UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended August 31, 1996
Commission File Number: 000-19320
Ag Services of America, Inc.
(Exact name of registrant as specified in its charter)
Iowa 42-1264455
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2302 West First Street, Cedar Falls, Iowa 50613
(Address of principal executive offices) (Zip Code)
(319) 277-0261
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
[X] Yes [ ] No
5,116,669 common shares were outstanding as of October 11, 1996.
<PAGE>
AG SERVICES OF AMERICA, INC.
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial statements:
Condensed balance sheets, August 31, 1996 (unaudited) and
February 29, 1996 1
Unaudited condensed statements of income, three months and
six months ended August 31, 1996 and 1995 2
Unaudited condensed statements of cash flows, six months
ended August 31, 1996 and 1995 3
Statement of stockholders' equity, six months ended
August 31, 1996 (unaudited) 4
Notes to condensed financial statements (unaudited) 5-6
Item 2. Management's discussion and analysis of financial
condition and results of operations 7-10
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security
Holders 11
Item 6. Exhibits and reports on form 8-K: 11
(a) Exhibits
(11) Statement re computation of earnings
per common share 12
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AG SERVICES OF AMERICA, INC.
CONDENSED BALANCE SHEETS
<CAPTION>
ASSETS August 31, February 29,
1996 1996*
(Unaudited)
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash $241,533 $1,808,778
Customer notes receivable, less allowance for
doubtful notes and reserve for discounts
August 31, 1996 $4,097,000; February 29, 1996
$1,370,000 126,683,713 31,702,885
Accounts receivable 31,271 117,834
Inventories 1,152,344 3,075,087
Foreclosed assets held for sale 1,150,110 2,778,260
Deferred income taxes, net 558,000 543,000
Other current assets 980,378 4,550,900
------------ -----------
Total current assets $130,797,349 $44,576,744
------------ -----------
LONG-TERM RECEIVABLES AND OTHER ASSETS
Customer notes receivable, less allowance for
doubtful notes August 31, 1996 $1,526,000;
February 29, 1996 $1,295,000 $9,822,362 $8,336,441
Foreclosed assets held for sale 237,951 574,805
Debt issuance costs, less accumulated
amortization August 31, 1996 $0; February 29,
1996 $244,800 0 620,200
Deferred income taxes, net 492,000 477,000
----------- -----------
$10,552,313 $10,008,446
----------- -----------
EQUIPMENT, less accumulated depreciation
August 31, 1996 $663,671; February 29, 1996
$603,607 $640,336 $601,115
------------ -----------
$141,989,998 $55,186,305
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable $92,700,000 $19,850,000
Excess of outstanding checks over bank balance 1,524,639 0
Accounts payable 8,855,264 471,291
Accrued expenses 1,327,684 644,207
Income taxes payable 696,194 0
------------ -----------
Total current liabilities $105,103,781 $20,965,498
------------ -----------
LONG-TERM LIABILITIES
7% covertible subordinated debentures $0 $13,800,000
------------- -----------
STOCKHOLDERS' EQUITY
Captial stock $21,756,700 $8,499,003
Retained earnings 15,129,517 11,921,804
------------- -----------
$36,886,217 $20,420,807
------------ -----------
$141,989,998 $55,186,305
============ ===========
<CAPTION>
*Condensed from Audited Financial Statements.
<FN>
See Notes to Condensed Financial Statements.
</TABLE>
<PAGE>
<TABLE>
AG SERVICES OF AMERICA, INC.
