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 May 31, 1999
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
5,229,264 common shares were outstanding as of May 31, 1999.
<PAGE>
AG SERVICES OF AMERICA, INC.
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial statements:
Consolidated condensed balance sheets, May 31, 1999
(unaudited) and February 28, 1999 1
Unaudited consolidated condensed statements of income,
three months ended May 31, 1999 and 1998 2
Unaudited consolidated condensed statements of cash
flows, three months ended May 31, 1999 and 1998 3
Consolidated statement of stockholders' equity,
three months ended May 31, 1999 4
Notes to consolidated condensed financial statements
(unaudited) 5-7
Item 2. Management's discussion and analysis of
financial condition and results of operations 8-12
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on form 8-K: 13
(a) Exhibits
(11) Statement re computation of per share
earnings 14
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AG SERVICES OF AMERICA, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
<CAPTION>
May 31, February 28
ASSETS 1999 1999*
(Unaudited)
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash $162 $67
Customer notes receivable, less allowance
for doubtful notes and reserve for
discounts May 31, 1999 $8,856;
February 28, 1999 $4,440 225,587 106,211
Accounts receivable 1,499 515
Inventories 1,488 2,818
Foreclosed assets held for sale 3,572 836
Deferred income taxes, net 872 872
Other current assets 856 3,695
---------- ----------
Total current assets $234,036 $115,014
---------- ----------
LONG-TERM RECEIVABLES AND OTHER ASSETS
Customer notes receivable, less allowance
for doubtful notes May 31, 1999 $2,141;
February 28, 1999 $1,755; $20,546 $16,899
Loan origination fees, less accumulated
amortization May 31, 1999 $254;
February 28, 1999 $235; 322 352
Deferred income taxes, net 650 650
---------- ----------
$21,518 $17,901
---------- ----------
EQUIPMENT, less accumulated depreciation
May 31, 1999 $1,516; February 28, 1999
$1,406; $1,874 $1,729
---------- ----------
$257,428 $134,644
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable, including current maturities $162,402 $61,817
Outstanding checks in excess of
bank balances 5,813 9,986
Accounts payable 16,664 1,732
Accrued expenses 1,456 1,553
Income taxes payable 1,640 536
---------- ----------
Total current liabilities $187,975 $75,624
---------- ----------
LONG-TERM LIABILITIES
Notes payable, less current maturities $15,716 $8,483
---------- ----------
STOCKHOLDERS' EQUITY
Capital stock $22,718 $22,595
Retained earnings 31,019 27,942
---------- ----------
$53,737 $50,537
---------- ----------
$257,428 $134,644
========== ==========
<CAPTION>
*Condensed from Audited Financial Statements.
<FN>
See notes to Consolidated Condensed Financial Statements.
</TABLE>
-1-
<PAGE>
<TABLE>
AG SERVICES OF AMERICA, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME
Three Months Ended May 31, 1999 and 1998
(Dollars in Thousands, Except Per Share Amounts)
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Net revenues:
Farm inputs $128,986 $97,720
Financing income 4,797 3,809
---------- ----------
$133,783 $101,529
---------- ----------
Cost of revenues:
Farm inputs $121,710 $92,362
Financing expense 1,954 1,504
Provision for doubtful notes 2,492 1,827
---------- ----------
$126,156 $95,693
---------- ----------
Income before operating expenses
and income taxes $7,627 $5,836
Operating expenses 2,728 2,044
---------- ----------
Income before income taxes $4,899 $3,792
Federal and state income taxes 1,822 1,363
---------- ----------
Net income $3,077 $2,429
========== ==========
Earnings per share
Basic $0.59 $0.47
========== ==========
Diluted $0.57 $0.45
========== ==========
Weighted average shares
Basic 5,221 5,192
========== ==========
Diluted 5,439 5,456
========== ==========
<FN>
See Notes to Consolidated Condensed Financial Statements.
