for dry materials along with ammonia was significantly higher due to the early fall harvest, good weather conditions and high grain prices. It is our belief that the strong fourth quarter volume will have limited downward impact on volume in the first half of 2011. We expect 2011 to be a good volume year as the demand for nutrients is high and acres planted are expected to increase. Margins should be strong as well as a result of tight supplies of the basic nutrients and strong price trends.

Turf & Specialty Group

The Turf & Specialty Group produces granular fertilizer products for the professional lawn care and golf course markets. It also sells consumer fertilizer and control products for “do-it-yourself” application, to mass merchandisers, small independent retailers and other lawn fertilizer manufacturers and performs contract manufacturing of fertilizer and control products. The Group is one of a limited number of processors of corncob-based 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 turf products industry is highly seasonal, with the majority of sales occurring from early spring to early summer. Corncob-based products are sold throughout the year.

The Group continues to see positive results from its focus on proprietary products and expanded product lines. The Group has spent considerable time marketing the A+ program which will boost liquid and dispersible granular sales and is planning several other productivity initiatives in operations, including automation, which will likely lead to continued growth.

Retail Group

The Retail Group includes large retail stores operated as “The Andersons” and a specialty food market operated as “The Andersons Market”. The Group also operates a sales and service facility for outdoor power equipment. The retail concept is More for Your Home ^® and the conventional retail stores focus on providing significant product breadth with offerings in home improvement and other mass merchandise categories, as well as specialty foods, wine and indoor and outdoor garden centers.

The retail business is highly competitive. The Company competes with a variety of retail merchandisers, including home centers, department and hardware stores, as well as local and national grocers. Food reset projects were completed during the year in three of the stores, which we expect will increase traffic in the stores and increase sales.

Other

The “Other” business segment of the Company represents corporate functions that provide support and services to the operating segments. The results contained within this segment include expenses and benefits not allocated back to the operating segments.

Operating Results

The following discussion focuses on the operating results as shown in the Consolidated Statements of Income with a separate discussion by segment. Additional segment information is included in Note 16 to the Company’s consolidated financial statements in Item 8.

		Year ended December 31,
		2010				2009				2008
Sales and merchandising revenues		$	3,393,791			$	3,025,304			$	3,489,478
Cost of sales			3,112,112				2,769,798				3,231,649
Gross profit			281,679				255,506				257,829
Operating, administrative and general			195,330				199,116				190,230
Interest expense			19,865				20,688				31,239
Equity in earnings of affiliates			26,007				17,463				4,033
Other income, net			11,652				8,331				6,170
Operating income before noncontrolling interest			104,143				61,496				46,563
(Income) loss attributable to noncontrolling interest			(219	)			(1,215	)			2,803
Operating income		$	103,924			$	60,281			$	49,366

Comparison of 2010 with 2009

Grain & Ethanol Group

		Year ended December 31,
		2010				2009
Sales and merchandising revenues		$	2,405,452			$	2,153,978
Cost of sales			2,286,962				2,047,174
Gross profit			118,490				106,804
Operating, administrative and general			57,301				64,643
Interest expense			8,315				9,363
Equity in earnings of affiliates			25,999				17,452
Other income, net			2,733				2,319
Operating income before noncontrolling interest			81,606				52,569
(Income) loss attributable to noncontrolling interest			(219	)			(1,215	)
Operating income		$	81,387			$	51,354

Operating results for the Grain & Ethanol Group increased $30 million over 2009. Sales of grain increased $174 million, or 10.5%, over 2009 and is the result of an 11% increase in volume. Sales of ethanol increased $80.4 million, or 20%, and is the result of an increase in the overall volume by 7 million gallons and a 16.5% increase in the average price per gallon sold. Fees for services provided to the ethanol industry increased $0.9 million, or 4.2%.

Gross profit increased $11.7 million, or 11%, for the Group. Basis income was higher than 2009 by $18.6 million due to earlier than normal 2010 harvest causing significant basis appreciation. Position income increased by $7.9 million from 2009 to 2010 primarily as a result of the growth of the ingredient trading area. The harvest occurred earlier in 2010 than 2009 and grain was drier which resulted in $11.5 million less service fees than prior year from drying and mixing services (when wet grain is received into the elevator and dried to an acceptable moisture level). In addition, the market value adjustment for customer credit exposure was $4.6 million higher for 2010 due to higher grain prices.

Operating expenses for the Group decreased $7.3 million, or 11%, from 2009. Bad debt expense decreased approximately $14.6 million due to reductions in amounts reserved for customer receivables and the net reversal of $6.7 million of reserves following the settlement of a long standing collection matter. Approximately $2.7 million of the decrease in operating expenses is the result of a decline in utilities expense due to the early and dry harvest in comparison with 2009. These expense decreases were partially offset by increases in labor, benefits, and depreciation and amortization expense due to the acquisition of O’Malley Grain during the second quarter of 2010. Performance incentives expense was also up year-over-year due to higher overall division earnings.

Interest expense for the Group decreased $1.0 million, or 11%, from 2009 due to lower rates on outstanding borrowings.

Equity in earnings of affiliates increased $8.5 million, or 49%, over 2009. Income from the Group’s investment in LTG increased $9.4 million. Income from the Group’s investment in the three ethanol LLCs decreased $1.3 million, primarily as a result of rising corn prices.

Rail Group

		Year ended December 31,
		2010				2009
Sales and merchandising revenues		$	94,816			$	92,789
Cost of sales			81,437				75,973
Gross profit			13,379				16,816
Operating, administrative and general			12,846				13,867
Interest expense			4,928				4,468
Other income, net			4,502				485
Operating income (loss)		$	107			$	(1,034	)

Operating results for the Rail Group increased $1.1 million over 2009. Sales of railcars increased $12.6 million, which includes $4.3 million related to intentional scrapping of railcars, nearly offset by leasing revenues which decreased $12.5 million. Sales relating to the repair and fabrication businesses increased $1.9 million. Gross profit for the Group decreased $3.4 million, or 20%, and is the result of more idle cars and increased storage costs during the first half of 2010 coupled with increased freight and maintenance costs, as cars were repaired and moved into service during the second half of 2010. Storage expenses for the Group increased $1.1 million in 2010 compared to 2009.

