AG SERVICES OF AMERICA, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 6, 1996
To the Stockholders of Ag Services of America, Inc.
The Annual Meeting of the Stockholders of Ag Services of America,
Inc. (the "Company"), an Iowa corporation, will be held on Tuesday,
August 6, 1996, at the Cedar Falls Holiday Inn, 5826 University
Avenue, Cedar Falls, Iowa, at 9:30 a.m., Cedar Falls time, for the
following purposes:
1. To elect six (6) directors of the Company for a term of
one year.
2. To ratify the appointment of McGladrey & Pullen, LLP as
the Company's independent public accountants for the
fiscal year ending February 28, 1997.
3. To consider and act upon any other matters that may
properly come before the meeting or any adjournment
thereof.
The Board of Directors has fixed the 7th day of June, 1996, as the
record date for the determination of stockholders entitled to
notice of and to vote at the meeting or any adjournment thereof.
You are cordially invited to attend the meeting. Whether or not
you plan to be personally present at the meeting, please complete,
date and sign the enclosed Proxy and return it promptly in the
enclosed envelope. If you later desire to revoke your Proxy, you
may do so at any time before it is exercised.
By Order of the Board of Directors
/s/ Dean C. Mohr
Dean C. Mohr
Secretary
July 12, 1996
Approximate Date First
Sent to Stockholders
Cedar Falls, Iowa
Your vote is important. Please date, sign and return your Proxy.
Your Proxy is in the enclosed envelope.
AG SERVICES OF AMERICA, INC.
PROXY STATEMENT
For the Annual Meeting of Stockholders
August 6, 1996
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the
solicitation of the enclosed proxy by the Board of Directors of Ag
Services of America, Inc. (the "Company") for use at the Annual
Meeting of Stockholders to be held August 6, 1996 at 9:30 a.m.,
Cedar Falls time, at the Cedar Falls Holiday Inn and any
adjournment thereof, for the purposes set forth in the Notice of
Annual Meeting of Stockholders.
Shares of Common Stock represented by proxies in the form solicited
will be voted in the manner directed by a stockholder. If no
direction is made, the proxy will be voted for the election of
nominees for director named in this Proxy Statement, ratification
of the Board of Directors' selection McGladrey & Pullen LLP as the
Company's independent public accountants for the 1997 fiscal year,
and transacting such other business as may come before the meeting
or any adjournment thereof. A stockholder may revoke his or her
proxy at any time before it is voted by delivering to the Secretary
a written notice of termination of the proxy's authority, by filing
with the Secretary another proxy bearing a later date, or by
appearing and voting at the meeting. This Proxy Statement and the
form of proxy enclosed are being mailed to shareholders commencing
on or about June 15, 1996. Only the holders of the Company's
Common Stock whose names appear of record on the Company's books at
the close of business on June 7, 1996 will be entitled to vote at
the Annual Meeting. At the close of business on June 7, 1996, a
total of 3,627,624 shares of Common Stock were outstanding, each
share being entitled to one vote. There is no right of cumulative
voting provided in the Company's Articles of Incorporation or
Bylaws. The affirmative vote of a majority of the outstanding
shares of the Company's Common Stock represented at the meeting in
person or by proxy, is necessary to effectuate all matters proposed
to the stockholders at the Annual Meeting.
Votes cast by proxy or in person at the Annual Meeting will be
tabulated by the inspectors of election appointed by the Company
for the meeting, and the number of stockholders present in person
or by proxy will determine whether or not a quorum is present. The
inspectors of election will treat abstentions as shares that are
present and entitled to vote for purposes of determining the
presence of a quorum for all matters. Shares abstaining with
respect to any matter will be treated as unvoted. If a broker
indicates on the proxy that it does not have discretionary
authority as to certain shares to vote on a particular matter,
those shares will not be considered as present and entitled to vote
by the inspectors of election with respect to that matter.