</TABLE>
-2-
<PAGE>
<TABLE>
AG SERVICES OF AMERICA, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Three Months Ended May 31, 1999 and 1998
(Dollars in Thousands)
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $3,077 $2,429
Adjustments to reconcile net income to
net cash (used in) operating activities:
Depreciation 110 82
Amortization 29 28
Changes in assets and liabilities (103,900) (89,393)
---------- ----------
Net cash (used in) operating activities ($100,684) ($86,854)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment ($253) ($149)
(Increase)decrease in foreclosed assets
held for sale (2,736) 70
---------- ----------
Net cash (used in) investing activities ($2,989) ($79)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable $117,577 $102,181
Principal payments on notes payable (9,759) (18,953)
Increase (decrease) in excess of outstanding
checks over bank balance (4,173) 4,798
Proceeds from issuance of capital stock,
net 123 187
---------- ----------
Net cash provided by financing
activities $103,768 $88,213
---------- ----------
Increase in cash and cash equivalants $95 $1,280
CASH
Beginning 67 174
---------- ----------
Ending $162 $1,454
========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest $1,562 $742
Income taxes $718 $71
<FN>
See notes to Consolidated Condensed Financial Statements
</TABLE>
-3-
<PAGE>
<TABLE>
AG SERVICES OF AMERICA, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Three Months Ended May 31, 1999
(Dollars in thousands)
<CAPTION>
Capital Stock
-----------------------
Shares Retained
Issued Amount Earnings Total
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance,
February 28, 1999 5,212,604 $22,595 $27,942 $50,537
Net income -- -- 3,077 3,077
Issuance of 15,750
shares of capital
stock upon the
exercise of
options 15,750 110 -- 110
Issuance of 910
shares of capital
stock under the
employee stock
purchase plan 910 13
---------- ----------- ----------- -----------
Balance, May 31, 1999 5,229,264 $22,718 $31,019 $53,737
========== =========== =========== ===========
<FN>
See Notes to Consolidated Condensed Financial Statements
</TABLE>
-4-
<PAGE>
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, 1999. 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 month period ended May 31, 1999 are not
necessarily indicative of the results that may be expected for the year ending
February 28, 2000.
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 May 31, 1999 and February 28, 1999 the Company had
approximately $117,200 and $84,000, 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 has 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.
-5-
<PAGE>
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 about the outcome of such
evaluations.
Note 3. Pledged Assets and Related Debt
The Company entered into a five-year asset backed securitized financing
program through fiscal 2004, with a maximum available borrowing amount of $275
million. 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"), wholly owned, special purpose subsidiary of the
Company. Ag Acceptance pledges its interest in these notes receivable to a
commercial-paper market conduit entity on $205 million of the facility which
incurs interest at variable rates in the commercial paper market and the
remaining $70 million is a three-year term note with interest at a variable
cost of LIBOR plus 25 basis points. 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 May 31, 1999, the
Company had a maximum amount available under the asset backed securitized
financing program of approximately $2.3 million based on borrowing base
computations as provided by the agreement.
In conjunction with the securitized financing program, the Company will
maintain an $8.5 million revolving bank line of credit through fiscal 2000.
The line of credit is accessible to cover any potential deficiencies in
available funds financed through the securitization program. At May 31, 1999
the Company had a maximum amount available under the agreement of
approximately $4.9 million based on the borrowing base computation as provided
by the agreement.
During 1998, the Company negotiated an additional bank line of credit with
a maximum available borrowing amount of $12 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
May 31, 1999, the Company had approximately $0.7 million available under the
line of credit based on the borrowing base computation as provided by the
agreement.
-6-
<PAGE>
Note 4. Earnings Per Share
In March of 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.
-7-
<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 months ended May 31, 1999 and 1998. 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
of Net Revenues
---------------
Three Months Ended
May 31,
------------------
1999 1998
-------- --------
Net Revenues:
Farm inputs 96.4% 96.2%
Financing Income 3.6% 3.8%
------- -------
100.0% 100.0%
------- -------
Cost of Revenues:
Farm inputs 91.0% 91.0%
Financing expense 1.5% 1.5%
Provision for doubtful notes 1.8% 1.8%
------- -------
94.3% 94.3%
------- -------
Income before operating
expenses and income taxes 5.7% 5.7%
Operating expenses 2.0% 2.0%
------- -------
Income before income taxes 3.7% 3.7%
Federal and state income taxes 1.4% 1.3%
------- -------
Net income 2.3% 2.4%
======= =======
Net Revenues:
Net revenues increased $32.3 million or 31.8% during the three months ended
May 31, 1999, compared with the three months ended May 31, 1998. The Company
reached this record level through greater market penetration with the
increased name recognition gained by the Company's Agri-Flex Credit(R) program
in its 30 state market area. Financing income as a percentage of net income
decrease slightly to 3.6% for the three months ended May 31, 1999 from 3.8%
the previous year. This decline was primarily a result of a decrease in the
prime lending rate by 75 basis points, which is the rate used by the Company
to charge interest on a variable rate basis to its customers, as compared to
a year ago.
