UNITED STATES
SECURITES AND EXCHANGE COMMISSION
Washington, D.C. 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 November 30, 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 jursidiction 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
5,212,604 common shares were outstanding as of January 11, 1999.
<PAGE>
AG SERVICES OF AMERICA, INC.
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial statements:
Consolidated condensed balance sheets, November 30, 1998
(unaudited) and February 28, 1998 1
Unaudited consolidated condensed statements of income,
three and nine months ended November 30, 1998
and 1997 2
Unaudited consolidated condensed statements of cash flows,
nine months ended November 30, 1998 and 1997 3
Consolidated statement of stockholders' equity, nine
months ended November 30, 1998 4
Notes to consolidated condensed financial statements
(unaudited) 5-7
Item 2. Management's discussion and analysis of
financial condition and results of operations 8-11
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on form 8-K: 12
(a) Exhibits
(11) Statement re computation of earnings
per common share 13
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AG SERVICES OF AMERICA, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
<CAPTION>
November 30,February 28,
ASSETS 1998 1998 *
(Unaudited)
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash $11,681 $174
Customer notes receivable, less allowance
for less allowance for doubtful notes and
reserve for discounts November 30, 1998
$6,648; February 28, 1998 $2,660 150,590 71,379
Accounts receivable 921 422
Inventories 393 2,972
Foreclosed assets held for sale 252 144
Deferred income taxes, net 293 293
Other current assets 22 1,999
----------- -----------
Total current assets $164,152 $77,383
----------- -----------
LONG-TERM RECEIVABLES AND OTHER ASSETS
Customer notes receivable, less allowance
for doubtful notes November 30, 1998
$2,553; February 28, 1998 $1,340 $18,773 $13,696
Foreclosed assets held for sale 84 48
Loan origination fees, less accumulated
amortization November 30, 1998 $200,
February 28, 1998 $114 387 457
Deferred income taxes, net 124 124
----------- -----------
$19,368 $14,325
----------- -----------
EQUIPMENT, less accumulated depreciation
November 30, 1998 $1,309;
February 28, 1998 $1,059 $1,700 $1,540
----------- -----------
$185,220 $93,248
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable $115,617 $39,328
Outstanding checks in excess of
bank balance 1,283 1,793
Accounts payable 9,592 1,654
Accrued expenses 1,835 802
Income taxes payable 108 - -
----------- -----------
Total current liabilities $128,435 $43,577
----------- -----------
LONG-TERM LIABILITIES
Notes payable, less current maturities $6,650 $5,915
STOCKHOLDERS' EQUITY
Capital stock $22,574 $22,307
Retained earnings 27,561 21,449
----------- -----------
$50,135 $43,756
----------- -----------
$185,220 $93,248
=========== ===========
<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
(Dollars in Thousands, Except Per Share Amounts)
<CAPTION>
Three Months Ended Nine Months Ended
November 30, November 30,
1998 1997 1998 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net revenues:
Farm inputs $10,466 $10,203 $170,938 $143,170
Financing income 5,981 4,021 16,435 10,772
----------- ----------- ----------- -----------
$16,447 $14,224 $187,373 $153,942
----------- ----------- ----------- -----------
Cost of revenues:
Farm inputs $8,798 $8,883 $160,334 $134,171
Financing expense 2,969 1,813 7,845 4,667
Provision for doubtful notes 261 226 3,333 2,397
----------- ----------- ----------- -----------
$12,028 $10,922 $171,512 $141,235
----------- ----------- ----------- -----------
Income before operating expenses
and income taxes $4,419 $3,302 $15,861 $12,707
Operating expenses 2,262 1,709 6,382 5,126
----------- ----------- ----------- -----------
Income before income taxes $2,157 $1,593 $9,479 $7,581
Federal and state income taxes 751 575 3,367 2,706
----------- ----------- ----------- -----------
Net income $1,406 $1,018 $6,112 $4,875
=========== =========== =========== ===========
Earnings per share:
Basic $0.27 $0.20 $1.18 $0.95
=========== =========== =========== ===========
Diluted $0.26 $0.19 $1.13 $0.90
=========== =========== =========== ===========
Weighted average shares
outstanding:
Basic 5,209 5,159 5,201 5,152
=========== =========== =========== ===========
Diluted 5,424 5,438 5,433 5,426
=========== =========== =========== ===========
<FN>
See Notes to Consolidated Condensed Financial Statements.