Other income increased by $4.0 million over 2009 primarily due to $2.2 million in settlements received from customers for railcars returned at the end of a lease that were not in the required operating condition. These settlements may be negotiated in lieu of a customer performing the required repairs. In addition, IANR dividends began accruing in May 2010 and amounted to approximately $1.1 million at year end.

Plant Nutrient Group

		Year ended December 31,
		2010				2009
Sales and merchandising revenues		$	619,330			$	491,293
Cost of sales			539,793				431,874
Gross profit			79,537				59,419
Operating, administrative and general			46,880				45,955
Interest expense			3,901				3,933
Equity in earnings of affiliates			8				8
Other income, net			1,298				1,755
Operating income		$	30,062			$	11,294

Operating results for the Plant Nutrient Group increased $18.8 million over its 2009 results. Sales increased $128 million, or 26%, over 2009 due to an increase in tons sold by 31% offset by a 3% decrease in average price per ton sold for the year. Volume increased almost twenty percent in the fourth quarter alone due to excellent fall application conditions and the continued restocking of the retail fertilizer pipeline. The overall margin per ton was approximately 6% higher than prior year.

Operating expenses increased $1.0 million over prior year due to incremental expenses relating to an August 2009 acquisition.

Turf & Specialty Group

		Year ended December 31,
		2010				2009
Sales and merchandising revenues		$	123,549			$	125,306
Cost of sales			96,612				99,849
Gross profit			26,937				25,457
Operating, administrative and general			23,225				20,424
Interest expense			1,604				1,429
Other income, net			1,335				1,131
Operating income		$	3,443			$	4,735

Operating results for the Turf & Specialty Group decreased $1.3 million from its 2009 results. Sales decreased $1.8 million, or 1%. Sales in the lawn fertilizer business decreased $5.6 million, or 5%, due to a 3% decrease in volume along with a 2% decrease in average price per ton sold. Sales in the cob business increased $3.7 million, or 24% as tonnage sold was up 24% over 2009. Gross profit for the Group increased $1.5 million, or 6% due to an overall increase in volume and margin.

Operating expenses for the Group increased $2.8 million, or 14%, from 2009, and is primarily related to the 2009 recognition of a pension curtailment gain that was not repeated in 2010 and more maintenance projects in 2010.

Retail Group

		Year ended December 31,
		2010				2009
Sales and merchandising revenues		$	150,644			$	161,938
Cost of sales			107,308				114,928
Gross profit			43,336				47,010
Operating, administrative and general			45,439				49,575
Interest expense			1,039				961
Other income, net			608				683
Operating (loss)		$	(2,534	)		$	(2,843	)

Operating results for the Retail Group increased $0.3 million over its 2009 results. Sales decreased $11.4 million, or 7%, from 2009 and were experienced in all of the Group’s market areas, but the majority was due to the Lima store closing in late 2009. Customer counts decreased 3% and the average sale per customer decreased by nearly 5%. Gross profit decreased $3.7 million, or 8%, due to the decreased sales as well as a slight decrease in gross margin percentage.

Operating expenses for the Group decreased $4.1 million, or 8%. As noted above, the Lima, Ohio store was closed in the fourth quarter of 2009 which contributed to the decrease in both sales and expenses year-over-year.

Other

		Year ended December 31,
		2010				2009
Sales and merchandising revenues		$	—			$	—
Cost of sales			—				—
Gross profit			—				—
Operating, administrative and general			9,639				4,652
Interest expense			78				534
Equity in earnings of affiliates			—				3
Other income, net			1,176				1,958
Operating (loss)		$	(8,541	)		$	(3,225	)

The Corporate operating loss (costs not allocated back to the business units) increased $5.3 million, or 165%, over 2009 and relates primarily to an increase in performance incentives due to favorable operating performance, an increase in charitable contributions, and increased expenses for the Company’s deferred compensation plan.

As a result of the operating performances noted above, income attributable to The Andersons, Inc. of $64.7 million for 2010 was 69% higher than the income attributable to The Andersons, Inc. of $38.4 million in 2009. Income tax expense of $39.3 million was recorded in 2010 at an effective rate of 37.7% which is an increase from the 2009 effective rate of 35.7% due primarily to the impact of Federal legislation on Medicare Part D.

Comparison of 2009 with 2008

Grain & Ethanol Group

		Year ended December 31,
		2009				2008
Sales and merchandising revenues		$	2,153,978			$	2,411,144
Cost of sales			2,047,174				2,300,190
Gross profit			106,804				110,954
Operating, administrative and general			64,643				60,281
Interest expense			9,363				18,667
Equity in earnings of affiliates			17,452				4,027
Other income, net			2,319				4,751
Operating income before noncontrolling interest			52,569				40,784
(Income) loss attributable to noncontrolling interest			(1,215	)			2,803
Operating income		$	51,354			$	43,587

Operating results for the Grain & Ethanol Group increased $7.8 million over 2008. Sales of grain decreased $234.7 million, or 12%, over 2008 and is the result of a 16% decrease in the average price per bushel sold, partially offset by a 4% increase in volume. Sales of ethanol decreased $52.5 million, or 12%, and is the result of a 15% decrease in the average price per gallon sold, partially offset by a 4% increase in volume. Services provided to the ethanol industry increased $1.0 million, or 5%.

Gross profit decreased $4.2 million, or 4%, for the Group, and is the result of decreased commodity derivative activity in the amount of $6.5 million in the Company’s majority owned subsidiary The Andersons Ethanol Investment LLC (“TAEI”) (which is 34% owned by another entity), partially offset by increased storage income as the Company had more wheat bushels in storage and had more delayed price bushels (grain that the Company has purchased but the purchase price has yet to be established) as compared to 2008. TAEI’s commodity derivatives are being used to economically hedge price risk related to The Andersons Marathon Ethanol LLCs (“TAME”) corn purchases and ethanol sales. The late wet harvest allowed the Group to significantly benefit from drying and mixing income, which is income earned when wet grain is received into the elevator and dried to an acceptable moisture level, however, this was offset by lower margins on grain sales.

