-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UHorl35evi+p+FZMNtljl5N0Mn70HjQFgsIBFd6dyvxMntUp3kLAMe+plEQHlQ1v 5Bb/CaynI02LUnIDiX7P5g== 0000821026-96-000024.txt : 19960912 0000821026-96-000024.hdr.sgml : 19960912 ACCESSION NUMBER: 0000821026-96-000024 CONFORMED SUBMISSION TYPE: 424B3 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19960911 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANDERSONS INC CENTRAL INDEX KEY: 0000821026 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-FARM PRODUCT RAW MATERIALS [5150] IRS NUMBER: 341562374 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-04213 FILM NUMBER: 96628543 BUSINESS ADDRESS: STREET 1: 1200 DUSSEL DRIVE CITY: MAUMEE STATE: OH ZIP: 43537 BUSINESS PHONE: 4198935050 FORMER COMPANY: FORMER CONFORMED NAME: ANDERSONS MANAGEMENT CORP DATE OF NAME CHANGE: 19931119 424B3 1 [Company Logo] THE ANDERSONS, INC. _________________________ PROSPECTUS _________________________ $5,000,000 7.7 % Ten-Year Debentures $5,000,000 7.0 % Five-Year Debentures SUBJECT TO A $1,000 MINIMUM PRINCIPAL AMOUNT REQUIREMENT Interest will be payable to the registered holder annually on each anniversary of the original issue date of a Debenture. Interest will begin to accrue at the original issue date of a Debenture, which is the first day of the month following the month in which payment for the Debenture is received by The Andersons, Inc. The Debenture may be redeemed in whole or in part, without premium, at any time upon payment of principal and accrued interest. No sinking fund will be provided for the Debentures which will be unsecured obligations of the Company. Except for the rate of interest and years to maturity, the terms and conditions of the Debentures are identical. See "Description of Debentures." The Debentures will not be listed on any national securities exchange. The Company does not expect an over-the-counter market to develop for the Debentures. Investors should carefully consider the factors set forth under the caption "Certain Risk Factors," beginning on page 4 hereof. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ____________________ Underwriting Discounts Proceeds to Company (1) Price to Public and Commissions Maximum Minimum Per Debenture 100% None 100% None Total $10,000,000 None $10,000,000 None ____________ (1) Before deduction of expenses payable by the Company, estimated at $25,448. The Debentures are offered on a continuous basis direct by the Company and no minimum principal amount of Debentures will be required for the offering to become effective. No commissions or remuneration will be paid for any selling activities hereunder. Subscriptions or inquiries should be directed to the principal administrative offices of The Andersons, Inc., as follows: THE ANDERSONS, INC. Corporate Treasurer 480 West Dussel Drive Maumee, Ohio 43537 (419) 893-5050 The date of this Prospectus is August 26, 1996. AVAILABLE INFORMATION The Andersons, Inc. and its predecessors have been and are currently subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In accordance therewith, the Company files reports, proxy statements and other information with the Securities and Exchange Commission (the "SEC"). Such reports, proxy statements, and other information can be inspected and copied at the offices of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional offices of the SEC at 75 Park Place, New York, New York 10007 and Northwestern Atrium Center, 500 W. Madison Street, Suite 1400, Chicago, Illinois 60661, and copies of such material can be obtained from the Public Reference Section at the principal office of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Company has filed with the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549, a Registration Statement under the Securities Act of 1933, as amended, with respect to the securities offered hereby. This Prospectus does not contain all the information set forth in the Registration Statement, certain items of which are contained in schedules and exhibits to the Registration Statement as permitted by the rules and regulations of the SEC. For further information, reference is hereby made to the Registration Statement, including the exhibits filed as a part thereof, which may be obtained from the Commission upon payment of the fees prescribed by the Commission. The Company will furnish holders of the Debentures offered hereby, upon request, with its annual report to shareholders containing consolidated financial statements audited by an independent public accounting firm. INCORPORATION OF CERTAIN INFORMATION BY REFERENCE The Company's Annual Report on Form 10-K for the year ended December 31, 1995, the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996 and the Company's Amended Quarterly Report on Form 10-Q for the quarter ended June 30, 1996, which have been filed by the Company with the SEC, are incorporated herein by reference. All documents filed by the Company with the SEC pursuant to Section 13(a), 13(c), 15 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the offering