UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended August 31, 1998
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
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
5,209,404 common shares were outstanding as of October 10, 1998.
<PAGE>
AG SERVICES OF AMERICA, INC.
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial statements:
Consolidated condensed balance sheets, August 31, 1998
(unaudited) and February 28, 1998 1
Unaudited consolidated condensed statements of income,
three months and six months ended August 31, 1998 and 1997 2
Unaudited consolidated condensed statements of cash
flows, three months ended August 31, 1998 and 1997 3
Consolidated statement of stockholders' equity,
three months ended August 31, 1998 4
Notes to consolidated condensed financial statements
(unaudited) 4-6
Item 2. Management's discussion and analysis of
financial condition and results of operations 6-11
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on form 8-K: 11
(a) Exhibits
(11) Statement re: computation of per share
earnings 12
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AG SERVICES OF AMERICA, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
<CAPTION>
August 31, February 28,
1998 1998*
ASSETS (Unaudited)
---------- ----------
<S> <C> <C>
CURRENT ASSETS
Cash $3,455 $174
Customer notes receivable, less allowance
for doubtful notes and reserve for
discounts August 31, 1998 $7,571;
February 28, 1998 $2,660 242,021 71,379
Accounts receivable 289 422
Inventories 849 2,972
Foreclosed assets held for sale 62 144
Deferred income taxes, net 293 293
Other current assets 1,007 1,999
---------- ----------
Total current assets $247,976 $77,383
---------- ----------
LONG-TERM RECEIVABLES AND OTHER ASSETS
Customer notes receivable, less allowance
for doubtful notes August 31, 1998 $1,650;
February 28, 1998 $1,340 $16,908 $13,696
Foreclosed assets held for resale 0 48
Loan origination fees, less accumulated
amortization August 31, 1998 $142;
February 28, 1998 $114 415 457
Deferred income taxes, net 124 124
---------- ----------
$17,447 $14,325
---------- ----------
EQUIPMENT, less accumulated depreciation
August 31, 1998 $1,222; February 28, 1998
$1,059 $1,637 $1,540
---------- ----------
$267,060 $93,248
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable, including current maturities $193,252 $39,328
Outstanding checks in excess of bank balances 3,632 1,793
Accounts payable 11,020 1,654
Accrued expenses 2,034 802
Income taxes payable 1,746 0
---------- ----------
Total current liabilities $211,684 $43,577
---------- ----------
LONG-TERM LIABILITIES
Notes payable, less current maturities $6,650 $5,915
---------- ----------
STOCKHOLDERS' EQUITY
Capital stock $22,571 $22,307
Retained earnings 26,155 21,449
---------- ----------
$48,726 $43,756
---------- ----------
$267,060 $93,248
========== ==========
<CAPTION>
*Condensed from Audited Financial Statements
<FN>
See notes to Consolidated Condensed Financial Statements.
</TABLE>
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<PAGE>
<TABLE>
AG SERVICES OF AMERICA, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME
Three Months and six months ended August 31, 1998 and 1997
(Dollars in Thousands, Except Per Share Amounts)
<CAPTION>
Three months ended Six months ended
August 31, August 31,
------------------ -----------------
1998 1997 1998 1997
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Net revenues:
Farm inputs $62,752 $54,628 $160,472 $132,967
Financing income 6,645 4,315 10,454 6,751
------- ------- -------- --------
$69,397 $58,943 $170,926 $139,718
------- ------- -------- --------
Cost of revenues:
Farm inputs $59,175 $51,335 $151,536 $125,288
Financing expense 3,372 2,044 4,876 2,854
Provision for doubtful notes 1,245 914 3,072 2,171
------- ------- -------- --------
$63,792 $54,293 $159,484 $130,313
------- ------- -------- --------
Income before operating expenses
and income taxes $5,605 $4,650 $11,442 $9,405
Operating expenses 2,076 1,606 4,120 3,417
------- ------- -------- --------
Income before income taxes $3,529 $3,044 $7,322 5,988
Federal and state income taxes 1,253 1,110 2,616 2,131
------- ------- -------- --------
Net income $2,276 $1,934 $4,706 $3,857
======= ======= ======== ========
Earnings per share
Basic $0.44 $0.36 $0.91 $0.75
======= ======= ======== ========
Diluted $0.42 $0.36 $0.87 $0.71
======= ======= ======== ========
Weighted average shares
Basic 5,154 5,435 5,198 5,148
======= ======= ======== ========
Diluted 5,435 5,443 5,439 5,424
======= ======= ======== ========
<FN>
See Notes to Consolidated Condensed Financial Statements.
