Good day ladies and gentlemen, and welcome to the Andersons, Inc. second quarter earnings conference call. (Operator instructions) I would now like to turn the presentation over to your host for today's conference Mr. Gary Smith, Vice President of Finance and Treasurer. Please proceed.

Thank you, Shawnell, and good morning everyone, and thanks for joining us on the second quarter 2008 conference call. As you know certain information that will be discussed today constitutes forward-looking statements. Actual results could differ materially from those presented in the forward-looking statements as a result of many factors including general economic conditions, weather and competitive conditions. Conditions in the Company’s industries both the United States and internationally and additional factors that are described in the company’s publicly filed documents including its 34 Act filings and the perspectives prepared in connection with the Company’s offerings. It also includes financial information of which as of the date of the call, the Company’s independent auditors have not completed their complete review. Although the Company believes the assumptions upon which the financial information and its forward-looking statements are based are reasonable, they can give no assurance that these assumptions will be proved to be. Mike Anderson, President and Chief Executive Officer and I will be available for questions at the end of the call. Mike?

Thanks Gary, and good morning everyone. As we noted in our press release we generated record net income of $45.6 million or $2.48 per diluted share on revenues of $1.1 billion. 2007 we reported net income of $25.5 million or $1.40 per diluted share on $634 million of revenues. I'm very pleased with our outstanding performance especially with both the Plant Nutrient and Grain & Ethanol Groups establishing new second quarter earnings records. In the first 6 months, our total income – net income stands at a record $53.4 million or $2.91 per diluted share. In 2007, we reported first half net income of $34.7 million or $1.90 per share. Total revenues of $1.8 billion for the first half of the year are up $800 million from last year. This revenue growth has come from several sources including higher grain and plant nutrient prices, and ethanol sales made on behalf of our joint ventures. To fully understand the Company results for the quarter, we'll take a look at each of our five business groups. The Grain & Ethanol Group established a new second quarter earnings record with an operating income of $20 million. This was significantly more than its year earlier result of $12 million. In fact the income from all the business units, that's grain, ethanol, and Lansing Trade Group increased over the prior year. The grain business benefited from significantly improved margins on grain sales. The grain business, however, continues to be impacted by rising costs associated with higher grain prices. First interest expense increased over $5.6 million in comparison to last year. Also adjustments were made to the fair values of contracts to account for the increased risk of default associated with rising grain prices. Income from the ethanol joint ventures also grew during the most recent…

Thanks Mike. Taxes for the second quarter, effective rate was 37%, that's up 2% from the second quarter in 2007. The tax benefits related to the 2007 charitable contribution of the Chicago Board of Trade shares is the primary reason for the increased rate between 2007 and 2008. We are projecting a full year tax rate at 37% for the whole year. You will note that our allowance for doubtful accounts appears as a separate line item on the income statement. We added approximately $0.9 million, just short of $1 million and $2.6 million to the reserve for the second quarter and year to date respectively. With commodity prices increasing, we feel that there is a higher risk of loss from our Grain & Ethanol and Plant Nutrients groups and so they have been adjusted accordingly. Interest expense for this 2008 second quarter totaled about $9 million, up more than $4 million from the same period last year. Year-to-date interest expense was $18 million, up $8 million compared to 2007. Our short-term average interest rates for both the second quarter and year to date were down approximately 2% compared to 2007. However, the average short-term borrowings as compared to 2007 were up approximately $300 million for the both the current quarter as well as year to date. Increased grain prices have caused us to borrow at these record levels. Short-term borrowings at the end of the second quarter were $432 million. However, grain and oil seed prices have dropped somewhat since the end of the second quarter. Our outstanding short-term loan balance is down to $185 million as of last night. So, there's been significant decline in that balance. EBITDA for the second quarter 2008 was $88 million versus $50 million in 2007, year-to-date EBITDA totaled $116 million, an increase…