UNAUDITED CONDENSED STATEMENTS OF INCOME
<CAPTION>
Three Months Ended August 31, Six Months Ended August 31,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net revenues:
Farm inputs $46,128,641 $36,785,393 $110,388,726 $84,450,156
Financing income 3,502,315 2,650,249 5,449,203 3,939,309
----------- ----------- ------------ -----------
$49,630,956 $39,435,642 $115,837,929 $88,389,465
----------- ----------- ------------ -----------
Cost of revenues:
Farm inputs $43,128,273 $33,951,061 $103,269,954 $78,299,640
Financing expense 1,619,390 1,456,977 2,537,441 2,114,459
Provision for doubtful notes 800,059 645,000 1,860,924 1,447,410
----------- ----------- ------------ -----------
$45,547,722 $36,053,038 $107,668,319 $81,861,509
----------- ----------- ------------ -----------
Income before operating
expenses and income taxes $4,083,234 $3,382,604 $8,169,610 $6,527,956
Operating expenses 1,531,237 1,256,005 3,161,897 2,602,202
----------- ---------- ----------- -----------
Income before income taxes $2,551,997 $2,126,599 $5,007,713 $3,925,754
Federal and state income taxes 917,000 768,000 1,800,000 1,419,000
----------- ---------- ----------- -----------
Net income $1,634,997 $1,358,599 $3,207,713 $2,506,754
=========== ========== =========== ===========
Earnings per common and common
equivalent share
Primary $0.39 $0.37 $0.79 $0.68
=========== ========== ============ ============
Fully diluted $0.31 $0.30 $0.63 $0.55
=========== ========== ============ ============
Weighted average common and common
equivalent shares outstanding
Primary 4,221,940 3,655,510 4,035,981 3,664,575
=========== ========== ============= ============
Fully diluted 5,337,086 5,169,175 5,337,137 5,169,706
=========== ========== ============= ============
<FN>
See Notes to Condensed Financial Statements
</TABLE>
<PAGE>
<TABLE>
AG SERVICES OF AMERICA, INC.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
Six Months Ended August 31, 1996 and 1995
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $3,207,713 $2,506,754
Adjustments to reconcile net income to net
cash (used in) operating activities:
Depreciation 106,229 85,288
Amortization 21,600 43,200
Deferred income taxes (30,000) (20,000)
(Gain) loss on sale of equipment (3,553) (1,327)
Change in assets and liabilities (81,123,276) (66,124,129)
------------- ------------
Net cash (used in) operating activity ($77,821,287)($63,510,214)
------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of equipment $14,200 $5,000
Purchase of equipment (156,097) (81,056)
(Increase) decrease in foreclosed assets held for sale 1,965,004 (3,031,663)
------------- ------------
Net cash provided by (used in) investing $1,823,107 ($3,107,719)
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings $74,100,000 $64,250,000
Principal payments on short-term borrowings (1,250,000) 0
Net payments on conversion or redemption of convertible
subordinated debentures (49,266) 0
Increase in excess of outstanding checks over bank
balance 1,524,639 2,052,186
Proceeds from the issuance of capital stock upon
exercise of options 98,825 42,302
Proceeds from the issuance of capital stock under
stock purchase plan 6,737 0
----------- -----------
Net cash provided by financing activities $74,430,935 $66,344,488
----------- -----------
(Decrease) in cash ($1,567,245) ($273,445)
CASH
Beginning 1,808,778 326,545
----------- -----------
Ending $241,533 $53,100
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash payments for:
Interest $1,843,600 $1,339,062
Income taxes $1,026,800 $962,500
<FN>
See Notes to Condensed Financial Statements.
</TABLE>
<PAGE>
<TABLE>
AG SERVICES OF AMERICA, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
Six Months Ended August 31, 1996
(Unaudited)
<CAPTION>
Capital Stock
Shares Retained
Issued Amount Earnings Total
<S> <C> <C> <C> <C>
Balance, February 29, 1996 3,611,350 $8,499,003 $11,921,804 $20,420,807
Net income 0 0 3,207,713 3,207,713
Issuance of 12,950 shares of capital
stock upon the exercise of options 12,950 98,825 0 98,825
Issuance of 600 shares of capital
stock under employee stock
purchase plan 600 6,737 0 6,737
Issuance of 1,487,669 shares of capital
stock upon conversion of
subordinated debentures 1,487,669 13,152,135 0 13,152,135
--------- ---------- ---------- -----------
Balance, August 31, 1996 5,112,569 21,756,700 15,129,517 36,886,217
========= ========== ========== ==========
<FN>
See Notes to Condensed Financial Statements.
</TABLE>
<PAGE>
AG SERVICES OF AMERICA, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. Basis of Presentation
The accompanying unaudited condensed financial statements
have been prepared in accordance with the instructions of
Form 10-Q and Rule 10-01 of Regulation S-X. Certain
information and footnote disclosures normally included in
financial statements prepared in accordance with
generally accepted accounting principles have been
condensed or omitted. It is suggested these interim
condensed financial statements be read in conjunction
with the financial statements and notes thereto included
in the Company's Annual Report for the year ended
February 29, 1996. In the opinion of management, all
adjustments (which include only normal recurring
adjustments) necessary for a fair presentation of the
financial position, results of operations and cash flows
for the interim periods presented have been made.