Expenses in connection with the solicitation of proxies will be
paid by the Company. In addition to solicitations by mail, the
Company may request banks, brokers, and other custodians, nominees,
and fiduciaries to send Proxy materials to beneficial owners and to
request voting instructions. The Company may reimburse them for
their expenses in so doing. Directors, officers and regular
employees of the Company, who will not receive extra compensation
for their services, may solicit personally or by mail, telephone,
or telegraph, if Proxies re not promptly received.
The Annual Report of the Company, including Financial Statements
for the fiscal year ended February 29, 1996, accompanies this Proxy
Statement.
ELECTION OF DIRECTORS
The Company's Bylaws provide that the Board of Directors shall be
elected at each annual meeting of stockholders. Directors are
elected for a one year term to succeed those directors whose terms
then expire.
The persons named in the accompanying proxy will vote for the
election of the nominees described herein, unless authority to vote
is withheld. The Board of Directors has been informed that each of
the nominees is willing to serve as a director; however, if any of
the nominees should decline or become unable to serve as a director
for any reason, the proxy may be voted for such other person as the
proxies shall, in their discretion, determine.
The following table sets forth certain information as of June 7,
1996, concerning the nominees for election as directors of the
Company:
Name Age Position with the Company
Gaylen D. Miller 47 President, Chief Executive
Officer and Director
Henry C. Jungling, Jr. 49 Chairman of the Board and
Director
Kevin D. Schipper 36 Chief Operating Officer and
Director
James D. Gerson 52 Director
Michael Lischin 45 Director
Ervin J. Mellema 50 Director
Gaylen D. Miller is a founder of the Company and has served as a
director since its formation in October 1985 and as President and
Chief Executive Officer since August 1995 and from May 1991 until
August 1993. Mr. Miller served as Chairman from August 1993 until
August 1995, as Chairman and Chief Operating Officer from August
1993 until July 1994, as Co-President of the Company from July 1988
until May 1991 and as Vice President, Secretary, and Treasurer from
November 1985 until July 1988. Mr. Miller was raised on a farm in
Iowa and before joining the Company he held administrative and
accounting positions with Land-O-Lakes, Inc., an agricultural
cooperative, and DEKALB Genetics Corporation, an international seed
company.
Henry C. Jungling, Jr. is a founder of the Company and has served
as a director since its formation in October 1985 and as Chairman
since August 1995 and from May 1991 until August 1993. Mr.
Jungling served as President and Chief Executive Officer from
August 1993 until August 1995, as Chairman and Chief Operating
Officer from May 1991 until August 1993, as Co-President of the
Company from July 1988 until May 1991 and as President from
November 1985 until July 1988. Mr. Jungling was raised on a farm
in Iowa and managed his own farming operation for 18 years. Mr.
Jungling is Mr. Schipper's uncle and Messrs Jungling and Miller are
first cousins.
Kevin D. Schipper is a founder of the Company and has served as a
director since its formation in October 1985 and as Chief Operating
Officer since July 1994. Mr. Schipper served as Vice President
since its formation in October 1985 until July 1994 and as
Treasurer and Secretary since July 1988 until July 1994. Before
joining the Company, Mr. Schipper was employed by Scoular Grain
Company, where he worked in product sales.
James D. Gerson has served as a director of the Company since
August 1991. Since March 1993, Mr. Gerson has been Senior Vice
President of Fahnestock & Co. Inc., a securities firm. Fahnestock
& Co. Inc. is a market maker of the Company's Common Stock and
served as an underwriter for the Company's offering of 7%
Convertible Subordinated Debentures due 2003 in April 1993.
Previously, since January 1992, Mr. Gerson was Senior Vice
President and Managing Director of Corporate Finance for Reich &
Co., Inc., a securities firm. For more than five years prior to
January 1992, Mr. Gerson was Vice President and Manager of
Corporate Finance at Josephthal & Co., Inc. (and successor
corporations), a securities firm. Josephthal & Co., Inc. served as
the Company's underwriter for its initial public offering completed
in August 1991. Mr. Gerson was originally appointed as a director
of the Company as a designee of the Underwriter according to the
terms of the Underwriting Agreement for the Company's initial
public offering, the provision in that underwriting agreement
regarding the nomination of the underwriter's designee for director
expired in August 1992. Mr. Gerson also serves as a director of
American Power Conversion Corp.; Conceptronic Inc.; Computer
Outsourcing Services, Inc.; Hilite Industries, Inc.; and Energy
Research Corporation.