Operating expenses for the Group increased $4.4 million, or 7%, over 2008. Approximately $2.5 million of this increase is the result of the two new facilities the Group acquired in 2008 (one through a purchase and the other through a leasing arrangement). Those facilities were acquired in September of 2008 and therefore the prior year expenses only include four months for those facilities compared to a full year for 2009. Another $1.2 million of the increase is due to increased cost to dry the wet grain received during the fall harvest. The remainder of the increase is spread across several expense items and are primarily

employee related costs and costs associated with growth. These expense increases were partially offset by a $2.5 million decrease in bad debt expense resulting from reserves taken in 2008 against specific customer receivables for contracts where grain was not delivered and the contracts were subsequently cancelled.

Interest expense for the Group decreased $9.3 million, or 50%, over 2008. The significant increase in commodity prices in 2008 required the Company to increase short-term borrowings to cover margin calls which was the main driver for the increased interest costs for the Group last year.

Equity in earnings of affiliates increased $13.4 million, or 333%, from 2008. Income from the Group’s investment in the three ethanol LLCs increased $16.5 million, primarily as a result of the significantly improved performance of TAME as decreasing corn and natural gas prices have improved margins for that entity. In addition, the Company’s share of income from The Andersons Albion Ethanol LLC’s business interruption claim from a fire at its facility was $1.3 million. Income from the Group’s investment in Lansing Trade Group LLC (“LTG”) decreased $3.0 million.

Rail Group

		Year ended December 31,
		2009				2008
Sales and merchandising revenues		$	92,789			$	133,898
Cost of sales			75,973				96,843
Gross profit			16,816				37,055
Operating, administrative and general			13,867				13,645
Interest expense			4,468				4,154
Other income, net			485				526
Operating (loss) income		$	(1,034	)		$	19,782

Operating results for the Rail Group decreased $20.8 million over 2008. Leasing revenues decreased $14.6 million, or 16%, due to the significant decrease in utilization. Sales of railcars decreased $20.1 million, or 74%, over 2008. With so many cars in the industry idled, there is not the demand for cars that there was in 2008 and with fewer cars on the rail lines overall, the opportunities for business in the repair and fabrication shops has significantly decreased resulting in a $6.4 million decrease in sales in that business. Gross profit for the Group decreased $20.2 million, or 55%, and is the result of the decreased sales coupled with significantly increased storage costs as many cars remain idle. Storage expenses for the Group increased $3.0 million in 2009 compared to 2008.

Operating expenses remained relatively flat year-over-year. Interest expense for the Group increased slightly.

Plant Nutrient Group

		Year ended December 31,
		2009				2008
Sales and merchandising revenues		$	491,293			$	652,509
Cost of sales			431,874				618,519
Gross profit			59,419				33,990
Operating, administrative and general			45,955				41,598
Interest expense			3,933				5,616
Equity in earnings of affiliates			8				6
Other income, net			1,755				893
Operating income (loss)		$	11,294			$	(12,325	)

Operating results for the Plant Nutrient Group increased $23.6 million over its 2008 results. Sales decreased $161.2 million, or 25%, over 2008 due to early 2008 price appreciation in fertilizer which caused the average price per ton sold for the year to be 33% higher than it was in 2009. As prices started to decline toward the end of 2008, and sales volume began to decrease, the Company was left with a large

inventory position valued higher than the market. This resulted in lower-of-cost or market and contract adjustments in the amount of $97.2 million in 2008. As a result of these significant write-downs in 2008, the Group’s 2009 gross profit is a $25.4 million improvement over the prior year. Volume also increased 12% over 2008.

Operating expenses for the Group increased $4.4 million, or 10%, over 2008 due to the added expenses from the Group’s acquisitions during 2008 and 2009. Excluding the expenses from these three businesses, expenses decreased $2.7 million, primarily in bad debt expense, uninsured losses and performance incentives.

Interest expense decreased $1.7 million, or 30%, as the drop in fertilizer prices have resulted in less borrowing needs to cover working capital.

Other income for the Group increased $0.9 million over 2008 as a result of forfeited customer prepayments.

Turf & Specialty Group

		Year ended December 31,
		2009				2008
Sales and merchandising revenues		$	125,306			$	118,856
Cost of sales			99,849				94,152
Gross profit			25,457				24,704
Operating, administrative and general			20,424				21,307
Interest expense			1,429				1,522
Other income, net			1,131				446
Operating income		$	4,735			$	2,321

Operating results for the Turf & Specialty Group increased $2.4 million over its 2008 results. Sales increased $6.5 million, or 5%. Sales in the lawn fertilizer business increased $6.4 million, or 6%, due to a 20% increase in volume, partially offset by an 11% decrease in the average price per ton sold. Sales in the cob business remained flat. Gross profit for the Group increased $0.8 million, or 3%.

Operating expenses for the Group decreased $0.9 million, or 4%, over 2008, and is primarily related to decreased pension expense as a result of the freezing of the Company’s defined benefit plan.

Retail Group

		Year ended December 31,
		2009				2008
Sales and merchandising revenues		$	161,938			$	173,071
Cost of sales			114,928				121,945
Gross profit			47,010				51,126
Operating, administrative and general			49,575				50,089
Interest expense			961				886
Other income, net			683				692
Operating (loss) income		$	(2,843	)		$	843

Operating results for the Retail Group decreased $3.7 million over its 2008 results. Sales decreased $11.1 million, or 6%, over 2008 and were experienced in all of the Group’s market areas. Customer counts decreased 2% and the average sale per customer decreased 4%. Gross profit decreased $4.1 million, or 8%, due to the decreased sales as well as a half a point decrease in gross margin percentage. As mentioned previously, the Group closed its Lima, Ohio store in the fourth quarter of 2009.