</TABLE>
-2-
<PAGE>
<TABLE>
AG SERVICES OF AMERICA, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Nine Months Ended November 30, 1998 and 1997
(Dollars in Thousands)
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $6,112 $4,875
Adjustments to reconcile net income to net
Cash (used in) operating activities:
Depreciation 286 206
Amortization 71 85
(Gain) loss on sale of equipment (10) 3
Change in assets and liabilities (71,649) (40,496)
----------- -----------
Net cash (used in) operating activities ($65,190) ($35,327)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of equipment $14 $22
Purchase of equipment (450) (1,035)
(Increase) decrease in foreclosed assets
held for sale (144) 187
----------- -----------
Net cash (used in) investing activities ($580) ($826)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings $186,800 $104,880
Principal payments on short-term borrowings (110,510) (62,179)
Proceeds from long-term borrowings 735 - -
(Increase) in debt origination fees (15) (571)
Proceeds from the issuance of capital stock,
net 267 209
----------- -----------
Net cash provided by financing activities $77,277 $42,339
----------- -----------
(Decrease) in cash $11,507 $6,186
CASH
Beginning 174 880
----------- -----------
Ending $11,681 $7,066
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest $7,034 $3,684
Income taxes $2,502 $2,261
<FN>
See Notes to Consolidated Condensed Financial Statements.
</TABLE>
-3-
<PAGE>
<TABLE>
AG SERVICES OF AMERICA, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Nine Months Ended November 30, 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 - - - - 6,112 6,112
Issuance of 31,750 shares
of capital stock upon
the exercise of options 31,750 256 - - 256
Issuance of 700 shares of
capital stock under employee
stock purchase plan 700 11 - - 11
----------- ----------- ----------- -----------
Balance, November 30, 1998 5,209,604 $22,574 $27,561 $50,135
=========== =========== =========== ===========
<FN>
See Notes to Consolidated Condensed Financial Statements.
</TABLE>
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<PAGE>
AG SERVICES OF AMERICA, INC.
NOTES TO CONSOLIDATED 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 28, 1998. 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. Operation results for the three and nine-month
periods ended November 30, 1998 are not necessarily indicative of the results
that may be expected for the year ending February 28, 1999.
Unless otherwise noted, all amounts present are in thousands except for per
share amounts.
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 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.
Note 2. Commitments and Contingencies
Commitments:
In the normal course of business, the company makes various commitments that are
not reflected in the accompanying condensed financial statements. These include
various commitments to extend credit to customers. At November 30, 1998 and
February 28, 1998 the Company had approximately $7,200 and $69,200,
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>
AG SERVICES OF AMERICA, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
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"), 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 November 30, 1998, the Company had a maximum
amount available under the asset backed securitized financing program of
approximately $1.2 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 1999. The line of
credit is accessible to cover any potential deficiencies in available funds
financed through the securitization program. At November 30, 1998, the Company
had a maximum amount available under the agreement of approximately $1.7 million
based on borrowing base computations 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 funding requirements for its intermediate loan program. The
agreement has a two-year term ending February 28, 2000. At November 30, 1998,
the Company had approximately $1.0 million available under the line of credit
based on the borrowing base computation as provided by the agreement.
- -6-
<PAGE>
AG SERVICES OF AMERICA, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note 4. Earnings Per Share
In March of 1997, the Financial Accounting Standards Board (FASB) 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 and nine months ended November 30, 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.
Percentage Percentage
of Net Revenues of Net Revenues
Three Months Ended Nine Months Ended
November 30, November 30,
1998 1997 1998 1997
Net Revenues
Farm inputs 63.6% 71.7% 91.2% 93.0%
Financing income 36.4% 28.3% 8.8% 7.0%
------ ------ ------ ------
100.0% 100.0% 100.0% 100.0%
------ ------ ------ ------
Cost of revenues:
Farm inputs 53.5% 62.4% 85.5% 87.1%
Financing expense 18.1% 12.8% 4.2% 3.0%
Provision for doubtful notes 1.6% 1.6% 1.8% 1.6%
------ ------ ------ ------
73.2% 76.8% 91.5% 91.7%
------ ------ ------ ------
Income before operating expenses
and income taxes 26.8% 23.2% 8.5% 8.3%
Operating expenses 13.8% 12.0% 3.4% 3.4%
------ ------ ------ ------
Income before income taxes 13.0% 11.2% 5.1% 4.9%
Federal and state income taxes 4.6% 4.0% 1.8% 1.7%
------ ------ ------ ------
Net income 8.4% 7.2% 3.3% 3.2%
------ ------ ------ ------
Net Revenues:
Net revenues increased $2.2 million or 15.5% during the three months ended
November 30, 1998, compared with the three months ended November 30, 1997. Net
revenues increased $33.4 million or 21.8% during the nine months ended November
30, 1998, compared with the nine months ended November 30, 1997. The Company
reached this record level through increased market penetration with the
introduction of Agri-Flex in our 30 state market area. Financing income as a
percentage of net income grew to 36.4% and 8.8% for the three and nine months
ended November 30, 1998, respectively, from 28.3% and 7.0% 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.
