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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 [Fee Required]
For the fiscal year ended February 28, 1997
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 [Fee Required]
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)
Registrant's telephone number, including area code:319 277-0261
Securities registered pursuant to Section 12(b) of the Act:
Name of exchange on which
Title of each class registered
Common stock, no par value New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act: None
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
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (229.405 of this chapter)
is not contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [X]
The aggregate market value of voting stock held by non-
affiliates of the registrant as of May 14, 1997, was approximately
$64,980,000 (based on the last reported sale price of $16.125 per
share on May 14, 1997, on the New York Stock Exchange).
As of May 14, 1997, 5,146,419 shares of the registrant's
common stock, no par value, were issued and outstanding. At that
date, there were 136 stockholders of record and approximately 2,200
stockholders for whom securities firms acted as nominees.
DOCUMENTS INCORPORATED BY REFERENCE
Herein the following documents are incorporated by reference:
Selected portions of the Registrant's Annual Report to
Stockholders for the year ended February 28, 1997, are
incorporated by reference into Part II.
Selected portions of the Registrant's Definitive Proxy
Statement for the annual shareholders' meeting to be held
August 6, 1997, are incorporated by reference into Part III.
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PART I
ITEM 1. BUSINESS
General Development of Business
Ag Services of America, Inc. (the "Company") was incorporated
under the laws of the state of Iowa in 1985. The Company supplies
farm inputs, including seed, fertilizer, agricultural chemicals,
crop insurance and cash advances for rent, fuel and irrigation, to
farmers primarily in the central United States. The Company buys
seed, fertilizer, agricultural chemicals and other farm inputs from
numerous national and regional manufacturers, distributors and
suppliers of seed, fertilizer and agricultural chemicals. Farmers
have traditionally purchased farm inputs from one or more suppliers
using credit from commercial banks, the Farm Credit System, the
FmHA or other agricultural lenders. The Company extends credit and
provides farmers the convenience of purchasing and financing a wide
variety of farm inputs from a single source at competitive prices.
On August 1, 1991, the Company completed its initial public
offering of 1,060,000 shares of common stock (including 60,000
shares due to over-allotments completed August 30, 1991), of which
382,000 previously issued shares were sold by certain stockholders
(32,000 shares as a result of over-allotments). For the 678,000
newly issued shares sold by the Company (28,000 shares as a result
of over-allotments), net proceeds of approximately $4.7 million
were received by the Company.
On April 22, 1993, the Company completed a public offering of
$13,800,000 principal amount of 7% Convertible Subordinated
Debentures due 2003 (including $1,800,000 due to over-allotments).
The 7% convertible Subordinated Debentures are convertible into
Common Stock of the Company at $9.25 per share. The Company
received net proceeds of approximately $12.9 million.
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 1,487,669
shares of common stock upon conversion of $13,761,000 of Debentures
and redeemed $39,000 of Debentures as full settlement of all
$13,800,000 of the Debentures outstanding.
Financial Information about Industry Segments
The Company is engaged in one industry segment - the supplying
of a wide range of farm inputs at competitive prices along with the
credit to finance these farm inputs through the crop growing cycle.
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Narrative Description of Business
General:
The Company supplies farm inputs, including seed, fertilizer,
agricultural chemicals, crop insurance and cash advances for rent,
fuel and irrigation, to farmers primarily in the central United
States. the Company's strategy has been to provide a single source
of farm inputs and the credit necessary to finance these inputs
through the growing cycle by taking a security interest in the crop
itself. This strategy is an attractive alternative to farmers who
had difficulty obtaining credit, who needed additional credit for
the expansion of existing operations and/or who wanted the
convenience of a single source of farm inputs, finance and product
expertise.
The Company believes that its business strategy has been
responsible for its growth and has focused its efforts on the
following principles:
* Supplying and financing a complete line of quality farm inputs
from several suppliers at competitive prices with prompt
delivery.
* Providing customers with appropriate product selection and
crop production advice from the Company's product specialists.
* Providing detailed monthly statements to simplify the
customer's bookkeeping for all farm inputs purchased from the
Company throughout each growing season.
* Offering multi-peril crop insurance through the Company as a
licensed insurance agency.
* Visiting customers' farms to view crops and discuss harvest
plans and marketing strategies.
* Providing professional and personalized service throughout the
entire growing season to encourage renewed business each year.
* Selecting credit worthy and experienced customers.
Principal Markets:
The Company's customers are currently located in 28 states.
The Company's principal target market is corn and soybean producers
in the states of Iowa, Minnesota, Nebraska, Illinois, Ohio, Texas
and Indiana.
