UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the period ended November 30, 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)
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report.)
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
5,124,819 common shares were outstanding as of January 13, 1997.
<PAGE>
AG SERVICES OF AMERICA, INC.
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial statements:
Condensed balance sheets, November 30, 1996
(unaudited) and February 29, 1996 1
Unaudited condensed statements of income,
three months and nine months ended November 30,
1996 and 1995 2
Unaudited condensed statements of cash flows,
nine months ended November 30, 1996 and 1995 3
Statement of stockholders' equity, nine
months ended November 30, 1996 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 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>
November 30, February 29,
ASSETS 1996 1996 *
(Unaudited)
------------- -------------
<S> <C> <C>
CURRENT ASSETS
Cash $3,756,555 $1,808,778
Customer notes receivable, less allowance for
doubtful notes and reserve for discounts November
30, 1996 $3,570,000; February 29, 1996 $1,370,000 71,424,857 31,702,885
Accounts receivable 324,248 117,834
Inventories 821,165 3,075,087
Foreclosed assets held for sale 1,220,148 2,778,260
Deferred income tax charges, net 558,000 543,000
Other current assets 626,080 4,550,900
------------- -------------
Total current assets $78,731,053 $44,576,744
------------- -------------
LONG-TERM RECEIVABLES AND OTHER ASSETS
Customer notes receivable, less allowance for
doubtful notes and reserve for discounts November
30, 1996 $1,355,000; February 29, 1996 $1,295,000 $9,620,915 $8,336,441
Foreclosed assets held for sale 252,441 574,805
Deferred debt issuance costs, less accumulated
amortization November 30, 1996 $0;
February 29, 1996 $244,800 0 620,200
Deferred income tax charges, net 492,000 477,000
------------- -------------
$10,365,356 $10,008,446
------------- -------------
EQUIPMENT, less accumulated depreciation
November 30, 1996 $706,845; February 29,
1996 $603,607 $672,039 $601,115
------------- -------------
$89,768,448 $55,186,305
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable $47,500,000 $19,850,000
Accounts payable 3,247,822 471,291
Accrued expenses 1,070,551 644,207
Income taxes payable 151,956 --
Total current liabilities $51,970,329 $20,965,498
LONG-TERM LIABILITIES
7% convertible subordinated debentures $0 $13,800,000
------------- -------------
STOCKHOLDERS' EQUITY
Capital stock $21,836,466 $8,499,003
Retained earnings 15,961,653 11,921,804
------------- -------------
$37,798,119 $20,420,807
------------- -------------
$89,768,448 $55,186,305
============= =============
<CAPTION>
*Condensed from Audited Financial Statements.
<FN>
See Notes to Condensed Financial Statements.
</TABLE>
-1-
<PAGE>
<TABLE>
AG SERVICES OF AMERICA, INC.
UNAUDITED CONDENSED STATEMENTS OF INCOME
<CAPTION>
Three Months Ended Nine Months Ended
November 30, November 30,
1996 1995 1996 1995
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Net revenues:
Farm inputs $8,150,204 $9,369,447 $118,538,930 $93,819,603
Financing income 3,251,402 2,637,193 8,700,605 6,576,502
------------ ------------ ------------- -------------
$11,401,606 $12,006,640 $127,239,535 $100,396,105
Cost of revenues: ------------ ------------ ------------- -------------
Farm inputs $6,908,576 $8,093,100 $110,178,530 $86,392,740
Financing expense 1,544,467 1,482,653 4,081,908 3,597,112
Provision for doubtful
notes 183,274 188,000 2,044,198 1,635,410
------------ ------------ ------------- -------------
$8,636,317 $9,763,753 $116,304,636 $91,625,262
------------ ------------ ------------- -------------
Income before operating
expenses and income
taxes $2,765,289 $2,242,887 $10,934,899 $8,770,843
Operating expenses 1,508,153 1,394,262 4,670,050 3,996,464
------------ ------------ ------------- -------------
Income before income
taxes $1,257,136 $848,625 $6,264,849 $4,774,379
Federal and state income
taxes 425,000 310,000 2,225,000 1,729,000
------------ ------------ ------------- -------------
Net income $832,136 $538,625 $4,039,849 $3,045,379
============ ============ ============= =============
Earnings per common and
common equivalent share:
Primary $0.16 $0.14 $0.87 $0.83
============ ============ ============= =============
Fully diluted $0.16 $0.14 $0.79 $0.68
============ ============ ============= =============
Weighted average common
and common equivalent
shares outstanding:
Primary 5,330,214 3,737,048 4,622,806 3,689,673
============ ============ ============= =============
Fully diluted 5,363,210 5,228,733 5,358,276 5,190,405
============ ============ ============= =============
<FN>
See Notes to Condensed Financial Statements.