Operating results for the three and six month periods
ended August 31, 1996 are not necessarily indicative of
the results that may be expected for the year ending
February 28, 1997.
Note 2. Commitments and Contingencies
Commitments:
In the normal course of business, the Company makes
various commitments which are not reflected in the
accompanying condensed financial statements. These
include various commitments to extend credit to
customers. At August 31, 1996 and February 29, 1996 the
Company had approximately $18,520,000 and $37,640,000,
respectively, in commitments to supply farm inputs. No
material losses or liquidity demands are anticipated as
a result of these commitments.
Contingencies:
The Company is named in lawsuits in the ordinary course
of business. Counsel for the Company have advised the
Company, while the outcome of various legal proceedings
is not certain, it is unlikely that these proceedings
will result in any recovery which will materially affect
the financial position or operating results of the
Company.
The availability of lines of credit to finance operations
and the existence of a multi-peril crop insurance program
are essential to the Company's operations. If the
<PAGE>
AG SERVICES OF AMERICA, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
federal multi-peril crop insurance program currently in
existence were terminated or negatively modified and no
comparable private or government program were
established, this could have a material adverse effect on
the Company's future operations. The government has from
time to time evaluated the federal multi-peril insurance
program and is likely to review the program in the
future, and there can be no assurance of the outcome of
such evaluations.
Note 3. Earnings per Common and Common Equivalent Share
Earnings per common and common equivalent share was
computed by dividing net income by the weighted average
number of common and common equivalent shares outstanding
during each respective period.
<PAGE>
AG SERVICES OF AMERICA, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The following table sets forth percentages of net revenues
represented by the selected items in the unaudited condensed
statements of income of the Company for the three and six months
ended August 31, 1996 and 1995. In the opinion of management, all
normal and recurring adjustments necessary for a fair statement of
the results for such periods have been included. The operating
results for any period are not necessarily indicative of results
for any future period.
Percentage Percentage
of Net Revenues of Net Revenues
------------------ ----------------
Three Months Ended Six Months Ended
August 31, August 31,
------------------ ----------------
1996 1995 1996 1995
-------- ------- ------ --------
Net Revenues:
Farm inputs 92.9% 93.3% 95.3% 95.5%
Financing Income 7.1% 6.7% 4.7% 4.5%
------ ------ ------ ------
100.0% 100.0% 100.0% 100.0%
------ ------ ------ ------
Cost of Revenues:
Farm inputs 86.9% 86.1% 89.1% 88.6%
Financing expense 3.3% 3.7% 2.2% 2.4%
Provision for doubtful
notes 1.6% 1.6% 1.6% 1.6%
------ ------ ------ -----
91.8% 91.4% 92.9% 92.6%
------ ------ ------ -----
Income before operating
expenses and income taxes 8.2% 8.6% 7.1% 7.4%
Operating expenses 3.1% 3.2% 2.7% 3.0%
------ ------ ------ -----
Income before income taxes 5.1% 5.4% 4.4% 4.4%
Federal and state income
taxes 1.8% 2.0% 1.6% 1.6%
------ ------ ------ -----
Net income 3.3% 3.4% 2.8% 2.8%
======== ======== ======== ========
Net Revenues:
Net revenues increased $10.2 million or 25.9% during the three
months ended August 31, 1996, compared with the three months ended
August 31, 1995. Net revenues increased $27.4 million or 31.1%
during the six months ended August 31, 1996, compared with the six
months ended August 31, 1995. The Company reached this record
level through increased marketing and sales efforts in our 28 state
market area.
<PAGE>
Cost of Revenues:
The total cost of revenues increased slightly from 91.4% and 92.6%
of net revenues for the three and six months ended August 31, 1995,
respectively, to 91.8% and 92.9% of net revenues for the three and
six months ended August 31, 1996. The increase in total cost of
revenues as a percentage of net revenues was due to the decrease in
gross margin on the sale of farm inputs, but was offset by an
increase in gross margin on financing income. The gross margin on
the sale of farm inputs alone, decreased to 6.50% and 6.45% for the
three and six months ended August 31, 1996, respectively, from
7.71% and 7.28% for the three and six months ended August 31, 1995.