of the Debentures shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained herein or in a document incorporated or deemed to be incorporated by reference in this Prospectus shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge to each person to whom this Prospectus is delivered, upon written or oral request of such person, a copy of any document incorporated by reference in this Prospectus, other than exhibits to any such document not specifically described above. Requests for such documents should be directed to The Andersons, Inc., 480 West Dussel Drive, Maumee, Ohio 43537, Attention: Corporate Treasurer (Telephone Number (419)891- 6417). SUMMARY The following summary is qualified in its entirety by the detailed information and financial statements and notes thereto appearing elsewhere or incorporated by reference in this Prospectus. THE COMPANY The Andersons, Inc. is engaged primarily in agriculture and retail with several smaller businesses. The Agriculture Group includes grain merchandising, the operation of terminal grain elevator facilities and distribution of agricultural fertilizer. The Retail Group includes the operation of six General Stores and a distribution center. The Business Development Group includes production and distribution of lawn fertilizer and corn cob products, railcar leasing and repair, as well as several smaller businesses. Together with its predecessor partnerships ("The Andersons"), the Company has been in existence since 1947 and has offered debentures under similar terms to this offering for many years. The principal administrative office s of the Company are located at 480 West Dussel Drive, Maumee, Ohio 43537. The general telephone number is (419) 893-5050. On January 2, 1996, The Andersons (the partnership) merged with and into its corporate general partner, whose name was changed to The Andersons, Inc. Common shares were issued to former partners and the Company was listed on the Nasdaq National Market, where trading began on February 20, 1996. This listing provided the Company's equity holders a market valuation for their interest and the potential for increased liquidity. In addition, it provided the Company with the ability to access equity markets in the future, the ability to use its own common shares as acquisition currency, greater opportunity to provide performance compensation to its key employees and increased employee ownership. THE OFFERING Securities $5,000,000 principal amount 7.7 % Ten-Year Debentures. $5,000,000 principal amount 7.0 % Five-Year Debentures. Offered directly by the Company. Subject to a $1,000 minimum principal amount requirement. Redemption Redeemable at maturity or at the option of the Company for principal plus accrued interest. Use of Proceeds Add to working capital and general corporate purposes. RATIO OF EARNINGS TO FIXED CHARGES (b) Six months ended June 30 Year ended December 31 1996 1995 1995 1994 1993 1992 1991 Ratio of earnings to fixed charges 1.55 1.62 1.62 2.42 2.29 2.14 1.47 SUMMARY FINANCIAL INFORMATION (b) (In thousands) Six months ended June 30 Year ended December 31 1996 1995 1995 1994 1993 Sales and merchandising revenues $601,942 $469,964 $1,092,410 $968,880 $796,471 Income from operations $5,703 $4,649 $10,188 $15,171 $11,080 Net income (a) $2,649 $2,813 $6,273 $9,285 $6,986 As of June 30 As of December 31 1996 1995 1995 1994 1993 Working Capital $62,510 $50,199 $58,897 $57,623 $47,795 Total Assets $361,898 $299,133 $455,518 $344,809 $360,586 Total long-term debt and other long-term obligations $78,494 $72,321 $77,743 $74,277 $55,817 Shareholders' equity $70,130 $66,333 $67,260 $64,870 $56,256 (a) Prior to January 2, 1996, the majority of operations were conducted in a partnership form and therefore the operating results were included in the tax returns of the partners. Income tax expenses for earnings in the corporate form were not material. Net income, as presented herein, for the six months ended June 30, 1995 and the years ended December 31, 1995, 1994, and 1993 include a pro forma provision for income taxes. (b) Prior to January 2, 1996, this financial information was included in filings for two registrants, The Andersons, an Ohio limited partnership, and The Andersons Management Corp., its sole general partner. On January 2, 1996, the two registrants merged and operations prior to that date were restated to reflect the combination. CERTAIN RISK FACTORS Prospective purchasers should consider carefully, in addition to the other information contained in this Prospectus, the following factors before purchasing the Debentures offered hereby. Seasonality; Weather Conditions The Company operates in three primary segments; Agriculture, Retail and the Business Development Group. The Agriculture Group is the largest segment and its success is highly dependent on the weather in the eastern corn belt (Ohio, Michigan, Indiana and Illinois), primarily during the spring planting season through the summer (wheat) and fall (corn and soybean) harvests. The Group is a merchandiser of grain and a supplier of