Operating expenses for the Group decreased $0.5 million, or 1%, in spite of $0.8 million in severance costs related to the closing of the Lima, Ohio store.

Other

		Year ended December 31,
		2009				2008
Sales and merchandising revenues		$	—			$	—
Cost of sales			—				—
Gross profit			—				—
Operating, administrative and general			4,652				3,310
Interest expense			534				394
Equity in earnings of affiliates			3
Other income (loss), net			1,958				(1,138	)
Operating (loss)		$	(3,225	)		$	(4,842	)

Corporate operating, administrative and general expenses (costs not allocated back to the business units) increased $1.3 million, or 41%, over 2008 and relates primarily to increased charitable contributions and increased expenses for the Company’s deferred compensation plan. These increases were partially offset by a reduction of expenses related to the Company’s defined benefit plan as a result of the pension freeze announced during the third quarter of 2009. The increase in expenses related to the deferred compensation plan is offset by increases to other income as the assets invested in the plan performed better than the prior year.

As a result of the operating performances noted above, income attributable to The Andersons, Inc. of $38.4 million for 2009 was 17% higher than the income attributable to The Andersons, Inc. of $32.9 million in 2008. Income tax expense of $21.9 million was recorded in 2009 at an effective rate of 35.7% which is an increase from the 2008 effective rate of 33.4% due primarily to certain Indiana state tax credits related to TACE that were a benefit to the Company in 2008.

Liquidity and Capital Resources

Working Capital

At December 31, 2010, the Company had working capital of $301.8 million, a decrease of about $5.9 million from the prior year. This decrease was attributable to changes in the following components of current assets and current liabilities (in thousands):

		2010				2009				Variance
Current Assets:
Cash and cash equivalents		$	29,219			$	145,929			$	(116,710	)
Restricted cash			12,134				3,123				9,011
Accounts and notes receivables, net			152,227				137,195				15,032
Margin deposits			20,259				27,012				(6,753	)
Inventories			647,189				407,845				239,344
Commodity derivative assets — current			226,216				24,255				201,961
Deferred income taxes			16,813				13,284				3,529
Prepaid expenses and other current assets			34,501				28,180				6,321
			1,138,558				786,823				351,735
Current Liabilities:
Borrowing under short-term line of credit		$	241,100				—			$	241,100
Accounts payable for grain			274,596				234,396				40,200
Other accounts payable			111,501				110,658				843
Customer prepayments and deferred revenue			78,550				56,698				21,852
Commodity derivative liabilities — current			57,621				24,871				32,750
Accrued expenses			48,851				41,563				7,288
Current maturities of long-term debt			24,524				10,935				13,589
			836,743				479,121				357,622
Working capital		$	301,815			$	307,702			$	(5,887	)

In comparison to the prior year-end, current assets increased largely as a result higher inventories and commodity derivative assets driven by rising commodity prices in the fourth quarter. Current liabilities increased primarily as a result of borrowings on our short-term line of credit. We also saw large increases in accounts payable for grain and commodity derivative liabilities due to rising commodity prices. See the discussion below on sources and uses of cash for an understanding of the significant decrease in cash from prior year.

Borrowings and Credit Facilities

On December 17, 2010, the Company entered into a restated loan agreement (“the agreement”) with several financial institutions, including U.S. Bank National Association, acting as agent. The agreement provides the Company with $513 million (“Line A) and $387 million (“Line C”) of short-term borrowing capacity. Due to the fact that we were oversubscribed on the renewal of the syndicate revolvers, the Company entered into an agreement to amend Line A, increasing the total amount of the line by an additional $92 million to $605 million subsequent to year end. The Company plans to use the lines to fund margin call requirements, as necessary, if commodity prices continue to increase into 2011.

On September 30, 2010, the Company entered into a new loan agreement with the same syndicate of banks referred to above. This agreement provides for $115 million (“Line B”) of borrowing capacity.

Total borrowing capacity for the Company under Lines A, B, and C is currently at $1.1 billion.

Sources and Uses of Cash

Operating Activities and Liquidity

The Company’s operations used cash of $239.3 million in 2010, a decrease of $419.5 million from cash provided by operations of $180.2 million in 2009. The significant amount of operating cash flows used in 2010 relates primarily to an increase in the commodity prices as noted in the discussion above on working capital.

The Company paid income taxes of $24.8 million in 2010. Income tax refunds of $24.2 million were received in 2009. The Company makes quarterly tax payments based on full-year estimated income. Through the first nine months of 2008, the Company anticipated significantly higher earnings and was making quarterly income payments accordingly. In the fourth quarter of 2008, the market price of fertilizer decreased dramatically requiring the Company to record lower-of-cost-or market adjustments on its inventory and purchase commitments in the amount of $97.2 million. The significantly decreased earnings resulted in lower income taxes due and as of December 31, 2008 the Company had over-paid its income tax liability for the year. The majority of this over-payment was refunded in the first quarter of 2009.

Investing Activities

Investing activities used $89.0 million, which is $25.6 million more than was used in 2009. The largest portion of the spending relates to business acquisitions in the amount of $39.3 million, capital spending of $30.9 million, and investment in convertible preferred securities of $13.1 million. In addition, purchases of railcars in the amount of $18.4 million nearly offset proceeds from the sale of railcars in the amount of $20.1 million.

On May 1, 2010, the Company acquired two grain cleaning and storage facilities from O’Malley Grain, Inc. for a purchase price of $7.8 million. On December 31, 2010, the Company completed the purchase of grain storage facilities in Nebraska from B4 Grain, Inc. for approximately $31.5 million. These acquisitions were another step westward for the Company and we see it as a great opportunity to be positioned along the high production area of Nebraska.

Total capital spending for 2010 on property, plant and equipment within the Company’s base business was $30.9 million, which includes $7.6 million in the Plant Nutrient Group, $10.3 million in the Grain & Ethanol Group, $2.2 million in the Turf & Specialty Group, $8.8 million in the Retail Group, $0.9 million in the Rail Group and $0.9 million in corporate purchases.