- -8-
<PAGE>
Cost of Revenues:
The total cost of revenues remained relatively constant from 76.8% and 91.7% of
net revenues for the three and nine months ended November 30, 1997,
respectively, to 73.2% and 91.5% of net revenues for the three and nine months
ended November 30, 1998. The gross margin on the sale of farm inputs also
remained steady as they were 12.9% and 6.3% for the three and nine months ended
November 30, 1997, respectively, compared to 15.9% and 6.2% for the three and
nine months ended November 30, 1998. Concerning the gross margin on financing
income alone, the percentages decreased to 50.4% and 52.3% for the three and
nine months ended November 30, 1998, from 54.9% and 56.7% for the three and nine
months ending November 30, 1997. The decrease in gross margin percentage from
last year is the result of increased leverage. The provision for doubtful notes
has increased from 1.6% for the three and nine months ended November 30, 1997 to
1.6% and 1.8% for the three and nine months ended November 30, 1998. The
increase was a result of the increased volume of lending under the Company's new
servicing and marketing agreement as well as the Company's experienced growth
under the Intermediate Term Financing Program mentioned above.
Operating Expenses:
Operating expenses were unchanged at 3.4% of net revenues for the nine months
ended November 30, 1998 and 1997 and increased to 13.8% from 12.0% of net
revenues for the three months ended November 30, 1998 and 1997, respectively.
The increase is a result of the 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 higher sales
volume. The increase in operating expense is attributed primarily to the
increase in payroll to $1,343,500 and $3,957,000 for the three and nine months
ended November 30, 1998, respectively, from $1,106,400 and $3,279,300 for the
three and nine months ended November 30, 1997. The increase is a result of the
Company adding employees as well as general wage rate increases to existing
employees. The balance of the increase represents the increase of operating
expenses attributed to the Company's growth.
Net Income:
Net income increased 38.2% to $1,406,911 for the three months ended November 30,
1998 from $1,018,364 for the three months ended November 30, 1997, and 25.4% to
$6,112,434 for the nine months ended November 30, 1998 from $4,875,099 for the
nine months ended November 30, 1997. The increase in net income is attributable
to the increase in net revenues and the corresponding increase in gross profit,
namely the increased financing margin due to the volume of lending under the
Company's new servicing and marketing agreement along with the growth of the
Company's Intermediate Term Financing Program.
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 1998 or the first nine 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 three quarters of fiscal 1999. This information
- -9-
<PAGE>
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 1999 Quarter Ended
May 31 August 31 November 30 February 28
(Dollars in thousands)
Net revenues $101,529 $69,397 $16,447
Net income $2,429 $2,276 $1,407
Fiscal 1998 Quarter Ended
May 31 August 31 November 30 February 28
(Dollars in thousands)
Net revenues $80,775 $58,943 $14,224 $32,131
Net income $1,922 $1,934 $1,014 $307
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 2.5% reduction in revenues
and earnings for the first nine months of fiscal 1999.
Liquidity and Capital Resources:
At November 30, 1998, the Company had working capital of $35,717 a decrease of
$575 over a year ago and an increase of $1,911 since February 28, 1998. The
components of this net increase, since February 28, 1998, were (i) $2,080
resulting from operating activities, consisting of approximately $6,112 in net
income, $286 in depreciation, $71 in amortization, and the remainder from a net
change in other working capital items, (ii) capital expenditures of
approximately $450 related to the acquisition of equipment and furniture, and
(iii) net proceeds of $267 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"), 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 November 30, 1998 the Company had a maximum
amount available under the asset backed securitized financing program of
approximately $1.2 million, based on borrowing base computations as provided by
the agreement.