The decline in gross margin on the sale of farm inputs was
primarily the result of a change in product mix from higher to
lower margin farm inputs. This change in the sales mix was due to
planned marketing changes for the 1996 crop year. The Company
focused its marketing efforts in the midwest corn belt and
panhandle regions of Texas with much less emphasis in the southern
cotton producing areas where collection experience has been less
favorable. The effects of these geographic changes were noticeable
as the product mix changed from highly chemical dependent southern
cotton regions to highly irrigation dependent western corn belt and
Texas panhandle regions resulting in lower overall product margins.
In addition to sales mix changes, the decline in farm input margins
was from larger seed volume discounts granted to customers in the
current year relative to the prior year due to growth of the
average size of our customers. The gross margin on financing
income increased to 53.8% and 53.4% for the three and six months
ended August 31, 1996, from 45.0% and 46.3% for the three and six
months ending August 31, 1995. This increase resulted from the
conversion of Ag Services' 7% Convertible Subordinated Debentures
into common stock during the second quarter of fiscal 1997. This
conversion allowed for a pretax interest savings of $241,500 over
the second quarter of fiscal 1996. The increase in gross margin on
financing income was also due to interest income collected and
recorded on customer notes receivable accounts that were previously
classified as impaired (nonaccrual) in terms of their
collectibility. The provision for doubtful notes was 1.6% of net
revenues for the three and six months ended August 31, 1996 and
1995.
Operating Expenses:
Operating expenses decreased to 3.1% and 2.7% of net revenues for
the three and six months ended August 31, 1996, respectively, from
3.2% and 3.0% of net revenues for the three and six months ended
August 31, 1995. This decrease is a result of the Company's
operating expenses increasing at a lower rate (21.9% and 21.5%)
than net revenues (25.9% and 31.1%) for the three and six months
ended August 31, 1996 due to efforts by management to control
spending. The increase in operating expense is attributed
primarily to the increase in payroll and payroll related expenses
due to the Company's growth. Payroll and payroll related expenses
increased to $1,049,309 and $2,136,021 for the three and six months
ended August 31, 1996, respectively, from $837,137 and $1,732,993
for the three and six months ended August 31, 1995.
Net Income:
Net income increased 20.3% to $1,634,997 for the three months ended
August 31, 1996 from $1,358,599 for the three months ended August
31, 1995 and 28.0% to $3,207,713 for the six months ended August
31, 1996 from $2,506,754 for the six months ended August 31, 1995.
The increase in net income is attributable to the increase in net
revenues and the decline in operating expenses as a percentage of
net revenues.
Inflation:
The Company does not believe the Company's net revenues and income
from continuing operations were significantly impacted by inflation
or changing prices in fiscal 1996 or the first six months of fiscal
1997.
<PAGE>
Seasonality:
The Company's revenues and income are directly related to the
growing cycle for crops. Accordingly, quarterly revenues and
income vary during each fiscal year. The following table shows the
Company's quarterly net revenues and net income for fiscal 1996 and
the first two quarters of fiscal 1997. This information is derived
from unaudited financial statements which include, in the opinion
of management, all normal and recurring adjustments which
management consider necessary for a fair statement of results of
those periods. The operating results for any quarter are not
necessarily indicative of the results for any future period.
Fiscal 1996 Quarter Ended
----------------------------------------------
May 31 August 31 November 30 February 29
------- --------- ----------- -----------
(Dollars in thousands)
Net revenues $48,954 $39,436 $12,007 $14,289
Net income $1,148 $1,359 $539 $87
Fiscal 1997 Quarter Ended
----------------------------------------------
May 31 August 31 November 30 February 29
------- --------- ------------ -----------
(Dollars in thousands)
Net revenues $66,207 $49,631
Net income $1,573 $1,635
The Company's primary target market experienced a particularly cool
and wet spring in 1996. These were also the conditions experienced
in the spring of 1995, as a result, planting was delayed resulting
in a delay in the Company's normal pattern of revenues in fiscal
1997 and 1996.