On May 25, 2010, the Company paid $13.1 million to acquire 100% of newly issued cumulative convertible preferred shares of IANR and Zephyr. As a result of this investment, the Company has a 49.9% voting interest in IANR, with dividends accruing at a rate of 14% annually whether or not declared by IANR and are cumulative in nature.

The Company expects to spend approximately $74 million in 2011 on conventional property, plant and equipment, including additions and enhancements to existing facilities, and an additional $90 million for the purchase and capitalized modifications of railcars with related sales or financings of $75 million.

Financing Arrangements

Net cash provided by financing activities was $211.6 million in 2010, compared to $52.6 million cash used by financing activities in 2009.

The Company has significant committed short-term lines of credit available to finance working capital, primarily inventories, margin calls on commodity contracts and accounts receivable. As noted above, the Company is party to a borrowing arrangement with a syndicate of banks, which was amended in December 2010, to provide the Company with $387 million and $513 million in short-term lines of credit. The Company had drawn $241.1 million on its short-term line of credit at December 31, 2010. Peak borrowing on the line of credit during 2010 and 2009 was $305.0 million and $92.7 million, respectively. Typically,

the Company’s highest borrowing occurs in the spring due to seasonal inventory requirements in the fertilizer and retail businesses, credit sales of fertilizer and a customary reduction in grain payables due to the cash needs and market strategies of grain customers.

Certain of the Company’s long-term borrowings include covenants that, among other things, impose minimum levels of equity and limitations on additional debt. The Company was in compliance with all such covenants at December 31, 2010. In addition, certain of the Company’s long-term borrowings are collateralized by first mortgages on various facilities or are collateralized by railcar assets. The Company’s non-recourse long-term debt is collateralized by railcar and locomotive assets.

The Company paid $6.6 million in dividends in 2010 compared to $6.3 million in 2009. The Company paid $0.0850 per common share for the dividends paid in January 2009, $0.0875 per common share for the dividends paid in April, July and October 2009 and January 2010, $0.090 per common share for the dividends paid in April, July and October 2010, and declared a dividend of $0.11 per common share for the dividends paid in January 2011.

Proceeds from the sale of treasury shares to employees and directors were $1.3 million and $0.8 million for 2010 and 2009, respectively. During 2010, the Company issued approximately 157,000 shares to employees and directors under its share compensation plans.

Because the Company is a significant consumer of short-term debt in peak seasons and the majority of this is variable rate debt, increases in interest rates could have a significant impact on the profitability of the Company. In addition, periods of high grain prices and / or unfavorable market conditions could require the Company to make additional margin deposits on its exchange traded futures contracts. Conversely, in periods of declining prices, the Company receives a return of cash.

The volatility in the capital and credit markets has had a significant impact on the economy in the past few years. Despite the volatile and challenging economic environment, the Company has continued to have good access to the credit markets. In the unlikely event that the Company was faced with a situation where it was not able to access the capital markets (including through the renewal of its line of credit), the Company believes it could successfully implement contingency plans to maintain adequate liquidity such as expanding or contracting the amount of its forward grain contracting, which will reduce the impact of grain price volatility on its daily margin calls. Additionally, the Company could begin to liquidate its stored grain inventory as well as execute sales contracts with its customers that align the timing of the receipt of grain from its producers to the shipment of grain to its customers (thereby freeing up working capital that is typically utilized to store the grain for extended periods of time). We also believe that we could raise equity through other portions of the capital market. The Company believes that its operating cash flow, the marketability of its grain inventories, other liquidity contingency plans and its access to sufficient sources of liquidity, will enable it to meet its ongoing funding requirements. At December 31, 2010, the Company had $760.8 million available under its lines of credit.

Contractual Obligations

Future payments due under contractual obligations at December 31, 2010 are as follows:

		Payments Due by Period
Contractual Obligations		Less than 1												After 5
(in thousands)		year				1-3 years				3-5 years				years				Total
Long-term debt (a)		$	21,683			$	76,661			$	108,948			$	78,066			$	285,358
Long-term debt non-recourse (a)			2,841				12,373				777				—				15,991
Interest obligations (b)			14,993				24,632				15,659				9,651				64,935
Uncertain tax positions			311				160				—				—				471
Operating leases (c)			22,739				25,431				14,105				17,851				80,126
Purchase commitments (d)			1,748,062				157,450				1,311				—				1,906,823
Other long-term liabilities (e)			4,196				2,559				2,787				7,567				17,109
Total contractual cash obligations		$	1,814,825			$	299,266			$	143,587			$	113,135			$	2,370,813

The Company had standby letters of credit outstanding of $14.1 million at December 31, 2010.

Off-Balance Sheet Transactions

The Company’s Rail Group utilizes leasing arrangements that provide off-balance sheet financing for its activities. The Company leases railcars from financial intermediaries through sale-leaseback transactions, the majority of which involve operating leasebacks. Railcars owned by the Company, or leased by the Company from a financial intermediary, are generally leased to a customer under an operating lease. The Company also arranges non-recourse lease transactions under which it sells railcars or locomotives to a financial intermediary, and assigns the related operating lease to the financial intermediary on a non-recourse basis. In such arrangements, the Company generally provides ongoing railcar maintenance and management services for the financial intermediary, and receives a fee for such services. On most of the railcars and locomotives, the Company holds an option to purchase these assets at the end of the lease.

The following table describes the railcar and locomotive positions of the Rail Group at December 31, 2010.

Method of Control		Financial Statement		Number
Owned-railcars available for sale		On balance sheet — current			10
Owned-railcar assets leased to others		On balance sheet — non-current			13,407
Railcars leased from financial intermediaries		Off balance sheet			6,827
Railcars — non-recourse arrangements		Off balance sheet			2,109
Total Railcars					22,353
Locomotive assets leased to others		On balance sheet — non-current			40
Locomotives leased from financial intermediaries		Off balance sheet			4
Locomotives leased from financial intermediaries under limited recourse arrangements		Off balance sheet			—
Locomotives — non-recourse arrangements		Off balance sheet			78
Total Locomotives					122

In addition, the Company manages approximately 761 railcars for third-party customers or owners for which it receives a fee.