Michael Lischin has served as a director of the Company since April
1990. Mr. Lischin is an attorney admitted to the bar in New York
and Kentucky. His area of concentration is livestock asset based
financing. He has served as a director and officer of a variety of
companies that provide financing in the agricultural industry.
Ervin J. Mellema has served as a director of the Company since May
1991. Since 1976, Mr. Mellema has been an operating principal of
Campbell Mellema Insurance Inc., a property and casualty insurance
agency, and Campbell Mellema Realty, a real estate brokerage firm.
Messrs. Junging, Miller and Schipper served as officers of the
Company pursuant to their respective employment agreements with the
Company (See "Executive Compensation and other Related
Information"). The Board of Directors intends to alternate the
officer positions of Messrs. Jungling and Miller every two years so
that commencing after the adjournment of the 1997 Annual Meeting of
Stockholders, Mr. Jungling will serve as President and Chief
Executive Officer and Mr. Miller will serve as Chairman of the
Board.
Committees and Meetings of the Board of Directors
The Board of Directors of the Company has an Audit Committee
consisting of Messrs. Miller, Gerson and Mellema. The Audit
Committee reviews and makes recommendations to the Board of
Directors with respect to designated financial and accounting
matters.
The Board of Directors met four times in fiscal year 1996. All
incumbent directors attended at least 75% of the respective
meetings of the Board and Audit Committee, if they were directors
or committee members.
Directors' Fees
The Company currently pays director's fees to its non employee
directors in the amount of $1,000 per board meeting and $250 per
committee meeting plus reimbursement for expenses incurred in
connection with the performance of their duties.
Compensation Committee Interlocks and Insider Participation
At present, the entire Board of Directors is responsible for
approving the compensation program and salaries for the executive
officers. Gaylen D. Miller, Henry C. Jungling, Jr. and Kevin D.
Schipper who are members of the Board of Directors were also
executive officers of the Company during fiscal 1996. However, the
executive officers who are also members of the board are not
present when their own compensation is under consideration. There
were no director interlocks with other companies or related party
transactions in fiscal 1996.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth as of June 7, 1996, information
about the beneficial ownership of Common Stock of the Company by
each stockholder who is known by the Company to own beneficially
more than five percent of the outstanding Common Stock of the
Company, by each director, by each executive officer named in the
Summary Compensation Table, and by all officers and directors as a
group:
Number of
Shares Percentage
Name and Address of Beneficially of Shares
Beneficial Owner Owned(1)(2) Outstanding
Gaylen D. Miller 351,334(3) 9.58%
Henry C. Jungling, Jr. 349,334(3) 9.52%
Kevin D. Schipper 348,534(3) 9.50%
James D. Gerson 167,666 4.62%
Michael Lischin 10,000(4) 0.28%
Ervin J. Mellema 8,540(5) 0.24%
All Directors and Officers
as a Group (10 persons) 1,303,228(6) 34.16%
(1) The persons or entities identified in the above table have
sole voting and investment power with respect to all shares
shown as beneficially owned by them unless otherwise
indicated. The number of shares beneficially owned includes
shares of Common Stock issuable upon exercise of options
exercisable during the next 60 days.
(2) Includes shares held by spouses and minor children sharing the
same home.
(3) Includes options to purchase 40,000 shares of Common Stock
exercisable within 60 days.
(4) Includes options to purchase 6,000 shares of Common Stock
exercisable within 60 days.
(5) Includes options to purchase 6,000 shares of Common Stock
exercisable within 60 days and $5,000 principal amount of the
Company's 7% Convertible Subordinated Debentures due 2003,
convertible into 540 shares of the Company's Common Stock.