</TABLE>
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<PAGE>
<TABLE>
AG SERVICES OF AMERICA, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Three Months Ended August 31, 1998 and 1997
(Dollars in Thousands)
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $4,706 $3,857
Adjustments to reconcile net income
to net cash (used in) operating activities:
Depreciation 172 121
Amortization 42 57
Changes in assets and liabilities (158,262) (105,145)
---------- ----------
Net cash (used in) operating activities ($153,342) ($101,110)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment (269) (789)
Decrease in foreclosed assets held for sale 130 (292)
---------- ----------
Net cash (used in) investing activities ($139) ($1,081)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short term borrowings $178,272 $100,295
Principal payments on short term borrowings (24,348) (1,696)
Proceeds from long term borrowings 735 --
Increase in excess of outstanding checks
over bank balance 1,839 3,386
(Increase) in loan origination fees -- (571)
Proceeds from issuance of capital stock
upon exercise of options 254 184
Proceeds from issuance of capital stock
under stock purchase plan 10 4
---------- ----------
Net cash (used in) financing activities $156,762 $101,602
---------- ----------
Increase (Decrease) in cash $3,281 ($589)
CASH
Beginning 174 880
---------- ----------
Ending $3,455 $291
========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest $2,258 $1,684
Income taxes $817 $1,286
<FN>
See notes to Consolidated Condensed Financial Statements.
</TABLE>
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<TABLE>
AG SERVICES OF AMERICA, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Quarter Ended August 31, 1998
(Unaudited)
(Dollars in thousands)
<CAPTION>
Capital Stock
-----------------------
Shares Retained
Issued Amount Earnings Total
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance,
February 28, 1998 5,177,154 $22,307 $21,449 $43,756
Net income -- -- 4,706 4,706
Issuance of 31,550
shares of capital -- 0
stock upon the
exercise of
options 31,550 254 -- 254
Issuance of
shares of capital
stock under employee
stock purchase plan 600 10 -- 10
---------- ----------- ----------- -----------
Balance,
August 31, 1998 5,209,304 $22,571 $26,155 $48,726
========== ======= ======= =======
<FN>
See Notes to Consolidated Condensed Financial Statements.
</TABLE>
AG SERVICES OF AMERICA, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. Basis of Presentation
The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with the instructions to 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 consolidated 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 28, 1998. In the opinion of
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 period ended
August 31, 1998 are not necessarily indicative of the results that may be
expected for the year ending February 28, 1999.
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<PAGE>
Principles of Consolidation:
The consolidated financial statements include the accounts of Ag Services
of America, Inc. (the Company) and its wholly owned subsidiary, Ag
Acceptance Corporation. All material intercompany balances and transactions
have been eliminated in consolidation.
According to the terms related to the asset backed securitized financing
program as described in Note 3 of the consolidated condensed financial
statements, the Company formed Ag Acceptance Corporation, a wholly owned,
special purpose corporation.
Unless otherwise noted, all amounts present are in thousands except per share
amounts.
Note 2. Commitments and Contingencies
Commitments:
In the normal course of business, the Company makes various commitments that
are not reflected in the accompanying consolidated condensed financial
statements. These include various commitments to extend credit to
customers. At August 31, 1998 and February 28, 1998 the Company had
approximately $23,228 and $69,151, 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 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. Pledged Assets and Related Debt
On March 11, 1997, the Company implemented an asset backed securitized
financing program with a maximum available borrowing amount of $135 million.
This facility was amended and increased to $205 million in March of 1998.
Under the terms of the five-year facility, the Company sells and may continue
to sell or contribute certain notes receivable to Ag Acceptance Corporation
("Ag Acceptance"), a newly formed, wholly owned, special purpose subsidiary of
the Company. Ag Acceptance pledges its interest in these notes receivable
to a commercial-paper market conduit entity and incurs interest at variable
rates in the commercial paper market. The agreement contains various
restrictive covenants including, among others, restrictions on mergers,
issuance of stock, declaration or payment of dividends, transactions with
affiliates and requires the Company to maintain certain levels of equity and
pretax earnings. Advances under the facility are made subject to portfolio
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<PAGE>
performance, financial covenant restrictions and borrowing base calculations.