Thank you, Gary. And before we take questions, a few more points. First I want to take this opportunity to thank the entire team that has made our current performance possible. During the first quarter, both Plant Nutrient and Rail Group set new operating income records, and during this quarter the same was accomplished by Grain & Ethanol and Plant Nutrient. One extends special thanks to our Plant Nutrient team whose results have been phenomenal. The team has worked diligently to serve our customers and optimize their inventory position, while simultaneously exploring multiple growth opportunities and integrating Douglass Fertilizer into its business. And just this week, we completed another acquisition of the three pelleted lime facilities which I mentioned earlier. We've been deliberately growing various business units for several years and we intend to continue doing so. Just since the beginning of this year, we've increased our investment in Lansing Trade Group twice, opened a third ethanol plant, added another railcar repair shop, and purchased both Douglass Fertilizer and the pelleted lime facilities. I continue to be excited about our future prospects. I'm obviously extremely pleased with the outstanding earnings growth we've achieved so far this year. Especially when you consider that the prior year results included non-recurring gains for the quarter and half year of $5.1 million and $12.1 million respectively. Based on these results, last week we revised our projected four-year outlook to $5 to $5.40 per diluted share, previous guidance was $4.40 to $4.80. Of course, our revised guidance was strongly impacted by the unprecedented performance within our Plant Nutrient Group. Therefore, I feel I should mention that although our margins continue to be strong as we move into the second half, based on inventory we own or if contracted to purchase, we do not believe that these margins are sustainable over the long, long term. Also remember that with the diversity of our business units, there are numerous factors that could impact the four-year results both good and bad. Examples of which are Plant Nutrient prices, grain prices, the timing of sales of rail cars, performance of our equity investments which ethanol production and Lansing Trade Group. And as the year progresses, we will again revisit our earnings forecast and if warranted we will update our guidance at that time. That concludes our prepared remarks, Gary and I will now be happy to answer any questions you may have. So, Shawnell, we'll turn up back to you.

(Operator instructions) And your first question comes from the line of Heather Jones of BB&T Capital Markets. Heather Jones – BB&T Capital Markets: Good morning.

Good morning.

Good morning, Heather. Heather Jones – BB&T Capital Markets: Excellent quarter.

Yes. Heather Jones – BB&T Capital Markets: You should be very pleased. I have several questions. First on the –

Is it true? Heather Jones – BB&T Capital Markets: I don't normally say quiet. On the debt side, I was curious the reduction in the short-term level, was all that pay down or was some of that reclassified long term?

No. That was all paid down. Heather Jones – BB&T Capital Markets: Okay. And then Lansing, do you have any plans to increase your – you are so close to 50%. I mean what are your plans with regards to taking that over a majority share position?

First I should say, of course anything can change in the future from what we say that are. Our intent is not to go over 50%. And it's not an issue of consolidation, now we disclosed a lot of the information in many ways. The strategy we planned – one of the strategy we planned in long term was with high confidence and the capability of that company and its management to run their own company and we both benefit from working together. But it is not our intent to go over 50% at this time. Heather Jones – BB&T Capital Markets: Okay. Then as far as your ethanol fee is more than doubling for the quarter. Was that all due to Greenville or in the past you have mentioned that you had additional client find, but didn't announce them until their plants opened. So, was that Greenville or do you have some new clients bottled on?

I don't think we've had any new clients that have come on. But we've had obviously we've got Greenville coming on, but Clymers came in the second quarter of '07, didn't have a full quarter in that particular location either. So, it's – the fees from the ethanol DDG we do have another agreement but that was in place before. Heather Jones – BB&T Capital Markets: Okay. What about the new customers, I mean how likely is that that they are going to open a plant or plants? And if it is likely, I mean what's the timing of when those fees would start coming on?

Right now, we don't have specific customers that would be opening plants, and we were talking to some folks. We do have one supply agreement with another company, but it's constructed a little bit differently than the ones that we have already. We are still working it up but there's nothing significant out there right now. Heather Jones – BB&T Capital Markets: Okay. Now given the break and corn prices and natural gas prices of late, have you all begun to take on any coverage as far as for your ethanol production side for '09?

No. We typically have a hedging philosophy that looks at the related values of corn and ethanol and natural gas. And as you pointed out, corn and natural gas have come down significantly, interesting – despite if oil come down, we didn't expect ethanol frankly to break as much as it has here this month. So, the ability to lock-in just pure margin ahead really hasn't improved. It varies day to day, week to week, but despite the big break you would thought that we would have gotten a better ability to lock in the margin. So, or is what we call the crump [ph], so we've actually not done that. But margins stay positive generally for the most part, then the deferred margins don't so to the extent that you want to do so something ahead, you would be in a position where you would need to take a position in one or two of the commodities, not all of them. And then of course you are betting on the fact that your judgment on that commodity is right. And at this point in time, we've elected to stay for the most part on the sidelines. We have had corn positions on the long side coming to the first half of the year and into this quarter. We have a basic desire to be a little more long but not even if it goes down just because of what you talked about and because as a company we are generally a short hedger offsetting impact of that. But ethanol is still substantially below unleaded. And I think part of that is we are still experiencing month to month an increase in ethanol capacity is to build out is not finished. So, there's that supply of ethanol coming into the market. We'll see what happens as we get towards the end of this year and into really next year when that build out basically stops in the blend side of the ethanol business is able to absorb the capacity a little better. That was a long answer that we really aren't experiencing the ability to lock in good margins forward. Heather Jones – BB&T Capital Markets: And so basically because we've seen that to the spot margins have improved but you are seeing on a significantly deferred basis they really haven't?