(6) Includes options to purchase 186,500 shares of Common Stock
exercisable within 60 days and $5,000 principal amount of the
Company's 7% Convertible Subordinated Debentures due 2003,
convertible into 540 shares of the Company's Common Stock.
EXECUTIVE COMPENSATION AND OTHER RELATED INFORMATION
The following table sets forth the cash and certain other
compensation paid or accrued by the Company for services rendered
in all capacities during the fiscal years ended February 28, 1996,
1995, and 1994 to all executive officers of the Company who's total
aggregate compensation was greater than $100,000.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------- Awards Payouts
---------------------- -------
Securities
Restricted Underlying
Name and Fiscal Stock Options LTIP ALL
Principal Position Year Salary Bonus Other(a) Awards(b) SARs(c) Payouts(d) Other
- ------------------ ------ ------ ----- ------- --------- ---------- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gaylen D. Miller 1996 $185,000 $50,253(e) $0 $0 0 $0 $4,718(f)
President and Chief 1995 173,300 26,877(e) 0 0 0 0 4,169(f)
Executive Officer 1994 166,600 12,502(e) 0 0 0 0 4,102(f)
Henry C. Jungling Jr 1996 $185,000 50,253(e) $0 $0 0 0 $4,753(g)
Chairman of the 1995 173,300 26,877(e) 0 0 0 0 4,344(g)
Board 1994 166,000 12,502(e) 0 0 0 0 4,267(g)
Kevin D. Schipper 1996 $185,000 50,253(e) $0 $0 0 0 $4,375(h)
Chief Operating 1995 173,300 26,877(e) 0 0 0 0 4,076(h)
Officer 1994 166,000 12,502(e) 0 0 0 0 4,029(h)
<FN>
(a) The table excludes noncash compensation for the use of an
automobile, which did not exceed the lesser of $50,000 or 10%
of the base compensation paid to each officer.
(b) No restricted stock awards were made in any of the periods
presented.
(c) No stock options or stock appreciation rights were granted or
paid in any periods presented.
(d) The Company did not have a long-term incentive compensation
plan for any of the periods presented.
(e) Reflects incentive compensation accrued in fiscal 1996, 1995,
and 1994 to the officers of the Company of $50,253, $26,877
and $12,502, each, respectively, accordingly to their
respective employment agreements.
(f) Reflects premiums paid by the Company for $250,000 term life
insurance coverage in fiscal 1996, 1995 and 1994 of $635, $458
and $438, respectively, and $4,083, $3,711 and $3,664,
respectively, contributed to the Company's 401(k) plan by the
Company on behalf of the officer listed above.
(g) Reflects premiums paid by the Company for $250,000 term life
insurance coverage in fiscal 1996, 1995 and 1994 of $670,
$633, and $603, respectively, and $4,083, $3,711 and $3,664,
respectively, contributed to the Company's 401(k) plan by the
Company on behalf of the officer listed above.
(h) Reflects premiums paid by the Company for $250,000 term life
insurance coverage in fiscal 1996, 1995 and 1994 of $292,
$365, and $365, respectively, and $4,083, $3,711 and $3,664,
respectively, contributed to the Company's 401(k) plan by the
Company on behalf of the officer listed above.
</TABLE>
Stock Option Grants
No stock options or stock appreciation rights were granted to the
Executive Officers of the Company in fiscal 1996 who's total
aggregate compensation was greater than $100,000.
Aggregated Option/SAR Exercises
in Fiscal 1996 and Year-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Options/SARS at Options/SARS at
Acquired February 29, 1996 February 29, 1996(c)
On Value Exer- Unexer- Exer- Unexer-
Name Exercise(a) Realized(a) cisable cisable(b) cisable cisable
- ---------------- --------- ---------- ------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Gaylen D. Miller 0 $0 40,000 0 $295,000 $0
Henry C. Jungling, Jr. 0 $0 40,000 0 $295,000 $0
Kevin D. Schipper 0 $0 40,000 0 $295,000 $0
<FN>
(a) No stock options were exercised in fiscal 1996. There were no
stock appreciation rights outstanding or exercised in fiscal
1996.