-8-
<PAGE>
Cost of Revenues:
The total cost of revenues remained relatively constant at 94.3% of net
revenues for the three months ended May 31, 1999 and May 31, 1998. The gross
margin on the sale of farm inputs increased to 5.6% for the three months
ended May 31, 1999 compared to 5.5% for the three months ended May 31, 1998.
The increase in gross margin on the sale of farm inputs was the result of
opportunistic purchasing from manufacturers and disbributors. Concerning the
gross margin on financing income alone, the percentages decreased to 59.3%
for the three months ended May 31, 1999 from 60.5% for the three months ended
May 31, 1998. The decrease in gross margin percentage from last year is the
result of continued increase in leverage. The provision for doubtful notes
remained relatively constant at 1.8% of net revenues for the three months
ended May 31, 1999 and 1998, respectively.
Operating Expenses:
Operating expenses remained constant at 2.0% of net revenues for the three
months ended May 31, 1999 and 1998. The increase in operating expense is
attributed primarily to the Company's growth. Payroll and payroll related
expenses increased to $1,940 for the three months ended May 31, 1999 from
$1,429 for the three months ended May 31, 1998.
Net Income:
Net income increased 26.7% to $3,077 for the three months ended May 31, 1999
from $2,429 for the three months ended May 31, 1998. The increase in net
income is attributable to the increase in net revenues and the corresponding
increase in gross profit. The percentage increase in net income was slightly
less than the increase in revenue due to the larger percentage increase in
farm input revenue over the percentage increase in financing income as
discussed above.
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 1999 or the first quarter of fiscal 2000.
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 1999 and the first quarter of fiscal 2000. 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.
-9-
<PAGE>
Fiscal 2000 Quarter Ended
May 31 August 31 November 30 February 29
------ --------- ----------- -----------
(Dollars in thousands)
Net revenues $133,783
Net income $3,077
Fiscal 1999 Quarter Ended
May 31 August 31 November 30 February 28
------- ---------- ----------- -----------
(Dollars in thousands)
Net revenues $101,529 $69,397 $16,447 $37,920
Net income $2,429 $2,276 $1,406 $381
Except for the Dakotas, the Company's primary market area experienced a normal
1999 crop planting season. Wet weather conditions in the Dakotas have caused
reduced and/or delayed sales of fertilizer and chemicals, as well as some
shifting from corn to soybean production.
Liquidity and Capital Resources:
At May 31, 1999 the Company had working capital of $46,061 an increase of
$12,209 over a year ago and an increase of $6,671 since February 28, 1999.
The components of this net increase, since February 28, 1998, were (i) $6,801
resulting from operating activities, consisting of approximately, $3,077 in
net income, $110 in depreciation, $29 in amortization, and the remainder from
a net change in other working capital items, (ii) capital expenditures of
approximately $254 related to the acquisition of equipment and furniture, and
(iii) net proceeds of $124 from the issuance of common stock upon exercise of
options and sales of stock through the employee stock purchase plan.
The Company entered into a five-year asset backed securitized financing
program through fiscal 2004 with a maximum available borrowing amount of $275
million. 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"), wholly owned, special purpose subsidiary of the
Company. Ag Acceptance pledges its interest in these notes receivable to a
commercial paper market conduit entity on $205 million of the facility which
incurs interest at variable rates in the commercial paper market and the
remaining $70 million is a three-year term note with interest at a variable
cost of LIBOR plus 25 basis points. 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 May 31, 1999, the Company had a maximum amount available under the asset
backed securitized financing program of approximately $2.3 million, based on
borrowing base computations as provided by the agreement.
In conjunction with the securitized financing program, the Company will
maintain an $8.5 million bank line of credit in fiscal 2000. 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
also requires that the total outstanding borrowings be repaid in full for 10
consecutive days during the Company's second fiscal 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 May 31, 1999, the Company had a maximum amount
available under the agreement of approximately $4.9 million based on the
borrowing base computation as provided by the agreement.
-10-
<PAGE>
During 1998, the Company negotiated an additional bank line of credit with
a maximum available borrowing amount of $12 million. The line of credit is
accessible to cover the Company's funding requirements for its intermediate
loan program. All borrowings are 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.
Advances under the line of credit agreement are also subject to portfolio
performance, financial covenant restrictions, and borrowing base calculations.
At May 31, 1999, approximately $0.7 million was available based on the
borrowing base computation as provided by the agreement.
Management believes that the financial resources available to it, including
its bank lines of credit and asset backed securitization program, 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.