They've improved. They were really, really ugly before and now they are just negative. And I don't mean to be slipping. I mean that's an improvement. Heather Jones – BB&T Capital Markets: Yes. Wonder if you could speak to wheat basis. I mean it's been a little improvement but not dramatically so, and we are hearing that they may actually be some regulatory action taken or should be in-debated to force convergence included force cash settlement features etcetera? And was just wondering if you could speak to that.

Yes. During – specifically during the second quarter, overall in the first quarter we had basis – big basis loss and that wasn't just wheat, it was all grains and we experienced overall improvement if you take into account corn and beans, but frankly through the second – in the second quarter, we really didn't move. Our old crop wheat actually went down a little, new crop wheat up a little. But as we've come into the wheat harvest and that often happens because wheat faces dropdown again. So, it's actually lower right at this moment than it was in the second quarter and we are now still accumulating wheat at these levels. To your point there had been some meetings at the Chicago Exchange and in Washington on the ongoing concern that for whatever reason as you get to the spot futures or even the deferred ones, value of cash wheat around the delivery markets which is Chicago, Toledo and basically driven market has been and continues to be substantially below the futures value. Now last year in the fall, there was a brief period of time of convergence. In the spring, there was a brief period of time and there had been a number of proposals that have been put up to possibly modify the contract and you've mentioned one of them. And at this point in time, I'm not sure where that's going to take us. We've now experienced a big decline in the flat – in the futures prices of corn, wheat and beans. Wheat still is maintaining a futures price somewhat say round numbers $2 premium to corn and the cash basis in wheat is way, way under the option and so it's still for those us who had been around for a while still…

Yes. Heather Jones – BB&T Capital Markets: Okay.

And that's true. Now there is a downside. Let's just say that in a given location you are $1.50 under the futures. There's point where you fill up, and then you have to sell the next bushel. If we would go to $2 under the futures rather than go to $1 under, then on what we are accumulating could be an issue except that as you say in Toledo where we can deliver and have the ability to deliver in which case we get delivered price for that. But there is point and time where you still have to buy the next bushel and don't have the space to deliver it. Heather Jones – BB&T Capital Markets: Right.

And that's a function of the market does. My own instinct, we'll see what happens. We believe that ultimately this thing will tend to work itself out and like in any contract ongoing review on how well the contract is functioning is appropriate and if smart people in Washington and Chicago in the trade, and I hope we not overreaction if adjustments are made, then hopefully we'll have the wisdom to make (inaudible). Heather Jones – BB&T Capital Markets: Okay. All right, thank you and congratulations again.

Thanks.

Your next question comes from the line of Farha Aslam of Stephens, Inc. Farha Aslam – Stephens, Inc: Hi, good morning.

Good morning, Farha. Farha Aslam – Stephens, Inc: Just starting with the interest question. What is your average interest rate on your short-term and your long-term securities right now?

Let me see. On the long term it's just shy [ph] at 6%. Yes, short term is running just shy a little more. Farha Aslam – Stephens, Inc: Okay. Thank you. And then –

I'm sorry, that's for the quarter. Actually for the year it's just had over 4%. Farha Aslam – Stephens, Inc: Okay. And for – highlighted 12 states that the Andersons is interested in expanding their presence in. Could you detail what those 12 states are?

No. Farha Aslam – Stephens, Inc: Okay. Have to try. And then on the grain business with the harvest being larger do you see opportunities to make more space income this year versus last year trading aside?

The space income would be – tend to be earned in wheat from July to July, and corn and beans from call it October 1 to September 30th I mean that's the cycle. In corn I would say our fear a little while ago was that with early projections on carry over taking this below 1 billion bushels next year that our space income was going to threatened. Now with carryover projections somewhat similar to this year, I would call it somewhat similar year. Soy beans, we still have a tight balance table but the basis levels that we have in front of us for new crop soy beans and corn suggest that we are going to be able to accumulate in the absence of some material change now, accumulate product at really nice levels and then when we get the appreciation what quarter, what year it's in. I'm not sure but it should be a good year, Farha. Farha Aslam – Stephens, Inc: Okay. And then on your ethanol business, are all three of your plants profitable in the quarter?