agricultural inputs and services. The Retail Group's business is also highly seasonal with a majority of sales generated in the fourth quarter, during the holiday season. The Business Development Group consists of several smaller businesses, the largest of which is l awn products. This business manufactures and distributes lawn fertilizer for home and professional use and is highly seasonal with the majority of its sales occurring in the first and second quarter. Poor weather conditions during the spring adversely affect consumer purchases of do-it- yourself lawn care products. Agribusiness Industry The recently enacted U. S. Government 1996 Farm Bill removes government-sponsored price supports and acreage set-asides over the next seven years and should result in more acres planted, however, the U.S. Government farm program is subject to change from time to time. The Company's position as a merchandiser of grain and supplier of agricultural inputs and services may allow it to benefit if additional acres are planted and additional bushels are harvested, however, there are no guarantees of additional bushels to handle or that further changes will not be made to the U.S. farm program. The Company hedges its grain inventories and contracts in order to limit its exposure to changing prices. This hedging program includes the sale of futures contracts on the Chicago Board of Trade and requires the Company to maintain significant short-term lines of credit with several banks. In addition to the effect of weather conditions on the Agriculture Group, the industry is currently experiencing unusual price levels in the grain commodity markets. This has resulted from several factors including lower than average 1995 yields and an increase in export demand resulting in expectations of the lowest carryover stocks in twenty years. This, coupled with poor weather conditions in the 1996 planting season and a poor 1996 U. S. wheat crop, have driven prices to re cord levels. The Company monitors current market conditions and may expand or reduce the purchasing program in response to changes in those conditions. The Company reviews its purchase contracts and the parties to those contracts for delivery risk and provides appropriate reserves for potential defaults and non-delivery. In addition, the Company has taken measures to monitor and limit margin requirements from price escalation in the commodity markets. Grain Purchase Contracts The Company's grain purchasing program relies on forward contracts with producers to generate a significant percentage of the bushels it handles. Forward contracts take many forms and include hybrid cash contracts (commonly referred to as "Hedged To-Arrive" or "HTA" contracts). These contracts were developed by grain elevators and merchants in response to perceived interest by producers in more pricing flexibility and risk management tools. With the price escalation occurring in the commodity markets (See "Agribusiness Industry"), most cash contracts held by producers have been negatively affected. Hybrid cash contracts, while only a subset of forward contracts used by the Company and the industry as a whole, have recently received publicity as they have a higher level of risk and are impacted to a higher degree by futures price escalation. The Company is actively working with its producers to limit further deterioration in their contract prices through alternative risk management tools. As well as reviewing its producer contracts for potential defaults and non-delivery (See "Agribusiness Industry"), the Company is also monitoring industry-wide litigation and public comment by regulatory agencies on this issue. See "Legal Proceedings". Absence of Public Market for Debentures; Effect of Interest Rate Changes The Company does not intend to list the Debentures on any national securities exchange or to seek the admission thereof to trading in the National Association of Securities Dealers Automated Quotation System. The Company does not expect any trading market to develop. Accordingly, no assurance can be given that any market will develop for the Debentures. If a holder of the Debentures desires to sell, there can be no assurances given that a willing buyer could be found or at what price they might be sold. In addition, increases in general interest rates would adversely affect any market that may develop. See "Description of Debentures". Subordinated Obligations; Additional Leverage not Restricted The Company's obligations under the Indenture are subordinate and junior in right of payment to all senior indebtedness of the Company. The Debentures are of equal rank with other debenture bonds of the Company due through 2004 at interest rates ranging from 6.5% to 10%. In addition, the Indenture does not limit the Company's ability to incur additional indebtedness or issue other securities which would be senior to the Debentures. See "Description of Debentures". Call Feature of the Debentures The Debentures are redeemable at maturity by the holder for principal plus accrued interest. The Company has