</TABLE>
-2-
<PAGE>
<TABLE>
AG SERVICES OF AMERICA, INC.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
Nine Months Ended November 30, 1996 and 1995
<CAPTION>
1996 1995
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $4,039,849 $3,045,379
Adjustments to reconcile net income to net
cash (used in) operating activities:
Depreciation 162,873 132,669
Amortization 21,600 64,800
Deferred income taxes (30,000) (20,000)
(Gain) loss on sale of equipment (774) (1,327)
Change in assets and liabilities (31,679,287) (30,579,922)
------------- -------------
Net cash (used in) operating activities ($27,485,739) ($27,358,401)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of equipment $29,750 $5,000
Purchase of equipment (256,842) (160,697)
(Increase) decrease in foreclosed
assets held for sale 1,874,546 (1,957,649)
------------- -------------
Net cash (used in) investing activities $1,647,454 (2,113,346)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings $78,425,000 $66,700,000
Principal payments on short-term borrowings (50,775,000) (38,300,000)
Net payments on conversion or redemption of
convertible subordinated debentures (49,756) --
Increase in excess of outstanding checks
over bank balance -- 206,708
Proceeds from the issuance of capital stock
exercise of options 173,275 80,863
Proceeds from the issuance of capital stock
upon exercise of warrants -- 527,997
Proceeds from the issuance of capital stock
under stock purchase plan 12,543 --
------------- -------------
Net cash provided by financing activities $27,786,062 $29,215,568
------------- -------------
(Decrease) in cash $1,947,777 ($256,179)
CASH
Beginning 1,808,778 326,545
------------- -------------
Ending $3,756,555 $70,366
============= =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest $3,781,900 $3,574,000
Income taxes $1,996,000 $1,503,500
<FN>
See Notes to Condensed Financial Statements.
</TABLE>
-3-
<PAGE>
<TABLE>
AG SERVICES OF AMERICA, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
Nine Months Ended November 30, 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 - - - - 4,039,849 4,039,849
Issuance of 21,150 shares
of capital stock upon
the exercise of options 21,150 173,275 - - 173,275
Issuance of 1,100 shares
of capital stock under
employee stock purchase
plan 1,100 12,543 -- 12,543
Issuance of 1,487,669
shares of capital stock
upon conversion of sub-
bordinated debentures 1,487,669 13,151,645 -- 13,151,645
------------ ------------ ------------- -------------
Balance, November 30, 1996 5,121,269 $21,836,466 $15,961,653 $37,798,119
============ ============ ============= =============
<FN>
See Notes to Condensed Financial Statements.
</TABLE>
-4-
<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 nine month periods
ended November 30, 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 November 30, 1996 and February 29, 1996
the Company had approximately $7,020,000 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 nine months
ended November 30, 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 Nine Months Ended
November 30, November 30,
------------------ -----------------
1996 1995 1996 1995
-------- --------- ------- --------
Net Revenues:
Farm inputs 71.5% 78.0% 93.2% 93.4%
Financing Income 28.5% 22.0% 6.8% 6.6%
------ ------ ------ ------
100.0% 100.0% 100.0% 100.0%
------ ------ ------ ------
Cost of Revenues:
Farm inputs 60.6% 67.4% 86.6% 86.1%
Financing expense 13.5% 12.3% 3.2% 3.6%
Provision for doubtful
notes 1.6% 1.6% 1.6% 1.6%
----- ----- ----- -----
75.7% 81.3% 91.4% 91.3%
----- ----- ----- -----
Income before operating
expenses and income taxes 24.3% 18.7% 8.6% 8.7%
Operating expenses 13.3% 11.6% 3.7% 4.0%
----- ----- ---- ----
Income before income taxes 11.0% 7.1% 4.9% 4.7%
Federal and state income
taxes 3.7% 2.6% 1.7% 1.7%
----- ---- ---- ----
Net income 7.3% 4.5% 3.2% 3.0%
======== ======== ======== ========
Net Revenues:
Net revenues decreased $0.6 million or 5.0% to $11.4 million for
the three months ended November 30, 1996, compared with $12.0
million for the three months ended November 30, 1995. Net revenues
increased $26.8 million or 26.7% to $127.2 million for the nine
months ended November 30, 1996, compared with $100.4 million for
the nine months ended November 30, 1995. Financing income as a
percentage of net revenues increased to 28.5% of net revenues for
the three months ended November 30, 1996 from 22.0% of net revenues
for the three months ended November 30, 1995 and increased to 6.8%
of net revenues for the nine months ended November 30, 1996 from
6.6% of net revenues for the nine months ended November 30, 1995.