(b) Includes stock options granted on May 30, 1991, under the 1991
Stock Option Plan of the Company based primarily on
performance during prior years.
(c) Reflects market value of underlying shares of Common Stock of
the Company on February 29, 1996, minus the exercise price.
</TABLE>
Employment Agreements
Effective July 1, 1991, Messrs. Jungling, Miller and Schipper
entered into separate five-year employment agreements with the
Company, each of which provide for (i) a base salary of $155,200,
subject to adjustment upward upon annual review by the Board of
Directors on March 1 of each year the agreement is in effect, (ii)
payment of an annual bonus to each of these persons in the amount
of 2% of the Company's pre-tax, pre-bonus income in excess of
$2,500,000, (iii) $250,000 in term life insurance coverage and (iv)
receipt of other Company benefits including use of an automobile.
If the respective employment agreement is terminated by the Company
without "cause," the Company must continue to pay the person salary
and bonus for up to two years. "Cause" is defined to include
repeated neglect in performance, breach of the employment agreement
or indictment or conviction of a felony or misdemeanor involving
moral turpitude. In April 1995 the Board of Directors approved a
four year extension through July 2000 for each of Messrs. Jungling,
Miller and Schipper. The Board of Directors approved a base salary
of $191,100 for each of the three persons for fiscal year 1997.
Board Report on Executive Compensation
At present, the entire Board of Directors is responsible for
approving the compensation program and salaries for the executive
officers. However, executive officers who are also members of the
board are not present when their own compensation is under
consideration.
Compensation Philosophy. It is the philosophy of the Company to
ensure that executive compensation is directly linked to sustained
improvements in corporate performance and increases in stockholder
value as measured by the Company's stock price. The following
objectives have been adopted by the Board of Directors as
guidelines for compensation decisions:
Provide a competitive total compensation package that
enables the Company to attract and retain key executive
talent needed to accomplish its corporate goals.
Integrate all pay programs with the Company's annual and
long-term business objectives and strategy, and focus
executive behavior on the fulfillment of those
objectives.
Provide variable compensation opportunities that are
directly linked with performance of the Company and that
align executive remuneration with the interests of
stockholders.
At present, the Company's executive compensation is comprised of
(i) a base salary, (ii) an annual cash incentive bonus, (iii)
additional incentive compensation in the form of stock options, and
(iv) other benefits typically provided to executives of comparable
companies, all described further below. For each such component of
compensation, the Company's compensation levels are compared with
those of comparable companies. For purpose of establishing these
comparable compensation levels, the Company compares itself to a
national group of companies selected by management and its
consultants. This group consists primarily of public and non-
public companies that have revenue levels similar to the Company's.
This group does not include the companies used by the Company in
the industry peer group index in the performance graph appearing
elsewhere herein, as several of the members of the industry peer
group are considerably larger in size with executive compensation
well above that of the Company.
Base Salary. The salary of each executive officer, including the
Chief Executive Officer, is based on the officer's level of
responsibility and comparisons to prevailing salary levels for
similar positions at the Company and at comparable companies. The
Board seeks to provide the Company's executive officers with
salaries that are at least commensurate with the median salary
levels at comparable companies. Each executive officer's
compensation is linked to individual employment agreements as
discussed above, which are consistent with the Company's
compensation philosophy.
After taking into account the Company's increase in return on
equity and its revenue and earnings growth, the Board sought to
establish the fiscal 1996 salaries of each of its executive
officers at the median salary levels for similarly-situated
executives of comparable companies. In an effort to ensure that
the base salary of the Company's Chief Executive Officer remain at
the median level, his base salary was increased 6.75% in fiscal
1996.
Annual Bonus. Each executive officer's annual bonus is linked to
individual employment agreements as discussed above, which are
consistent with the Company's compensation philosophy. The
employment agreements establish target performance levels and the
amount of bonus payable if these targets are met, which is defined
in terms of pre-tax, pre-bonus income of the Company. The Board
evaluates the annual bonus through review of information furnished
by its consultants as to the bonus practices among comparable
companies. The annual bonuses paid to the Company's executive
officers have typically been less than the median annual bonuses
paid by comparable companies.