the option to call the Debentures at any time, paying principal plus interest at the date that they are called. Thus no assurances can be given that the Debentures will not be called prior to their maturity date. A holder of the Debentures has no option to require the Company to purchase their Debentures. See "Description of Debentures". Absence of Debenture Rating The Debentures have not been rated by an independent rating organization. The Company has no plans to seek such a rating at this time. LEGAL PROCEEDINGS The Company, like others in the agricultural industry, utilizes different types of contracts with producers (including contracts commonly referred to as "Hedged To-Arrive" or "HTA" contracts) to purchase grain. See "Certain Risk Factors - Grain Purchase Contracts." Some producers have recently defaulted or threatened default on certain of these contracts, arguing that their contracts are unenforceable. The Company believes that this is due, in large part, to unprecedented high grain prices. The Company currently is engaged in litigation with several defaulting producers, including one purported class action filed on May 16, 1996 in the United States District Court for the Northern District of Illinois, Eastern Division, Case no. 96C2936, Harter, et. al., v. Iowa Grain Company and The Andersons Investment Services, Corp., d.b.a. The Andersons, Inc., wherein enforceability of the delivery obligation under certain grain contracts has been raised as an issue. The Company believes its grain contracts are enforceable obligations and intends to enforce them. Although no assurance can be given that the current litigation and proceedings will not result in liability or loss, the Company believes that it has valid claims and defenses in the lawsuits and proceedings in which it is involved. Based upon the advice of counsel, management also believes that it has valid defenses to the purported "class action" nature of the Harter lawsuit and intends to defend vigorously against the certification of the class. The Harter lawsuit seeks declaratory and injunctive relief and compensatory, exemplary and punitive damages of an unspecified amount. The Commodities Futures Trading Commission (the "CFTC"), has served subpoenas duces tecum for the Company to produce certain records and testify in the matter of "Certain Transactions and Practices Among Grain Elevators, et. al., Involving Futures Contracts." In light of the Company's current and prior use of Hedged To- Arrive contracts, related industry-wide litigation, and current conditions of the industry as a whole, there can be no assurance that other litigation will not be brought, that a class will not be certified or that other CFTC proceedings will not be instituted. There currently is no reasonable basis to predict the amount of future liability or loss, if any, that may arise from such litigation or CFTC proceedings. USE OF PROCEEDS The offering is not underwritten and no assurance can be given as to the amount of proceeds that may be realized by the Company from this offering or when any such proceeds may be received. The net proceeds from the sale of the Debentures will be used for the payment of current maturities of long-term debt as scheduled. Following are the current maturities as of June 30, 1996: Debenture Bonds, 1996-1997, interest rates ranging from 7.2% to 10% $5.5 million Note payable, due quarterly with balance due in 2004, interest rate 7.84% .3 million Industrial development revenue bonds: Due 1999 with annual sinking fund payment, interest rate 6.5% .8 million Due 2004 with annual payments, variable rate (5.5275 % at June 30, 1996 .9 million Other .1 million Total $7.6 million Proceeds received from the sale of Debentures will be used first to retire the previously issued Debentures maturing in the last half of 1996. This represents $3 million of the $5.5 million noted above. Secondly proceeds will be applied to the $0.9 million annual payment due on the industrial development revenue bond and thirdly, to the $0.8 million sinking fund on the remaining industrial development revenue bond. The quarterly payments on the note payable and the previously issued Debentures maturing in 1997 will be paid from any additional payments received. If less than $7.4 million of bonds are sold, the Company expects to fund its current maturities of long-term debt through cash provided by operations or, if adequate cash is not generated from operations, through borrowings on the Company's various lines of credit. The Company has available short-term lines of credit totaling $385 million used primarily to finance working capital and a long-term revolving line of credit of $20 million. At June 30, 1996, a total of $131 million was drawn on the available lines of credit. Any proceeds in excess of $7.4 million will be added to working capital. The offering is not conditioned upon the sale of any minimum amount of Debentures. CAPITALIZATION The following table sets forth the consolidated capitalization of the Company in thousands, as of June 30, 1996. No