The Company has future lease payment commitments aggregating $65.5 million for the railcars leased by the Company from financial intermediaries under various operating leases. Remaining lease terms vary with none exceeding fifteen years. The Company prefers non-recourse lease transactions, whenever possible, in order to minimize its credit risk. Refer to Note 12 to the Company’s consolidated financial statements in Item 8 for more information on the Company’s leasing activities.

In addition to the railcar counts above, the Grain & Ethanol Group owns 150 railcars which it leases to third parties under operating leases. These cars are included in railcar assets leased to others in the consolidated balance sheets.

Critical Accounting Estimates

The process of preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. The Company evaluates these estimates and assumptions on an ongoing basis. Estimates and assumptions are based on the Company’s historical experience and management’s knowledge and understanding of current facts and circumstances. Actual results, under conditions and circumstances different from those assumed, may change from estimates.

Certain of the Company’s accounting estimates are considered critical, as they are important to the depiction of the Company’s financial statements and/or require significant or complex judgment by management. There are other items within our financial statements that require estimation, however, they are not deemed critical as defined above. Note 1 to the consolidated financial statements in Item 8 describes our significant accounting policies which should be read in conjunction with our critical accounting estimates.

The Company believes that accounting for allowance for accounts and notes receivable, fair value adjustment for counter-party risk, grain inventories and commodity derivative contracts, lower-of-cost-or-market inventory adjustments, impairment of long-lived assets and equity method investments, income taxes, and employee benefit plans involve significant estimates and assumptions in the preparation of the consolidated financial statements.

Allowance for Accounts and Notes Receivable

The allowance for doubtful accounts and notes receivable relate to trade receivables and the current portion of notes receivable and is reviewed in detail by the Company on a quarterly basis. The allowance is based

both on specific identification of problem accounts and some base level of reserve for small and unidentified issues. For those customers that are thought to be at higher risk, the Company makes assumptions as to collectability based on past history and facts about the current situation.

Fair Value Adjustment for Counter-Party Risk

The Company records quarterly estimated fair value adjustments to its commodity contracts. These market value adjustments for customer credit exposure are based on internal projections, the Compay’s historical experience with its producers and customers and the Company’s knowledge of their business. In addition, the adjustments to contract fair values tends to fluctuate with the rise and fall of commodity prices.

Grain Inventories and Commodity Derivative Contracts

The Company marks to market all grain inventory, forward purchase and sale contracts for grain and ethanol, over-the-counter grain and ethanol contracts, and exchange-traded futures and options contracts. The overall market for grain inventories is very liquid and active; market value is determined by reference to prices for identical commodities on the CME (adjusted primarily for transportation costs); and the Company’s grain inventories may be sold without significant additional processing. The Company uses forward purchase and sale contracts and both exchange traded and over-the-counter contracts (such as derivatives generally used by the International Swap Dealers Association). Management estimates fair value based on exchange-quoted prices, adjusted for differences in local markets, as well as counter-party non-performance risk in the case of forward and over-the-counter contracts. The amount of risk, and therefore the impact to the fair value of the contracts, varies by type of contract and type of counter-party. With the exception of specific customers thought to be at higher risk, the Company looks at the contracts in total, segregated by contract type, in its assessment of nonperformance risk. For those customers that are thought to be at higher risk, the Company makes assumptions as to performance based on past history and facts about the current situation. Changes in fair value are recorded as a component of sales and merchandising revenues in the statement of income.

Lower-of-Cost-or-Market Inventory Adjustments

The Company records its non-grain inventory at the lower of cost or market. Whenever changing conditions warrant, the Company evaluates the carrying value of its inventory compared to the current market. Market price is determined using both external data, such as current selling prices by third parties and quoted trading prices for the same or similar products, and internal data, such as the Company’s current ask price and expectations on normal margins. If the evaluation indicates that the Company’s inventory is being carried at values higher than the current market can support, the Company will write down its inventory to its best estimate of net realizable value.

Impairment of Long-Lived Assets and Equity Method Investments

The Company’s business segments are each highly capital intensive and require significant investment in facilities and / or railcars. Fixed assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. This is done by evaluating the recoverability based on undiscounted projected cash flows, excluding interest and taxes. If an asset group is considered impaired, the impairment loss to be recognized is measured as the amount by which the asset group’s carrying amount exceeds its fair value.

We also annually review the balance of goodwill for impairment in the fourth quarter. These reviews for impairment take into account estimates of future undiscounted, and as appropriate discounted, cash flows. Our estimates of future cash flows are based upon a number of assumptions including lease rates, lease terms, operating costs, life of the assets, potential disposition proceeds, budgets and long-range plans. The majority of our goodwill is in the Grain and Ethanol and Plant Nutrient Groups. Based on the strength of current performance in both of these groups, we do not anticipate any impairment issues in the near future.

In addition, the Company holds investments in limited liability companies that are accounted for using the equity method of accounting. The Company reviews its investments to determine whether there has been a decline in the estimated fair value of the investment that is below the Company’s carrying value which is other than temporary.

Income Taxes

On a quarterly basis, the income tax provision is based primarily on the expected annual effective tax rate. In the event there is a significant or unusual item recognized in our quarterly operating results, the tax attributable to that item is separately calculated and recorded at the same time as that item. Our annual tax rate is based on our income, statutory tax rates and tax planning opportunities available to us in the various jurisdictions in which we operate. Significant judgment is required in determining our annual tax rate and in evaluating our tax positions. We establish reserves when, despite our belief that our tax return positions are fully supportable, we believe that certain positions are likely to be challenged and that we may not prevail. We adjust these reserves in light of changing facts and circumstances, such as the progress of a tax audit. We have limited reserves for uncertain tax positions and most will be eliminated in the near future as the years available for audit are closing.