At August 31, 1998, the Company had a maximum amount available under the asset
backed securitized financing program of approximately $223, based on borrowing
base computations as provided by the agreement.
In conjunction with the securitized financing program, Ag Services maintains
an $8.5 million revolving bank line of credit through fiscal 1999. The line
of credit is accessible to cover any potential deficiencies in available funds
financed through the securitization program. At August 31, 1998 the Company
had a maximum amount available under the revolving line of credit of $50, based
on the borrowing base computation as provided by the agreement.
On April 23, 1998, the Company negotiated an additional bank line of credit
with a maximum available borrowing amount of $20 million. The line of credit
is accessible to cover the Company's funding requirements for its intermediate
loan program. The agreement has a two year term ending February 28, 2000. At
August 31, 1998, approximately $50 was available based on the borrowing base
computation as provided by the agreement.
Note 4. Earnings Per Share
In 1997, the Financial Accounting Standards Board issued Statement No. 128,
"Earnings Per Share." Statement No. 128 replaced the calculation of primary
and fully diluted earnings per share with basic and diluted earnings per share.
Basic earnings per share is computed by dividing net income available to common
stockholders by the weighted average number of shares outstanding. In
computing diluted earnings per share, the dilutive effect of stock options
during the periods presented as well as the effect of contingently issuable
shares also increase the weighted average number of shares.
The Company initially applied statement No. 128 for the year ended February 28,
1998 and has restated all per share information for prior periods to conform
to Statement No. 128.
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 months and six months ended August 31, 1998 and 1997. 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.
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<PAGE>
<TABLE>
Percentage Percentage
of Net Revenues of Net Revenues
Three Months Ended Six Months Ended
August 31, August 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net Revenues:
Farm inputs 90.4% 92.7% 93.9% 95.2%
Financing Income 9.6% 7.3% 6.1% 4.8%
100.0% 100.0% 100.0% 100.0%
Cost of Revenues:
Farm inputs 85.3% 87.1% 88.7% 89.7%
Financing expense 4.9% 3.5% 2.8% 2.0%
Provision for doubtful notes 1.8% 1.5% 1.8% 1.6%
92.0% 92.1% 93.3% 93.3%
Income before operating
expenses and income taxes 8.0% 7.9% 6.7% 6.7%
Operating expenses 2.9% 2.7% 2.4% 2.4%
Income before income taxes 5.1% 5.2% 4.3% 4.3%
Federal and state income taxes 1.8% 1.9% 1.5% 1.5%
Net income 3.3% 3.3% 2.8% 2.8%
</TABLE>
Net Revenues:
Net revenues increased $10.5 million or 7.7% during the three months ended
August 31, 1998, compared with the three months ended August 31, 1997.
Net revenues increased $31.2 million or 22.3% during the six months ended
August 31, 1998, compared with the six months ended August 31, 1997.
The Company reached this record level through increased market penetration with
the introduction of Agri-Flex Credit in our thirty-state market area.
Financing income as a percentage of net income grew to 9.6% and 6.1% for the
three and six months ended August 31, 1998, respectively, from 7.3% and 4.8%
for the same periods of the previous year. This growth was a result of the
volume of lending under the Company's new servicing and marketing agreement
as well as growth experienced under the Company's Intermediate Term Financing
Program.
Cost of Revenues:
The total cost of revenues remained relatively constant at 92.1% and 93.3% of
net revenues for the three and six months ended August 31, 1998 and 1997,
respectively. The gross margin on the sale of farm inputs alone, decreased
to 5.70% and 5.57% for the three and six months ended August 31, 1998,
respectively, from 6.03% and 5.77% for the three and six months ended
August 31, 1997. This decrease was the result of wet weather conditions in the
Eastern Cornbelt which caused a change in planting from corn to soybeans,
reducing the volume of fertilizer sales. The gross margin on financing income,
alone, decreased to 49.3% and 53.4% for the three and six months ended
August 31, 1998 from 52.6% and 57.7% for the three and six months ended
August 31, 1997. The increase in gross margin on financing income was the
result of increased leverage. The provision for doubtful notes increased from
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<PAGE>
1.5% and 1.6% of net revenues for the three and six months ended
August 31, 1997, respectively, to 1.8% and 1.8% for the three and six months
ended August 31, 1998. The increase is a result of lending under the Company's
new servicing and marketing agreement as well as growth experienced under the
Company's Intermediate Term financing program as mentioned above.