effect has been given in the table below to the receipt of any proceeds from the offering described herein, since the amount of proceeds and when the proceeds will be received is uncertain. Long-term debt: Notes payable $ 44,531 Debenture bonds 13,707 Industrial development revenue bonds 12,352 Other 484 Total long-term debt $ 71,074 Minority interest $ 878 Shareholders' equity: Common shares $ 84 Additional paid-in capital 66,659 Retained earnings 3,387 Total shareholders' equity $ 70,130 Total capitalization $142,082 See Notes 6, 7, 8, 9 and 11 to the Consolidated Financial Statements for additional information as to the lines of credit, long-term debt, owners' equity, leases and commitments of the Company. DESCRIPTION OF DEBENTURES The Debentures offered hereby are to be issued under an Indenture, dated as of October 1, 1985, as supplemented by a Fifteenth Supplemental Indenture, dated as of January 2, 1996, between the Company (previous Supplemental Indentures were with the Partnership) and Fifth Third Bank, as Trustee (the "Trustee"). Under the Fifteenth Supplemental Indenture the current successor Company assumed all Partnership obligations under the Indenture, including the payment of principal and interest on the previously issued debentures. Except for the rate of interest and years to maturity, the terms and conditions of the Debentures, including all debentures previously issued under the Indenture, are identical. The following summaries of certain provisions of the Indenture are not complete definitions and are subject to and qualified by reference to all the provisions of and definitions in the Indenture, a copy of which is filed as an exhibit to the Registration Statement. Wherever particular Sections of defined terms of the Indenture are referred to, it is intended that such Sections or defined terms shall be incorporated herein by reference. General The Debentures are not limited in principal amount by the Indenture either in the aggregate or as to any series. The Debentures will be unsecured direct obligations of the Company and any successor entities. In this connection, the Indenture provides that the Company shall not consolidate with or merge into any other corporation or convey or transfer its properties and assets substantially as an entirety to any corporation or other entity or person, unless the successor expressly assumes, by a supplemental indenture, the due and punctual payment of the principal of, and interest on, all outstanding debentures issued under the Indenture, including the Debentures. Due and punctual payments of principal and interest were assumed by the Company on all of the outstanding debentures of the Partnership as part of the Fifteenth Supplemental Indenture and the merger. Although it has no present plans, understandings or arrangements, the Company may in the future, in order to meet capital requirements, issue unsecured debt, which by its terms would be senior to the Debentures. Upon any insolvency or bankruptcy proceedings, or any other receivership, liquidation, reorganization or similar proceedings, the holders of any such senior debt, or of any secured debt of the Company would be entitled to receive payment in full before the holders of the Debentures are entitled to receive any payment of principal or interest on the Debentures. The Indenture contains no restriction against the issuance by the Company of additional indebtedness, including unsecured debt senior to the Debentures, or secured debt. The Debentures are of equal rank with other debenture bonds of the Company due through 2004 at interest rates ranging from 6.5% to 10%. See Note 7 of the Notes to the Consolidated Financial Statements with respect to the Company's secured borrowings. The Indenture contains no minimum working capital, current ratio or other such requirements, or any protective provisions in the event of a highly leveraged transaction. No such transactions are contemplated. The Debentures will be issued as of the first of the month next following the month in which payment for the Debentures is received by the Company. The Debentures offered hereby will be due five years or ten years from their Original Issue Date, subject to the right of the Company to redeem the Debentures at any time by payment of the principal amount plus accrued interest to the date of redemption (Section 1101) and will bear interest at the rate per annum shown on the front cover of this Prospectus, payable annually, commencing one year from their Original Issue Date, to the holder of record at the close of business on the fifteenth day next preceding the Interest Payment Date. (Section 301.) Principal and interest will be payable, and the Debentures will be transferable, at the office of the Trustee, Corporate Trust Services, Mail Drop 1090D2, 38 Fountain Square Plaza, Cincinnati, Ohio, 45263, provided that any payment of interest or principal may be made at the option of the Company by check mailed to the address of the person entitled thereto as it appears on the Debenture Register. (Sections 301 