Employee Benefit Plans

The Company provides all full-time, non-retail employees hired before July 1, 2010 with pension benefits and full-time employees hired before January 1, 2003 with postretirement health care benefits. In order to measure the expense and funded status of these employee benefit plans, management makes several estimates and assumptions, including rates of return on assets set aside to fund these plans, rates of compensation increases, employee turnover rates, anticipated mortality rates and anticipated future healthcare cost trends. These estimates and assumptions are based on the Company’s historical experience combined with management’s knowledge and understanding of current facts and circumstances. The selection of the discount rate is not a matter of judgment but based on an index given projected plan payouts. With the freeze of the pension and supplemental retirement plan, the volatility of the assumption has been reduced.

Item 7a. Quantitative and Qualitative Disclosures about Market Risk

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

Commodity Prices

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 in purchase and sale commitments for grain and grain held in inventory, the Company enters into exchange-traded futures and options contracts that function as economic hedges. The market value of exchange-traded futures and options used for economic hedging has a high, but not perfect correlation, to the underlying market value of grain inventories and related purchase and sale contracts. The less correlated portion of inventory and purchase and sale contract market value (known as basis) is much less volatile than the overall market value of exchange-traded futures and tends to follow historical patterns. The Company manages this less volatile risk using its daily grain position report to constantly monitor its position relative to the price changes in the market. In addition, inventory values are affected by the month-to-month spread relationships in the regulated futures markets, as the Company carries inventories over time. These spread relationships are also less volatile than the overall market value and tend to follow historical patterns but also represent a risk that cannot be directly offset. The Company’s accounting policy for its futures and options, 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 (exclusive of basis risk). The Company’s daily net commodity position consists of

inventories, related purchase and sale contracts and exchange-traded contracts. The fair value of the 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)		2010				2009
Net (short) long position		$	(2,105	)		$	3,848
Market risk			(211	)			385

Interest Rates

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 and credit ratings for similar types of borrowing arrangements. In addition, the Company has derivative interest rate contracts recorded in its balance sheet at their fair value. 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)		2010				2009
Fair value of long-term debt and interest rate contracts		$	307,865			$	327,412
Fair value in excess of carrying value			4,359				6,688
Market risk			(8,091	)			(3,344	)

Item 8. Financial Statements and Supplementary Data

The Andersons, Inc.
Index to Financial Statements

Management’s Report on Internal Control Over Financial Reporting			40
Report of Independent Registered Public Accounting Firm — PricewaterhouseCoopers LLP			41
Report of Independent Registered Public Accounting Firm — Crowe Chizek LLP			42
Consolidated Statements of Income for the years ended December 31, 2010, 2009 and 2008			43
Consolidated Balance Sheets as of December 31, 2010 and 2009			44
Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008			45
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2010, 2009 and 2008			46
Notes to Consolidated Financial Statements			47
Schedule II — Consolidated Valuation and Qualifying Accounts for the years ended December 31, 2010, 2009 and 2008			90
Exhibit Index			91

Management’s Report on Internal Control Over Financial Reporting

The management of The Andersons, Inc. (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness of internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2010. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control — Integrated Framework. Based on the results of this assessment and on those criteria, management concluded that, as of December 31, 2010, the Company’s internal control over financial reporting was effective.

The Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP, has audited the effectiveness of the Company’s internal control over financial reporting as of December 31, 2010, as stated in their report which follows in Item 8 of this Form 10-K.

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors
of The Andersons, Inc.:

     In our opinion, based on our audits and the report of other auditors, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of The Andersons, Inc. and its subsidiaries at December 31, 2010 and December 31, 2009, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2010 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company’s internal control over financial reporting based on our integrated audits. We did not audit the financial statements of Lansing Trade Group, LLC, an entity in which The Andersons, Inc. has an investment in and accounts for under the equity method of accounting, and for which The Andersons, Inc. recorded $15.1 million, $5.8 million and $8.8 million of equity in earnings of affiliates for the years ended December 31, 2010, 2009 and 2008, respectively. The financial statements of Lansing Trade Group, LLC as of December 31, 2010 and December 31, 2009 and for each of the years ended December 31, 2010, December 31, 2009 and December 31, 2008 were audited by other auditors whose report thereon has been furnished to us, and our opinion on the financial statements of The Andersons, Inc. as of December 31, 2010 and December 31, 2009 and for the years ended December 31, 2010, December 31, 2009 and December 31, 2008 expressed herein, insofar as it relates to the amounts included for Lansing Trade Group, LLC, is based solely on the report of the other auditors. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits and the report of other auditors provide a reasonable basis for our opinions.

     A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP
Toledo, Ohio
March 1, 2011

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Lansing Trade Group, LLC
Overland Park, Kansas

We have audited the consolidated balance sheets of Lansing Trade Group, LLC and Subsidiaries as of December 31, 2010 and 2009 and the related consolidated statements of income and comprehensive income, members’ equity and cash flows for each of the three years in the period ended December 31, 2010 (not included herein). 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 the standards of the Public Company Accounting Oversight Board (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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. 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 financial position of the Company as of December 31, 2010 and 2009, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2010, in conformity with U.S. generally accepted accounting principles.

Crowe Chizek LLP

Elkhart, Indiana
February 21, 2011

The Andersons, Inc.

		Year ended December 31,
(in thousands, except per common share data)		2010				2009				2008
Sales and merchandising revenues		$	3,393,791			$	3,025,304			$	3,489,478
Cost of sales and merchandising revenues			3,112,112				2,769,798				3,231,649
Gross profit			281,679				255,506				257,829
Operating, administrative and general expenses			195,330				199,116				190,230
Interest expense			19,865				20,688				31,239
Other income:
Equity in earnings of affiliates			26,007				17,463				4,033
Other income — net			11,652				8,331				6,170
Income before income taxes			104,143				61,496				46,563
Income tax provision			39,262				21,930				16,466
Net income			64,881				39,566				30,097
Net (income) loss attributable to the noncontrolling interest			(219	)			(1,215	)			2,803
Net income attributable to The Andersons, Inc.		$	64,662			$	38,351			$	32,900
Per common share:
Basic earnings attributable to The Andersons, Inc. common shareholders		$	3.51			$	2.10			$	1.82
Diluted earnings attributable to The Andersons, Inc. common shareholders		$	3.48			$	2.08			$	1.79
Dividends paid		$	0.3575			$	0.3475			$	0.325

The Notes to Consolidated Financial Statements are an integral part of these statements.