Liquidity and Capital Resources:
At August 31, 1996, the Company had working capital of $25,694,000
an increase of $3,845,000 over a year ago and an increase of
$2,083,000 since February 29, 1996. The components of this net
increase, since February 29, 1996, were (i) $2,166,000 resulting
from operating activities, consisting of approximately $3,208,000
in net income, $106,000 in depreciation, $22,000 in amortization,
and the remainder from a net change in other working capital items,
(ii) capital expenditures of approximately $189,000 related to the
acquisition of equipment and furniture, and (iii) net proceeds of
$106,000 from the issuance of common stock upon exercise of options
and sales of stock through the employee stock purchase plan.
In April 1996, the Company negotiated a $100,000,000 bank line of
credit through February 1998. The line was increased from
$72,000,000 the previous year. The Company's bank line of credit
can be drawn upon based on a percentage of customer notes
receivable. The total outstanding under the line of credit
agreement as of August 31, 1996 was $92,700,000, with an additional
maximum amount available on its line of credit of approximately
$4.4 million based on a percentage of customer notes receivable as
provided by the line of credit agreement. The Company's loan
agreement for its line of credit contains numerous restrictive
covenants, including among others: payment of dividends restricted
to an aggregate of $100,000, mergers, issuance of stock and loans
to shareholders; requirements for the maintenance of certain
financial ratios and total stockholders' equity. The Company was
in compliance with these covenants at August 31, 1996.
<PAGE>
In April 1993, the Company completed the public offering of $13.8
million (including $1.8 million as a result of over-allotments)
principal amount of 7% Convertible Subordinated Debentures due
2003. Interest is paid semi-annually on May 31 and November 30 of
each year and is convertible into Common Stock of the Company at
$9.25 per share, subject to adjustment under certain conditions, at
any time prior to maturity, unless previously redeemed or
repurchased. At August 31, 1996, the balance of the Debentures was
$0.
On June 7, 1996, the Company called for redemption or conversion
all of its outstanding 7% Convertible Subordinated Debentures due
2003 (the "Debentures"). From June 7, 1996 through July 10, 1996,
the redemption date, the Company issued 1,483,345 shares of common
stock upon conversion of $13,721,000 of Debentures and redeemed
$39,000 of Debentures as full settlement of all $13,760,000 of the
Debentures outstanding at May 31, 1996.
Management believes that the financial resources available to it,
including its bank line of credit, trade credit, its equity, and
internally generated funds, will be sufficient to finance the
Company and its operations in the foreseeable future. The Company
currently has not significant capital commitments.
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995
Information contained in this report, other than historical
information, should be considered forward looking which reflect
Management's current views of future events and financial
performance that involve a number of risks and uncertainties. The
factors that could cause actual results to differ materially
include, but are not limited to, the following: general economic
conditions within the agriculture industry; competitive factors and
pricing pressures; changes in product mix; changes in the
seasonality of demand patterns; changes in weather conditions;
changes in agricultural regulations; and other risks detailed in
the Company's Securities and Exchange Commission filings.
<PAGE>
AG SERVICES OF AMERICA, INC.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Stockholders on
August 6, 1996. Proxies for such meeting were solicited
pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended. At such meeting, management's
entire slate of six Directors was elected for a one year
term, (until the Company's 1997 Annual Meeting), and
until the directors' respective successors are duly
elected and qualified;
Votes Votes
Director Name in Favor Withheld
------------- -------- --------
Gaylen D. Miller 3,544,571 7,000
Henry C. Jungling, Jr. 3,544,571 7,000
Kevin D. Schipper 3,544,571 7,000
James D. Gerson 3,544,271 7,300
Michael Lischin 3,544,471 7,100
Ervin J. Mellema 3,544,171 7,400
In addition, a proposal to ratify the appointment of
McGladrey & Pullen, LLP as independent auditors for the
Company for the fiscal year ending February 28, 1997 was
approved by a vote of 3,523,040 votes in favor, 21,306
votes against, and 7,225 votes abstaining.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(11) Statement re computation of earnings per common
share is attached.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the period
covered by this report.
Signatures
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
AG SERVICES OF AMERICA, INC.