The Company reached these record net revenue levels through the
first three quarters of fiscal 1997, by increasing marketing and
sales efforts in our 28 state market area.
<PAGE>
Cost of Revenues:
The total cost of revenues decreased from 81.3% to 75.7% of net
revenues for the three months ended November 30, 1995 and 1996,
respectively and increased slightly from 91.3% to 91.4% for the
nine months ended November 30, 1995 and 1996. The increase in
total cost of net revenues for the nine months ended November 30,
1996 was due to a decrease in the gross margin on the sale of farm
inputs, but was offset by an increase in gross margin on financing
income. The gross margin on farm inputs, alone, increased to 15.2%
from 13.6% for the three months ended November 30, 1996 and 1995.
For the nine months ending November 30, 1996 and 1995, however,
gross margin on farm inputs dropped to 7.1% in 1996 from 7.9% in
1995. The decline in gross margin on the sale of farm inputs was
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 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 52.5% and 53.1% for the three and nine months ended November 30,
1996, from 43.8% and 45.3% for the three and nine months ending
November 30, 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 $483,000 in the second and
third quarters of fiscal 1997, compared to the same six month
period in fiscal 1996. The increase in gross margin on financing
income was also due to interest income collected and recorded on
customer note 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 nine months ended November 30, 1996 and 1995.
Operating Expenses:
Operating expenses decreased to 3.7% from 4.0% of net revenues for
the nine months ended November 30, 1996 and 1995, and increased to
13.3% from 11.6% for the three months ended November 30, 1996 and
1995, respectively. The increase in operating expense is primarily
due to the increase in payroll to $885,796 and $2,722,228 for the
three and nine months ended November 30, 1996, respectively, from
$735,591 and $2,226,593 for the three and nine months ended
November 30, 1995. The increase is a result of the Company adding
employees after November 30, 1995, most significantly an increased
sales force as well as general wage rate increases to existing
employees. The balance of the increase in operating expenses is
attributed principally to the Company's growth.
Net Income:
Net income increased 54.9% to $832,136 for the three months ended
November 30, 1996 from $538,625 for the three months ended November
30, 1995 and increased 32.7% to $4,039,849 for the nine months
ended November 30, 1996 from $3,045,379 for the nine months ended
November 30, 1995. The increase in net income is attributable to
the increase in net revenues, improvement in the gross margin on
financing income, and total operating expenses increasing at a
lower rate than net revenues.
<PAGE>
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 three quarters of
fiscal 1997.
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 three 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 28
------ --------- ----------- -----------
(Dollars in thousands)
Net revenues $66,207 $49,631 $11,402
Net income $1,573 $1,635 $832
In the Company's primary target market, planting in the current
year was ahead of spring 1995 planting due to planting delays
experienced in a prior year. The delay in the prior year, caused
by cool and wet weather, disrupted the Company's normal pattern of
revenues, and resulted in revenue timing differences between the
second and third quarters.
Liquidity and Capital Resources:
At November 30, 1996, the Company had working capital of
$26,760,000 an increase of $3,771,000 over a year ago and an
increase of $3,149,000 since February 29, 1996. The components of
this net increase, since February 29, 1996, were (i) $3,220,000
resulting from operating activities, consisting of approximately
$4,040,000 in net income, $163,000 in depreciation, $22,000 in
amortization, and the remainder from a net change in other working
capital items, (ii) capital expenditures of approximately $257,000
related to the acquisition of equipment and furniture, and (iii)
net proceeds of $186,000 from the issuance of common stock upon
exercise of options and sales of stock through the employee stock
purchase plan.
<PAGE>
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 November 30, 1996 was $47,500,000, with an
additional maximum amount available on its line of credit of
approximately $7.9 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
November 30, 1996.