Operating Expenses:
Operating expenses increased to 2.9% of net revenues for the three months ended
August 31, 1998 from 2.7% of net revenues for the three months ended
August 31, 1997. The increase is the result of reduction of sales in the
Eastern Cornbelt due to wet weather, which caused the Company to incur overhead
costs due to infrastructure development that took place in anticipation of
increased sales volume. Operating expenses remained at 2.4% of net revenues
for the six months ended August 31, 1998 and 1997. 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 $1,516 and $2,945 for the three and six months ended
August 31, 1998, respectively, from $1,231 and $2,432 for the three and six
months ended August 31, 1997.
Net Income:
Net income increased 17.7% to $2,276 for the three months ended August 31, 1998
from $1,934 for the three months ended August 31, 1997 and 22.0% to $4,706 for
the six months ended August 31, 1998 from $3,857 for the six months ended
August 31, 1997. The increase is attributable to the increase in net revenues.
Inflation:
The Company does not believe net revenues and income from continuing operations
were significantly impacted by inflation or changing prices in fiscal 1998 or
the first six months of fiscal 1999.
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 1998 and the first quarter of fiscal 1999. This information
is derived from unaudited consolidated 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.
<TABLE>
Fiscal 1999 Quarter Ended
May 31 August 31 November 30 February 28
(Dollars in thousands)
<S> <C> <C> <C> <C>
Net revenues $101,276 $69,397
Net income $2,430 $2,276
Fiscal 1998 Quarter Ended
May 31 August 31 November 30 February 28
(Dollars in thousands)
Net revenues $80,775 $58,943 $14,224 $32,130
Net income $1,922 $1,934 $1,018 $307
</TABLE>
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<PAGE>
Except for the Eastern corn belt, the Company's primary market area experienced
a normal 1998 crop planting season. Wet weather conditions in the Eastern
Cornbelt caused reduced sales of fertilizer, as well as some shifting from corn
to soybean production. The result was an estimated 2% reduction in revenues and
earnings for the first six months of fiscal 1999.
Liquidity and Capital Resources:
At August 31, 1998, the Company had working capital of $36,292, an increase of
$8,122 compared to a year ago and an increase of $2,486 since February 28, 1998.
The components of this net increase, since February 28, 1998, were (i) $2,491
resulting from operating activities, consisting of approximately $4,706 in net
income, $172 in depreciation, $42 in amortization, and the remainder from the
net change in other working capital items, (ii) capital expenditures of
approximately $269 related to the acquisition of equipment and furniture, and
(iii) net proceeds of $264 from the issuance of common stock upon exercise of
options and sales of stock through the employee stock purchase plan.
On March 11, 1997, the Company implemented an asset backed securitized
financing program with a maximum available borrowing amount of $135 million.
This facility was amended and increased to $205 million in March of 1998.
Under the terms of the five year facility, the Company sells and may continue
to sell or contribute certain notes receivable to Ag Acceptance Corporation
("Ag Acceptance"), a newly formed, wholly owned, special purpose subsidiary of
the Company. Ag Acceptance pledges its interest in these notes receivable to
a commercial-paper market conduit entity and incurs interest at variable rates
in the commercial paper market. The agreement contains various restrictive
covenants, including, among others, restrictions on mergers, issuance
of stock, declaration or payment of dividends, transactions with affiliates,
and requires the Company to maintain certain levels of equity and pretax
earnings. Advances under the facility are made subject to portfolio
performance, financial covenant restrictions and borrowing base calculations.
At August 31, 1998, the Company had a maximum amount available under the asset
backed securitized financing program of approximately $223 million, based on
borrowing base computations as provided by the agreement.