and 307.) The Debentures will be issued only in fully registered form without coupons in denominations of $1,000 or any multiple thereof. (Section 302.) No service charge will be made for any transfer or exchange of Debentures, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. (Section 305.) Debentures may be issued in series from time to time upon the written order of the Company in such aggregate principal amount as is authorized by the Board of Directors of the Company. (Section 311.) The Debentures do not provide for any sinking fund. As of June 30, 1996, there remained outstanding Debentures issued by the Partnership and assumed by the Company in the merger transaction in the total principal amount of $20 million. Modification and Waiver Modification and amendment of the Indenture may be made by the Company and the Trustee with the consent of the holders of 66 2/3 % in principal amount of the outstanding Debentures, and, in case one or more but less than all the series of Debentures issued under the Indenture are so affected, of at least 66 2/3 % in principal amount of the Debentures of each series affected thereby consenting as a separate class. No such modification or amendment may, without the consent of the holder of each Debenture affected thereby, (a) change the stated maturity date of the principal of, or any installment of interest on, any Debenture; (b) reduce the principal amount of, or the interest on, any Debenture; (c) change the place or currency o f payment of principal or interest on any Debenture; (d) impair the right to institute suit for the enforcement of any payment on or with respect to any Debenture; (e) reduce the above-stated percentage of holders of Debentures necessary to modify or amend the Indenture; or (f) modify the foregoing requirements or reduce the percentage of outstanding Debentures necessary to waive any past default to less than a majority. The holders of 66 % in principal amount of the outstanding Debentures ma y waive compliance by the Company with certain restrictions. (Sections 902 and 1006.) Events of Default The following will be events of default: (a) failure to pay principal when due; (b) failure to pay any interest when due, continued for 30 days; (c) failure to perform any other covenant of the Company, continued for 60 days after written notice; and (d) certain events in bankruptcy, insolvency or reorganization. The Trustee may withhold notice to the holders of Debentures of any default (except in the payment of principal or interest) on the Debentures if it considers such withholding to be in the interests of the holders. (Section 501 and 602.) If a default shall happen and be continuing, either the Trustee or the holders of at least 25% in principal amount of the Debentures may accelerate the maturity of all outstanding Debentures, and prior to acceleration of maturity of t he Debentures, the holders of a majority in principal amount may waive any past interest. The holders of a majority in principal amount of the outstanding Debentures may waive a default resulting in acceleration of the Debentures, but only if all defaults have been remedied and all payments due (other than by acceleration) have been made. (Sections 502 and 513.) Each holder of a Debenture has the unconditional right to receive the payment of principal and interest when due and to institute suit for the enforcement of such payment. (Section 508.) The Trustee Subject to provisions relating to its duties in the case of default, the Trustee is under no obligation to exercise any of its rights or powers under the Indenture at the request, order or direction of any holders, unless such holders have offered to the Trustee reasonable indemnity. (Section 603.) Subject to such provisions for indemnification, the holders of a majority in principal amount of the outstanding Debentures will be entitled to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or of exercising any trust or power conferred upon the Trustee. (Section 512.) The Company is required to furnish to the Trustee annually a statement as to performance or fulfillment of covenants, agreements or conditions in the Indenture and as to the absence of default. (Section 1004.) PLAN OF DISTRIBUTION This offering of Debentures is not underwritten. There can be no assurance that any minimum amount of Debentures will be sold pursuant to the offering contemplated hereby. The Debentures are being sold by the Company for its own account and no commissions or remuneration will be paid for any selling activities in connection with the sale of the Debentures contemplated hereby. LEGAL OPINIONS The legality of the Debentures offered hereby and matters with respect to Ohio law have been passed on by Beverly J. McBride, Esq., General Counsel and Corporate Secretary of the Company. Beverly J. McBride holds 38,001 common shares of the Company as well as options to purchase an additional 2,910 common shares. EXPERTS The consolidated financial statements of The Andersons, Inc. at January 2, 1996, December 31, 1995 and December 31, 1994 