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 November 30, 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 no 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 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/ Brad D. Schlotfeldt
Brad D. Schlotfeldt
Vice President Finance/Treasurer
(Principal Financial & Accounting Officer)
Date: January 15, 1997
<PAGE>
<TABLE>
AG SERVICES OF AMERICA, INC.
EXHIBIT 11 - COMPUTATION OF EARNINGS PER COMMON SHARE
<CAPTION>
Three Months Ended Nine Months
November 30, November 30,
1996 1995 1996 1995
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Computation of weighted average
number of common shares outstan-
ding and common equivalent shares:
Primary:
Common shares outstanding at
beginning of the period 5,112,569 3,493,884 3,611,350 3,482,634
Weighted average common shares
issued during the period 4,193 78,420 12,693 33,046
Weighted average common shares
issued under the stock purchase
plan this period 270 -- 389 --
Weighted average common shares
issued due to conversion of the
7% subordinated convertible
debentures this period -- -- 776,693 --
Weighted average common equiva-
lent shares computed using the
treasury stock method using the
average market price during
the period:
Warrants -- 12,017 -- 33,244
Options (1) 213,182 152,727 221,681 140,749
---------- ---------- ----------- ----------
Weighted average number of common
and common equivalent shares 5,330,214 3,737,048 4,622,806 3,689,673
========== ========== =========== ===========
Net income $832,136 $538,625 $4,039,849 $3,045,379
========== ========== =========== ===========
Earnings per common and
common equivalent share $0.16 $0.14 $0.87 $0.83
========== ========== =========== ===========
Fully diluted:
Common shares outstanding at
beginning of the period 5,112,569 3,493,884 3,611,350 3,482,634
Common shares issued due to con-
version of the 7% convertible
convertible debentures this
period -- -- 1,487,669 --
Weighted average common shares
issued during the period 4,193 78,420 12,693 33,046
Weighted average common shares
issued under the stock purchase
plan this period 270 -- 389 --
Weighted average common equiva-
lent shares computed using the
treasury stock method using the
quarter end market price, if
higher than the average market
price:
Warrants -- 14,035 -- 38,826
Options (1) 246,178 150,502 246,175 144,007
Assumed conversion of $13.8 mill-
ion 7% convertible subordinated
debentures (2) -- 1,491,892 -- 1,491,892
---------- ---------- ----------- ------------
Weighted average number of common
and common equivalent shares 5,363,210 5,228,733 5,358,276 5,190,405
========== ========== =========== ============
Net income $832,136 $538,625 $4,039,849 $3,045,379
Add: Interest on $13.8 million 7%
convertible subordinated
debentures, net of income
tax effect -- 154,077 154,077 462,231
Amortization of debt issu-
ance costs, net of income
tax effect -- 13,781 13,781 41,342
---------- ---------- ----------- -----------
Total $832,136 $706,483 $4,207,707 $3,548,952
========== ========== =========== ===========
Earnings per common and common
equivalent share $0.16 $0.14 $0.79 $0.68
========== ========== =========== ============
<CAPTION>
(1) Some of the stock options have not been included because they are antidilutive.
(2) Assumed conversion at the date of issuance on April 23, 1993.
</TABLE>
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-END> NOV-30-1996
<CASH> 3,756,555
<SECURITIES> 0
<RECEIVABLES> 86,295,020
<ALLOWANCES> 4,925,000
<INVENTORY> 821,165
<CURRENT-ASSETS> 78,731,053
<PP&E> 1,378,884
<DEPRECIATION> 706,845
<TOTAL-ASSETS> 89,768,448
<CURRENT-LIABILITIES> 51,970,329
<BONDS> 0
0
0
<COMMON> 21,836,466
<OTHER-SE> 15,961,653
<TOTAL-LIABILITY-AND-EQUITY> 89,768,448
<SALES> 118,538,930
<TOTAL-REVENUES> 127,239,535
<CGS> 110,178,530
<TOTAL-COSTS> 114,260,438
<OTHER-EXPENSES> 4,670,050
<LOSS-PROVISION> 2,044,198
<INTEREST-EXPENSE> 4,081,908
<INCOME-PRETAX> 6,264,849
<INCOME-TAX> 2,225,000
<INCOME-CONTINUING> 4,039,849
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,039,849
<EPS-PRIMARY> 0.87
<EPS-DILUTED> 0.79
</TABLE>