(Registrant)
/s/ Gaylen D. Miller
Gaylen D. Miller
President and Chief Executive Officer
(Principal Financial & Accounting Officer)
Date: October 14, 1996
<PAGE>
<TABLE>
AG SERVICES OF AMERICA, INC.
EXHIBIT 11
COMPUTATION OF EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
<CAPTION>
Three Months Ended Six Months Ended
August 31, August 31,
----------------------- ----------------------
1996 1995 1996 1995
------- ------ --------- ---------
<S> <C> <C> <C> <C>
Computation of weighted average number of common
shares outstanding and common equivalent shares:
Primary:
Common shares outstanding at beginning of the period 3,627,424 3,484,184 3,611,350 3,482,634
Weighted average common shares issued during the period 801 3,704 9,906 3,202
Weighted average common shares issued under the stock
purchase plan this period 103 0 152 0
Weighted average common shares issued due to conversion
of the 7% subordinated convertible debentures this
period 368,200 0 186,632 0
Weighted average of the common equivalent shares
computed using the treasury stock method using
the average market price during the period:
Options (1) 225,412 127,839 227,941 136,184
Warrants 0 39,783 0 42,555
--------- --------- --------- ---------
Weighted average number of common and common
equivalent shares 4,221,940 3,655,510 4,035,981 3,664,575
========== ========== ========== ==========
Net income $1,634,997 $1,358,599 $3,207,713 $2,506,754
========== ========== ========== ==========
Earnings per common and common equivalent share $0.39 $0.37 $0.79 $0.68
========== ========== ========== ==========
Fully diluted:
Common shares outstanding at beginning of the period 3,627,424 3,484,184 3,611,350 3,482,634
Common shares issued due to conversion of the 7%
convertible debentures this period 1,483,345 0 1,487,669 0
Weighted average common shares issued during the period 801 3,704 9,906 3,202
Weighted average common shares issued under the stock
purchase plan this period 103 0 152 0
Weighted average of the common equivalent shares computed
using the treasury stock method using the greater of
the quarter end market price or average market price
during the period:
Options (1) 225,413 143,071 228,060 145,655
Warrants 46,324 0 46,323
Assumed conversion of $13.8 million 7% convertible
subordinated debentures (2) 0 1,491,892 0 1,491,892
---------- --------- --------- ---------
Weighted average number of common and common
equivalent shares 5,337,086 5,169,175 5,337,137 5,169,706
========== ========= ========= =========
Net income $1,634,997 $1,358,599 $3,207,713 $2,506,754
Add: Interest on $13.8 million 7% convertible
subordinated debentures, net of income
tax effect 0 154,077 154,077 308,154
Amortization of debt issuance costs, net of
income tax effect 0 13,781 13,781 27,562
---------- ---------- ---------- ----------
Total $1,634,997 $1,526,457 $3,375,571 $2,842,470
========== ========== ========== ==========
Earnings per common and common equivalent share $0.31 $0.30 $0.63 $0.55
========== ========== ========== ==========
<CAPTION>
(1) Some of the stock options have not been included because they are antidilutive.
(2) Assumes conversion at the date of issuance on April 23, 1993.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-END> AUG-31-1996
<CASH> 241,533
<SECURITIES> 0
<RECEIVABLES> 142,160,346
<ALLOWANCES> 5,623,000
<INVENTORY> 1,152,344
<CURRENT-ASSETS> 130,797,349
<PP&E> 1,304,007
<DEPRECIATION> 663,671
<TOTAL-ASSETS> 141,989,998
<CURRENT-LIABILITIES> 105,103,781
<BONDS> 0
0
0
<COMMON> 21,756,700
<OTHER-SE> 15,129,517
<TOTAL-LIABILITY-AND-EQUITY> 141,989,998
<SALES> 110,388,726
<TOTAL-REVENUES> 115,837,929
<CGS> 103,269,954
<TOTAL-COSTS> 105,807,395
<OTHER-EXPENSES> 3,161,897
<LOSS-PROVISION> 1,860,924
<INTEREST-EXPENSE> 2,537,441
<INCOME-PRETAX> 5,007,713
<INCOME-TAX> 1,800,000
<INCOME-CONTINUING> 3,207,713
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,207,713
<EPS-PRIMARY> 0.79
<EPS-DILUTED> 0.63
</TABLE>