- -10-
<PAGE>
In conjunction with the securitized financing program, the Company will maintain
an $8.5 million 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 borrowing are collateralized by
substantially all assets of the Company. The agreement also requires that 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 an pretax earnings. At November
30, 1998, the Company had a maximum amount available under the agreement of
approximately $1.7 million based on borrowing base computations 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, 90 day maturities. 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. 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 November 30, 1998, approximately $1.0 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 line of credit, trade credit, its equity and internally generated funds,
will be sufficient to finance the Company and its operations in the foreseable
future. The Company currently has no significant capital commitments.
Year 2000:
The Company's Year 2000 program addresses analysis and testing of information
systems used in the operation of the company, as well as, analysis of other
areas important to the administration of the business. The plan includes
identification and assessment of critical functions, compliance plan
development, testing and contingency planning. The respective vendors of its
principal financial systems have advised the Company, that these systems are in
compliance with the upcoming millennium change. Although no assurances can be
given as to third party compliance, including governmental entities, the Company
does not expect any material costs associated with third party compliance. The
final testing phase will be completed during the second quarter of Fiscal Year
2000; allowing ample time for any necessary remedial measures, in the event of
any unforeseen problems. With the assistance of an outside consultant, the
Company has determined the Company's information systems will be Year 2000
compliant. Expenses incurred to date have not had a material impact on
financial statements. The Company expects that estimated remaining expenses
associated with final testing, contingency planning and remedial action, if
necessary, will not have a material effect on the Company's financial position.
- -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) Statements re computation of earnings per common share is attached.
(b) Reports on From 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 and Accounting Officer)
Date: January 15, 1999
- -13-
<PAGE>
<TABLE>
AG SERVICES OF AMERICA, INC.
EXHIBIT 11
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
<CAPTION>
Three Months Ended Nine Months Ended
November 30, November 30,
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 5,209,304 5,157,644 5,177,154 5,135,719
Weighted average number of
shares issued during the
period 146 1,535 24,315 15,991
----------- ----------- ----------- -----------
Weighted average shares
outstanding, (basic) 5,209,450 5,159,179 5,201,469 5,151,710
=========== =========== =========== ===========
Net income $1,406,911 $1,018,364 $6,112,434 $4,875,099
=========== =========== =========== ===========
Basic earnings per share $0.27 $0.20 $1.18 $0.95
=========== =========== =========== ===========
Diluted:
Common shares outstanding at
beginning of the period 5,209,304 5,157,644 5,177,154 5,135,719
Weighted average number of
shares issued during the
period 146 1,535 24,315 15,991
Weighted average of potential
dilutive shares computed
using the treasury stock
method using the average
market price during the period:
Options (1) 214,436 279,015 231,658 274,346
----------- ----------- ----------- -----------
Weighted average shares
outstanding, (diluted) 5,423,886 5,438,194 5,433,127 5,426,056
=========== =========== =========== ===========
Net income $1,406,911 $1,018,364 $6,112,434 $4,875,099
=========== =========== =========== ===========
Diluted earnings per share $0.26 $0.19 $1.13 $0.90
=========== =========== =========== ===========
<CAPTION>
(1) Some of the stock options have not been included because they are
antidilutive.
</TABLE>
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-28-1999
<PERIOD-END> NOV-30-1998
<CASH> 11,680,858
<SECURITIES> 0
<RECEIVABLES> 178,564,467
<ALLOWANCES> 9,201,000
<INVENTORY> 392,309
<CURRENT-ASSETS> 164,152,584
<PP&E> 3,008,806
<DEPRECIATION> 1,309,292
<TOTAL-ASSETS> 185,219,819
<CURRENT-LIABILITIES> 128,434,220
<BONDS> 0
0
0
<COMMON> 22,574,291
<OTHER-SE> 27,561,308
<TOTAL-LIABILITY-AND-EQUITY> 185,219,819
<SALES> 170,938,267
<TOTAL-REVENUES> 187,373,038
<CGS> 160,333,336
<TOTAL-COSTS> 160,333,336
<OTHER-EXPENSES> 6,382,228
<LOSS-PROVISION> 3,333,029
<INTEREST-EXPENSE> 7,844,664
<INCOME-PRETAX> 9,479,781
<INCOME-TAX> 3,367,347
<INCOME-CONTINUING> 6,112,434
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,112,434
<EPS-PRIMARY> 1.18
<EPS-DILUTED> 1.13
</TABLE>