As a result of the Company exceeding its income target in fiscal
1996, each executive officer, including the Chief Executive
Officer, received a cash incentive bonus equal to 2% of pre-tax,
pre-bonus income in excess of $2,500,000.
Stock Options. The Company's 1991 and 1993 stock option plans
authorize the Board to grant stock options to key personnel. The
Board's philosophy with respect to stock option incentive awards is
to strengthen the relationship between compensation and increases
in the market price of the Common Stock and thereby ally the
executive officers' financial interests with those of the Company's
stockholders. The Board determines the size of option grants based
on information furnished by consultants regarding stock option
practices among comparable companies. The Board also takes into
account the number of outstanding unexercised options held by the
executive officers. In fiscal 1996 the Board determined that the
number of outstanding unexercised options issued to the executive
officers who's total aggregate compensation was greater than
$100,000, including the Chief Executive Officer, was adequate and
elected to issue no further options.
Other Benefits. The Company maintains a 401(k) plan which the
executive officers are generally permitted to participate on terms
substantially similar to those relating to all other participants,
subject to certain legal limitations on the amounts that may be
contributed or benefits payable thereunder.
Additionally, the Company makes available to its executive officers
a supplemental life insurance plan and the use of an automobile.
Mr. Henry C. Jungling, Jr. Mr. James Gerson
Mr. Gaylen D. Miller Mr. Michael Lischin
Mr. Kevin D. Schipper Mr. Ervin J. Mellema
Stock Option Plans
1991 Stock Option Plan. The Company's 1991 Stock Option Plan,
which was approved by the Board of Directors and stockholders
effective May 30, 1991 (the "1991 Stock Option Plan"), provides for
the grant of options to purchase shares of Common Stock to
directors, officers, employees or other persons or entities. A
total of 300,000 shares of Common Stock have been reserved for
issuance under the 1991 Stock Option Plan. Options granted under
the 1991 Stock Option Plan may be either "incentive stock options"
or "nonqualified stock options." As designated by the Board of
Directors, the 1991 Stock Option Plan is administered by a
committee comprised of the officers of the Company, who designate
the type of option to be granted, the number of options to be
granted, the number of shares of Common Stock to be covered by each
option (subject to a specified maximum number of shares of Common
Stock which may be purchased under all options granted), the
exercise price, the period during which the options are
exercisable, the method of payment and certain other terms. The
exercise price for each share of Common Stock covered by an option
is determined by the committee, except (i) the exercise price for
an incentive stock option may not be less than the fair market
value, at the time the option is granted, of the stock subject to
the option and (ii) the exercise price for a nonqualified stock
option may not be less than 85% of the fair market value, at the
time the option is granted, of the stock subject to the option.
The exercise price for an incentive stock option granted to any
individual who owns stock, at the time of grant, possessing more
than 10% of the voting power of the capital stock of the Company
may not be less than 110% of such fair market value on the date of
the grant. No more than $100,000 of stock vesting during any
calendar year per person will qualify for incentive stock option
treatment. Options are non-transferable, other than by will or the
laws of descent and distribution, and may be exercised only by the
optionee while employed by or providing services to the Company or
within three months after termination of employment by reason of
retirement or six months following termination of employment
resulting from death or permanent disability. Options expire no
later than ten years from the date of grant, provided that
incentive stock options granted to employees owning stock
possessing more than 10% of the total combined voting power of all
classes of stock of the Company or any of its subsidiaries expire
five or fewer years from the date of grant. At February 29, 1996,
6,550 shares remained available for future grants under the 1991
Stock Option Plan.