In conjunction with the securitized financing program, Ag Services will maintain
an $8.5 million revolving bank line of credit in fiscal 1999. The line of
credit is accessible to cover any potential deficiencies in available funds
financed through the securitization program. All borrowings are collateralized
by substantially all assets of the Company. The agreement requires that the
total outstanding borrowings be repaid in full for 10 consecutive days during
the Company's fiscal second quarter. The agreement contains various restrictive
covenants, including, among others, restrictions on mergers, issuance of stock,
declaration or payment of dividends, loans to stockholders, and requires the
Company to maintain certain levels of equity and pretax earnings. At
August 31, 1998, approximately $50 was available based on the borrowing
base computation as provided by the agreement.
On April 23, 1998, the Company negotiated an additional bank line of credit
with a maximum available borrowing amount of $20 million. The line of credit
is accessible to cover the Company's funding requirements for its intermediate
loan program. The terms of the two year agreement allow for three interest
rate alternatives, including (i) variable base rate advances requiring monthly
interest payments at 0.5% above the bank's prime rate, (ii) variable rate
advances requiring monthly interest payments at 2.5% above Fed Fund rates, or
(iii) fixed rate advances requiring interest payments upon maturity at 2.0%
above LIBOR for 30, 60, or 90 day maturities. All borrowings are
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collateralized by substantially all assets of the company. The agreement
contains various restrictive covenants, including, among others, restrictions
on mergers, issuance of stock, declaration or payment of dividends, loans to
stockholders, and requires the Company to maintain certain levels of equity
and pretax earnings. These restrictions are in effect unless the bank's
written consent is obtained. Advances under the line of credit agreement are
also subject to portfolio performance, financial covenant restrictions, and
borrowing base calculations. At August 31, 1998, approximately $50 was
available based on the borrowing base computation as provided by the agreement.
Management believes that the financial resources available to it, including its
asset backed securitization program, its bank lines 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.
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 13,
1998. 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 1999 Annual Meeting), and until
the director's respective successors are duly elected and qualified;
<TABLE>
Votes Votes
Director Name in Favor Withheld
<S> <C> <C>
Gaylen D. Miller 3,438,080 5,265
Henry C. Jungling, Jr. 3,438,080 5,265
Kevin D. Schipper 3,438,080 5,265
James D. Gerson 3,437,880 5,465
Michael Lischin 3,438,080 5,265
Ervin J. Mellema 3,438,080 5,265
</TABLE>
In addition, a proposal to amend the Company's 1995 stock purchase
plan was approved by a vote of 3,224,645 votes in favor, 175,500
against the plan, and 43,200 abstaining.
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<PAGE>
The third item of business, a proposal to ratify the appointment
of McGladrey & Pullen, LLP as independent auditors for the Company
for the fiscal year ending February 28, 1999 was approved by a
vote of 3,424,042 votes in favor, 2,120 votes against, and 17,183
votes abstaining.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(11) Statement re computation of earnings per common share
is attached.
(11) Statement re computation of per share earnings 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 of Finance & Treasurer
(Principal Financial & Accounting Officer)
Date: October 15, 1998
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<TABLE>
AG SERVICES OF AMERICA, INC.
EXHIBIT 11
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
Three Months Ended Six Months Ended
August 31, August 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Computation of weighted average
number of basic shares:
Basic:
Common shares outstanding at
beginning of the period 5,199,304 5,146,916 5,177,154 5,135,719
Weighted average number of shares
issued during the period 3,816 7,397 20,267 12,447
Weighted average shares
outstanding (basic) 5,203,120 5,154,313 5,197,521 5,148,166
Net income $2,276,085 $1,934,490 $4,705,523 $3,856,735
Basic earnings per share $0.44 $0.38 $0.91 $0.75
Diluted:
Common shares outstanding at
beginning of the period 5,199,304 5,146,916 5,177,154 5,135,719
Weighted average number of shares
issued during the period 3,816 7,397 20,267 12,447
Weighted average of potential
dilutive shares computed
using the treasury stock
method using average market
price during the period:
Options (1) 233,163 280,865 241,510 275,668
Weighted average number of common
and common equivalent
shares 5,436,286 5,435,181 5,439,031 5,423,834
Net income $2,276,085 $1,934,490 $4,705,523 $3,856,735
Diluted earnings per share $0.42 $0.36 $0.87 $0.71
<FN>
(1) Some of the stock options have not been included because they are
antidilutive.
</TABLE>
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AG SERVICES OF AMERICA, INC. ARTICLE 5 OF REGULATION S-X
2ND QTR 10-Q FINANCIAL DATA SCHEDULE
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
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