and for each of the three years in the period ended December 31, 1995, incorporated in this Prospectus by reference to the Annual Report on Form 10-K of the Company for the year ended December 31, 1995, have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon and incorporated by reference herein. Such financial statements are incorporated herein in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. __________________________________________________ No person has been authorized to give any information or to make any representations other than those contained in this Prospectus, and if given or made, such information or representations must not be relied upon as having been authorized. This Prospectus does not constitute an offer to sell or the solicitation of an offer to buy any securities other than the Debentures to which it relates or an offer to or solicitation of any person in any jurisdiction in which such offer or solicitation is unlawful. Neither the delivery of this prospectus nor any sale made hereunder shall under any circumstances imply that information contained herein is correct at any time subsequent to its date. The Registrant will comply with its obligations under applicable securities laws to file and deliver any necessary supplement to this Prospectus. SUBSCRIPTION AGREEMENT FOR 7.7 % TEN-YEAR DEBENTURES AND 7.0 % FIVE-YEAR DEBENTURES OF THE ANDERSONS, INC. (I) (We) hereby subscribe for: ____________________________ multiple(s) of 7.7 % Ten-Year Debentures ____________________________ multiple(s) of 7.0 % Five-Year Debentures of The Andersons, Inc. at face value. Each multiple is $1,000. Herewith find $__________________ in full payment thereof. The Debentures should be registered and issued in the following mode of ownership: (ONLY ONE MODE OF OWNERSHIP MAY BE SELECTED) 1. ________________________ an individual. (Name) 2. ________________________ and ________________________ as joint (Name) (Name) tenants with right of survivorship and not as tenants in common. 3. ________________________ and ________________________ as (Name) (Name) tenants in common. 4. ________________________ as custodian for ___________________ (Name) (Name) under the Uniform Gifts to Minors Act, as applicable. 5. __________________ trustee for ________________ Trust (Name) (Name) Name of Trust __________________________ Date of Trust ________ I acknowledge receipt of a copy of the current Prospectus of The Andersons, Inc. with respect to the offering of the above Debentures subscribed for hereby which will be issued, and interest will begin to accrue, as of the first day of the mo nth following the month in which payment of the Debentures has been received by the Andersons, Inc. Under the penalties of perjury, I certify that the information listed below is true, correct and complete. Dated_________________________ Signed__________________________________ Signed__________________________________ Please print name, address, social security number and telephone number of registered owner(s). _____________________________________ _________________________________ (Name) (Name) _____________________________________ _________________________________ (Street) (Street) _____________________________________ _________________________________ (City, State and Zip Code) (City, State and Zip Code) _____________________________________ _________________________________ (Social Security Number or (Social Security Number or Federal I.D. Number) Federal I.D. Number) _____________________________________ _________________________________ (Area Code)(Telephone Number) (Area Code)(Telephone Number) Make check payable to: The Andersons, Inc. Mail to: The Andersons, Inc. You are required to complete the W-9 Form Corporate Treasurer on the reverse side of this subscription. P. O. Box 119 Maumee, Ohio 43537 W-9 Form Important Tax Information We ask that you complete this substitute form W-9, sign in the space provided, and return it, with the subscription agreement to: The Andersons, Inc. Corporate Treasurer P.O. Box 119 Maumee, Ohio 43537 A) Is your name and address correct on the preceding subscription form?____Yes ____No (If No, please correct it on the subscription agreement.) B) Taxpayer Identification Number (TIN). - Enter your TIN in the space provided below. Employer Identification Number ___ ___ - ___ ___ ___ ___ ___ ___ ___ -OR- Social Security Number ___ ___ ___ - ___ ___ - ___ ___ ___ ___ C) Please check the appropriate box: [] Individual / Sole Proprietor [] Corporation [] Partnership [] Other ______________________ D) Certification: Under penalties of perjury, I certify that: 1. The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me), and 2. I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding. Certification instructions: You must cross out item 2 above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting interest or dividends on your tax return. Signature:___________________________________ Title:__________________________ Date:___________________________ -----END PRIVACY-ENHANCED MESSAGE-----