Year 2000:
The Company has established a company-wide plan to prepare our information
technology systems and non-information technology systems with embedded
technology applications for the Year 2000 issue. The plan includes
identification and assessment of critical functions, compliance plan
development, testing and contingency planning. The respective vendors of the
principal financial systems have advised the Company, that these systems are
in compliance with the upcoming millenium change. With the assistance of an
outside consultant, the Company has determined the Company's information
systems will be Year 2000 compliant. Additionally, the Company has scheduled
the final testing phase to be completed during the second quarter of fiscal
2000; allowing ample time for any necessary remedial measures, in the event of
any unforeseen problems. The Company is in the process contacting third
parties as to the state of their Year 2000 readiness. Questionnaires are
being sent out during the second quarter of fiscal 2000 to major suppliers,
vendors and banks. The responses to these questionnaires will allow the
Company to choose alternative suppliers, where appropriate, to fulfill
customer orders.
Costs associated with Year 2000 issues are estimated to be approximately
$30,000 from 1998 through 2000, of which $2,000 has already been spent to
date. The Company has excluded the costs from the above estimates associated
with information specialists already on staff. These cost estimates assume
that the Company will not incur any significant Year 2000 costs associated
with third party non-compliance. Based upon its review efforts to date, the
Company believes that future external and internal costs to be incurred to
address Year 2000 issues will not have a material adverse effect on the
Company's financial position, cash flows or results of operations.
Our most likely worst case scenario is the temporary inability of our
suppliers to provide our customers with the farm inputs they require on a
timely basis. Due to the uncertainty of the Year 2000 compliance with third
parties, including governmental agencies, the Company can not reasonably
estimate the financial effects of the worst case scenario. Through the
development and use of a contingency plan, which will be finalized by the
end of second quarter of fiscal 2000, the Company hopes to mitigate all
potential problems associated with the Year 2000 issue.
-11-
<PAGE>
"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;
technological problems (including Year 2000 compliance); the amount and
availability under its asset backed securitization program; unknown risks;
and other risks detailed in the Company's Securities and Exchange Commission
filings.
-12-
<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 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: July 13, 1999
-13-
<PAGE>
<TABLE>
AG SERVICES OF AMERICA, INC.
EXHIBIT 11
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
<CAPTION>
Three Months Ended
May 31,
--------------------
1999 1998
------ ------
<S> <C> <C>
Computation of weighted average number
of basic shares:
Basic:
Common shares outstanding at
beginning of the period 5,212,604 5,177,154
Weighted average number of shares
issued during the period 8,426 14,797
---------- ----------
Weighted average shares outstanding
(basic) 5,221,030 5,191,951
========== ==========
Net income $3,076,555 $2,429,438
========== ==========
Basic earnings per share $0.59 $0.47
========== ==========
Diluted:
Common shares outstanding at
beginning of the period 5,212,604 5,177,154
Weighted average number of shares
issued during the period 8,426 14,797
Weighted average of potential dilutive
shares computed using the treasury
stock method using average market
price during the period:
Options (1) 218,045 263,692
---------- ----------
Weighted average shares outstanding
(diluted) 5,439,075 5,455,643
========== ==========
Net income $3,076,555 $2,429,438
========== ==========
Diluted earnings per share $0.57 $0.45
========== ==========
<CAPTION>
(1) Some of the stock options have been excluded because they are
antidilutive.
</TABLE>
-14-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-2000
<PERIOD-END> MAY-31-1999
<CASH> 161,559
<SECURITIES> 0
<RECEIVABLES> 258,629,285
<ALLOWANCES> 10,997,000
<INVENTORY> 1,488,236
<CURRENT-ASSETS> 234,036,845
<PP&E> 3,389,198
<DEPRECIATION> 1,515,680
<TOTAL-ASSETS> 257,427,834
<CURRENT-LIABILITIES> 187,974,850
<BONDS> 0
0
0
<COMMON> 22,718,237
<OTHER-SE> 31,018,747
<TOTAL-LIABILITY-AND-EQUITY> 257,427,834
<SALES> 128,986,182
<TOTAL-REVENUES> 133,783,302
<CGS> 121,710,289
<TOTAL-COSTS> 121,710,289
<OTHER-EXPENSES> 2,728,269
<LOSS-PROVISION> 2,491,869
<INTEREST-EXPENSE> 1,954,320
<INCOME-PRETAX> 4,898,555
<INCOME-TAX> 1,822,000
<INCOME-CONTINUING> 3,076,555
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,076,555
<EPS-BASIC> 0.59
<EPS-DILUTED> 0.57
</TABLE>