1993 Stock Option Plan. The Company's 1993 Stock Option Plan,
which was approved by the Board of Directors and stockholders
effective August 3, 1993 (the "1993 Stock Option Plan"), provides
for the grant of options to purchase shares of Common Stock to
directors, officers, employees or other persons or entities. A
total of 400,000 shares of Common Stock have been reserved for
issuance under the 1993 Stock Option Plan. Options granted under
the 1993 Stock Option Plan may be either "incentive stock Options"
or "nonqualified stock options." As designated by the Board of
Directors, the 1993 Stock Option Plan is administered by a
committee comprised of the officers of the Company, who designate
the type of option to be granted, the number of options to be
granted, the number of shares of Common Stock to be covered by each
option (subject to a specified maximum number of shares of Common
Stock which may be purchased under all options granted), the
exercise price, the period during which the options are
exercisable, the method of payment and certain other terms. The
exercise price for each share of Common Stock covered by an option
is determined by the committee, except (i) the exercise price for
an incentive stock option may not be less than the fair market
value, at the time the option is granted, of the stock subject to
the option and (ii) the exercise price for a nonqualified stock
option may not be less than 85% of the fair market value, at the
time the option is granted, of the stock subject to the option.
The exercise price for an incentive stock option granted to any
individual who owns stock, at the time of grant, possessing more
than 10% of the voting power of the capital stock of the Company
may not be less than 110% of such fair market value on the date of
the grant. No more than $100,000 of stock vesting during any
calendar year per person will qualify for incentive stock option
treatment. Options are non-transferable, other than by will or the
laws of descent and distribution, and may be exercised only by the
optionee while employed by or providing services to the Company or
within three months after termination of employment by reason of
retirement or six months following termination of employment
resulting from death or permanent disability. Options expire no
later than ten years from the date of grant, provided that
incentive stock options granted to employees owning stock
possessing more than 10% of the total combined voting power of all
classes of stock of the Company or any of its subsidiaries expire
five or fewer years from the date of grant. At February 29, 1996,
139,700 shares remained available for future grants under the 1993
Stock Option Plan.
The following table summarizes the options to purchase shares of
the Company's Common Stock:
Stock Options
Outstanding Exercisable Price Range
Balance at February 28, 1993 286,100 59,450 $3.50-$8.00
Granted 133,000 - - $7.75-$9.88
Became exercisable - - 71,950
Exercised (13,700) (13,700) $3.50-$6.00
Canceled (8,400) - -
------- ------- ------------
Balance at February 28, 1994 397,000 117,700 $3.50-$9.88
Granted 110,600 - - $6.75-$9.00
Became exercisable - - 99,900
Exercised (13,100) (13,100) $3.50-$7.63
Canceled (27,800) (1,450) $3.50-$9.88
-------- -------- -----------
Balance at February 28, 1995 466,700 203,050 $3.50-$9.88
Granted 79,900 - - $7.75-$10.88
Became exercisable - - 127,700
Exercised (22,050) (22,050) $3.50-$8.00
Canceled (26,150) (5,550) $3.88-$9.88
-------- -------- -----------
Balance at February 29, 1996 498,400 303,150 $3.50-$10.88
Options are exercisable over varying periods ending on February 28,
2006.
Retirement and Savings Plan
The Company has established a Retirement and Savings Plan (the
"401(k) plan") which became effective June 1, 1992. Currently, all
employees of the Company, including the officers, are eligible to
participate in the 401(k) Plan. Benefits provided under the 401(k)
Plan are funded by a qualified retirement trust administered by
Norwest Bank Iowa, N.A. as trustee.
Participants may contribute an amount of their compensation,
including base salary and overtime, to the 401(k) Plan, which can
be no more than 15% of the participant's compensation or, if less,
the maximum dollar limit allowed by law on a pre-tax basis. The
Company makes a matching contribution to the 401(k) Plan subject to
certain limitations, equal to 40% of each participant's pre-tax
contribution on an amount of up to 7% of each participant's
compensation. The plan year ends each February 28th.