No. Albion and Clymers continue to niche. We had that substantially hedged. The Greenville one – I'm going try not to overcomplicate this. That is a entity (inaudible) which is 50% owned by Marathon and 50% owned by (inaudible) is made up two-thirds, Andersons is one-third, Mitsui. And the way we handle the buying of grain and selling of ethanol we have to look at each entity to really understand the – although they are built separate legal entities to understand the economic impact of running the ethanol plants. But to make a long story short, between those two entities as relates to the Andersons, we had a modest loss between our portion of the TAME business the Greenville plant itself and this entity that is Mitsui and the Andersons. Farha Aslam – Stephens, Inc: So, basically the Andersons and Mitsui were hedged on grain and the Greenville plant wasn't. So, the –

It's not as simple as that because how the pricing of corn flows through it. It's a – we are going to have to do a crammer on this that it probably get bogged down. But I would say in general there's some substance of fact that Greenville doesn't hedge ahead, but there's also – how we flow that timing of ethanol sales and corn purchases that complicates it. Farha Aslam – Stephens, Inc: Okay. A prime [ph] I think would be great.

Yes. Farha Aslam – Stephens, Inc: And then finally on your rail business, could you highlight for us the opportunities from the large portfolios that may potentially be available to you?

You are talking about GE? Farha Aslam – Stephens, Inc: Yes.

I wish Roch [ph] was in here right now. The – my understanding is that GE may have, and may have. Everything I'm going to say now is a 'may' and not certainly may have – initially they were intending to market the entire portfolio and hoped to find one buyer, we wouldn't have been of the size that would be bid on it. We think they may have not been able to get what they wanted out there, and they have pulled that off and may be we'll see some stuff come out feast meal. I think that's similar with CIT. So, initially we wouldn't be much of a shot or a shot because their hope was to find one buyer to buy the whole thing. Here I'm not sure what about Wachovia [ph].

Wachovia portfolio is not as far as we know it's not 100% known as being for sales. But it certainly is an asset that they could liquidate if they need to shore up their capital.

So, what we hope for if it moves into may be a more traditional feast meal put out several thousand cars, and in that case we would definitely be at the table and we would hope to be able to have a shot at some stuff and win on acquisitions.

In those three portfolios are multi-billion dollar portfolios, if you look at the asset values. And so for us to step up to that without some financial support would be a stretch. Farha Aslam – Stephens, Inc: All right, and my final question is about railcar rates. Could you highlight what the lease rates are this year versus last year, and what's your outlook is for lease rates?

Yes, and again often a awful lot depends on specifically what car. But in general, if we look year over year, I'm sorry, not year over year. If we look through this year, we are relatively flat and we are down a little bit from this year versus a year ago on actual rates per car. However, our margins have improved because as we depreciate the cars and they come off lease and replace them, replace them with a lower asset [ph] in the essence of lower asset base. So, we end up taking a wider spread. It's very consistent with our strategy. And right now just stopped – has always cycled before. I suspect it's going to cycle again. We had built a new car manufacturing and it takes a while for that to get absorbed into the market. Now for the most part I would say large base manufacturing has really, really slowed down. So, we've got a while before we absorb those in and we do have an economic slowdown. I think rates in the near future stay I think relatively stable with where they are, may be a little downward pressure. I don't see a pop in the next 12 months. Farha Aslam – Stephens, Inc: Okay.

I can tell you the truth. And that's okay. That's – we really like the cycles because it allows us to manage the portfolio in the cycles. Farha Aslam – Stephens, Inc: Okay. And when do you anticipate railcar rates to recover?

I'm going to say I self judged based on looking at cycles before. I'm thinking by 2010, may be sometime in 2009 and again subject to the general economy we have is not an insignificant item on certain types of things in lumber and call for new homes is down, it's an example. So, and there's that subject to, but we will start – every year we will be scrapping cars because we always do. Use the fleet and that will help move us towards the next period of time wherever short a little versus we are long a little. Farha Aslam – Stephens, Inc: Okay. That’s very helpful. Thank you.

That concludes the Q&A session. Now I would like to turn the call back over to Gary Smith.

Thank you. But I’ll give it back to Mike.

Okay. I want to thank you all for joining us next conference call scheduled for Wednesday, November 15th – or 5th rather at 11 a.m. Eastern Time to review the quarter. We hope you are able to join us at that time and have great day and appreciate your interest. Thanks.

Ladies and gentlemen that concludes the presentation. Thank you for your participation. You may now disconnect.