The Andersons, Inc.

		December 31,
(in thousands)		2010				2009
Assets
Current assets:
Cash and cash equivalents		$	29,219			$	145,929
Restricted cash			12,134				3,123
Accounts and notes receivable, less allowance for doubtful accounts of $5,684 in 2010; $8,753 in 2009			152,227				137,195
Margin deposits, net			20,259				27,012
Inventories			647,189				407,845
Commodity derivative assets — current			226,216				24,255
Deferred income taxes			16,813				13,284
Other current assets			34,501				28,180
Total current assets			1,138,558				786,823
Other assets:
Commodity derivative assets — noncurrent			18,113				3,137
Other assets and notes receivable, less allowance for doubtful notes receivable of $254 in 2010; $7,950 in 2009			47,855				25,629
Equity method investments			175,349				157,360
			241,317				186,126
Railcar assets leased to others, net			168,483				179,154
Property, plant and equipment, net			151,032				132,288
Total assets		$	1,699,390			$	1,284,391
Liabilities and Shareholders’ equity
Current liabilities:
Borrowings under short-term line of credit		$	241,100			$	—
Accounts payable for grain			274,596				234,396
Other accounts payable			111,501				110,658
Customer prepayments and deferred revenue			78,550				56,698
Commodity derivative liabilities — current			57,621				24,871
Accrued expenses and other current liabilities			48,851				41,563
Current maturities of long-term debt			24,524				10,935
Total current liabilities			836,743				479,121
Other long-term liabilities			25,183				16,051
Commodity derivative liabilities — noncurrent			3,279				830
Employee benefit plan obligations			30,152				24,949
Long-term debt, less current maturities			276,825				308,026
Deferred income taxes			62,649				49,138
Total liabilities			1,234,831				878,115
Shareholders’ equity:
Common shares, without par value, 42,000 shares authorized; 19,198 shares issued			96				96
Preferred shares, without par value, 1,000 shares authorized; none issued			—				—
Additional paid-in capital			177,875				175,477
Treasury shares, at cost (762 in 2010; 918 in 2009)			(14,058	)			(15,554	)
Accumulated other comprehensive loss			(28,799	)			(25,314	)
Retained earnings			316,317				258,662
Total shareholders’ equity of The Andersons, Inc.			451,431				393,367
Noncontrolling interest			13,128				12,909
Total shareholders’ equity			464,559				406,276
Total liabilities and shareholders’ equity		$	1,699,390			$	1,284,391

The Notes to Consolidated Financial Statements are an integral part of these statements.

The Andersons, Inc.

		Year ended December 31
(in thousands)		2010				2009				2008
Operating activities
Net income		$	64,881			$	39,566			$	30,097
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization			38,913				36,020				29,767
Bad debt (recovery) expense			(8,716	)			4,973				8,710
Equity in (earnings) loss of unconsolidated affiliates, net of distributions received			(17,594	)			(15,105	)			19,307
Gains on sales of railcars and related leases			(7,771	)			(1,758	)			(4,040	)
Excess tax benefit from share-based payment arrangement			(876	)			(566	)			(2,620	)
Deferred income taxes			12,205				16,430				4,124
Gain from pension plan curtailment			—				(4,132	)			—
Stock based compensation expense			2,589				2,747				4,050
Lower of cost or market inventory and contract adjustment			—				2,944				97,268
Impairment of property, plant and equipment			1,682				304				—
Other			215				186				58
Changes in operating assets and liabilities:
Accounts and notes receivable			(848	)			(15,259	)			(23,460	)
Inventories			(214,171	)			32,227				3,074
Commodity derivatives and margin deposits			(158,183	)			2,211				102,818
Prepaid expenses and other assets			(3,970	)			61,938				(56,939	)
Accounts payable for grain			20,703				18,089				72,648
Other accounts payable and accrued expenses			31,656				(574	)			(6,198	)
Net cash (used in) provided by operating activities			(239,285	)			180,241				278,664
Investing activities
Acquisition of businesses, net of cash acquired			(39,293	)			(30,480	)			(18,920	)
Purchases of property, plant and equipment			(30,897	)			(16,560	)			(20,315	)
Purchases of railcars			(18,354	)			(24,965	)			(97,989	)
Investment in convertible preferred securities			(13,100	)			—				—
Proceeds from sale of railcars			20,102				8,453				68,456
Proceeds from sale of property, plant and equipment and other			1,942				540				180
Proceeds received from minority interest			—				—				2,278
Change in restricted cash			(9,010	)			803				(201	)
Investment in affiliates			(395	)			(1,200	)			(41,450	)
Net cash used in investing activities			(89,005	)			(63,409	)			(107,961	)
Financing activities
Net increase (decrease) in short-term borrowings			241,100				—				(245,500	)
Proceeds from issuance of long-term debt			18,986				9,523				220,827
Payments of long-term debt			(36,598	)			(52,349	)			(82,090	)
Payment of debt issuance costs			(7,508	)			(4,500	)			(2,283	)
Purchase of treasury stock			—				(229	)			(924	)
Proceeds from sale of treasury shares to employees and directors			1,305				750				1,914
Excess tax benefit from share-based payment arrangement			876				566				2,620
Dividends paid			(6,581	)			(6,346	)			(5,885	)
Net cash provided by (used in) financing activities			211,580				(52,585	)			(111,321	)
(Decrease) increase in cash and cash equivalents			(116,710	)			64,247				59,382
Cash and cash equivalents at beginning of year			145,929				81,682				22,300
Cash and cash equivalents at end of year		$	29,219			$	145,929			$	81,682