The participants may direct the investment of their account
balances among several equity funds. Distributions from a
participant's account (including earnings) are made after the
participant's termination of employment for any reason and, in
certain circumstances, participants may receive a distribution
during employment. All employee contributions (including earnings)
are fully vested at all times. Employer matching contributions
vest over five years at a rate of 20% per year from the date an
employee becomes eligible to participate in the 401(k) Plan. The
distributions of a participant's vested account balances will be
made in the form of a lump sum or periodic installments.
For the years ended February 28, 1996, 1995 and 1994, $19,750,
$16,849 and $10,992, respectively, was contributed to the accounts
of the Company's executive officers.
Stock Purchase Plan
In August 1995, the Company's Board of Directors approved the "1995
Stock Purchase Plan" which allows directors, officers and all other
employees of the Company to purchase common stock directly from the
Company, subject to certain restrictions. Common stock may be
purchased at (i) the closing price of the stock on the trading day
immediately preceding the purchase date or (ii) the cost at which
the common stock may be purchased in the open market, exclusive of
brokerage commissions and fees. An aggregate of 150,000 authorized
but unissued shares of the Company's common stock are reserved for
issuance under the plan. The 1995 Stock Purchase Plan is
administered by the Company and is subject to termination or
amendment by the Board of Directors at any time. At February 28,
1996, no shares have been purchased or issued to an executive
officer or other employee or director of the Company under the 1995
Stock Purchase Plan.
Performance Graph
The following graph compares the cumulative total stockholder
return on the Common Stock of the Company with that of the NASDAQ
Stock Market Index (U.S. Companies), a broad market index prepared
for the NASDAQ by the Center for Research in Securities Prices
("CRSP") at the University of Chicago, and the Agricultural Input
Supply Index, an agricultural input supply index prepared for the
Company by CRSP made up of the following NASDAQ companies; Dekalb
Genetics Corp., Pioneer Hi-Bred Int'l, Inc. AgriDyne Technologies
Inc. and Crop Genetics Int'l Corp. The comparison for each of the
periods assumes that $100 was invested on August 1, 1991, the date
of the Company's initial public offering, in each of the Common
Stock of the Company, the stocks included in the NASDAQ Stock
Market Index (U.S. Companies) and the stocks included in the
Agricultural Input Supply Index. These indexes, which reflect
formulas for dividend reinvestment and weighting of individual
stocks, do not necessarily reflect returns that could be achieved
by individual investors.
Comparison of Cumulative Total Return
Since the Company's IPO Among the Company,
the NASDAQ Stock Market Index (U.S. Companies)
and the Agricultural Input Supply Index
[ Graphic included with hard copy ]
<TABLE>
<CAPTION>
August Fiscal Year End February 28,
1, 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Ag Services of America, Inc. 100.00 141.20 188.20 232.40 205.90 255.90
NASDAQ Stock Market (U.S.) Index 100.00 127.10 135.30 160.10 162.30 226.30
Agricultural Input Supply Index 100.00 129.50 159.80 215.40 198.60 328.30
</TABLE>
RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Stockholders are being requested to approve the resolution
ratifying the action of the Board of Directors in appointing
McGladrey & Pullen, LLP as the Company's independent public
accountants for the fiscal year ending February 28, 1997.
It is not expected that a member of McGladrey & Pullen, LLP will be
present at the Annual Meeting. However, we will forward any
questions that arise to McGladrey & Pullen, LLP, who will have the
opportunity to respond.
OTHER MATTERS
The Board of Directors of the Company knows of no other matters
which may come before the meeting. However, if any matters other
than those referred to above should properly come before the
meeting calling for a vote of the stockholders, it is the intention
of the persons named in the enclosed proxy to vote such proxy in
accordance with their best judgment.
DEADLINE FOR SUBMISSION OF STOCKHOLDER
PROPOSALS FOR 1997 ANNUAL MEETING
Proposals of Stockholders to be presented at the Company's 1997
Annual Stockholders' Meeting must be received at the Company's
corporate headquarters no later than February 15, 1997, for
inclusion in the agenda for the 1997 Annual Meeting.
By Order of the Board of Directors
/s/ Dean C. Mohr
Dean C. Mohr
Secretary