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Products and Suppliers:
The Company buys seed, fertilizer, agricultural chemicals and
other farm inputs from numerous manufacturers, distributors or
dealers. These suppliers generally deliver the farm inputs
directly to the Company's customers. The Company negotiates the
purchase price, discounts and trade credit annually with most of
these suppliers. In fiscal 1997, the percentage of net revenues
attributed to the sale of seed, fertilizer, agricultural chemicals,
and other farm inputs including, among others, cash rents, fuel,
and irrigation was 12.3%, 16.3%, 18.4% and 46.1%, respectively.
The balance of the Company's net revenues in fiscal 1997 were
attributed to financing income.
Seed. The Company currently buys seed from approximately 30
national and regional seed companies. Seed company representatives
as well as the Company's product specialists work directly with the
Company's customers to assist them in selecting specific hybrids
and varieties of seed. The Company sells seed at competitive
prices and achieves its margin based on standard industry discounts
or negotiated volume discounts, if available. Seed is delivered to
the Company's customers directly by the seed companies.
Fertilizer. The Company currently buys fertilizer from over
500 suppliers. The Company sells fertilizer at competitive prices
and achieves its margin based on dealer discounts, negotiated
pricing or opportunistic purchasing. The Company purchases
fertilizer using two alternative methods, depending on the
customer's needs. For those customers with storage facilities to
handle bulk dry materials, bulk fluids or anhydrous ammonia, the
Company may purchase the materials through major fertilizer
distribution terminals or manufacturers. These bulk materials may
be direct-shipped in truckload quantities to the customer's farm.
Customers without storage facilities can have the materials
supplied by the Company which may enlist the delivery service of a
local fertilizer dealer.
Agricultural Chemicals. The Company currently buys
agricultural chemicals from several major distributors or
suppliers. The Company sells agricultural chemicals at competitive
prices and achieves its margin based on dealer discounts,
negotiated pricing, manufacturers' rebates and opportunistic
purchasing. Agricultural chemicals are generally delivered
directly to the customer's farm by the distributor or through a
dealer.
Insurance, Cash Rents, Fuel, Irrigation and Custom
Application. The Company offers its customers multi-peril crop
insurance as an agent, although customers may also purchase multi-
peril crop insurance from other insurance agents. Through thirteen
of its employees, the Company is currently licensed as an insurance
agent in 26 states. When customers purchase the insurance through
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the Company's agent, the Company receives a standard industry
commission based on the premium amount.
The Company also provides its customers with credit for cash
rents, fuel, irrigation and custom application costs. If a
customer's farm acreage is leased, the land owner may require
payment of the annual rent before planting. Based on its credit
policy and the customer's needs, the Company may assist its
customers with the advance payment of all or a portion of these
cash rents. The Company's customers generally arrange their own
fuel, irrigation and custom application needs and the Company may,
based on its credit policy, advance cash for a portion or all of
these costs.
Government Programs:
The two principal government programs affecting the Company's
business are government underwritten multi-peril crop insurance and
the government's farm subsidy program payments.
Multi-Peril Crop Insurance. The Company requires that its
customers purchase multi-peril crop insurance and assign the
insurance coverage to the Company as collateral for the credit
extended by the Company to the customer. Multi-peril crop
insurance, while sold and administered in large part by private
companies, is currently underwritten by the Federal Crop Insurance
Corporation ("FCIC"), an agency of the United States Government.
Current multi-peril crop insurance generally covers crop losses for
hail, wind, drought, flood and certain other covered events.
While various forms of federal multi-peril crop insurance have
been in existence since 1938, federal farm policies and funding are
subject to periodic change, and there can be no assurance that the
FCIC or any other federal agency will continue to underwrite multi-
peril crop insurance on an ongoing basis. If the Company's
customers were not able to obtain multi-peril crop insurance
through some combination of the FCIC or domestic or foreign private
insurance underwriters at a reasonable cost, the Company would be
required to seek alternative collateral from its customers, which
could have a material adverse affect on the Company's net revenues.
There can be no assurance that multi-peril crop insurance will
continue to be available to the Company's customers or, if
available, for a reasonable cost.
FSA "Production Flexibility Contract" Payments. The United
State Department of Agriculture, through its Farm Service Agency
("FSA"), guarantees participating farmers fixed payments on
"contract acreage base" for various crops over the next six years
under Federal Agriculture and Improvement Act ("1995 Farm Bill").
Corn, wheat and certain other crops are currently eligible under
the FSA farm program. If a customer of the Company participates in
the FSA farm program, the Company supplements its security by
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obtaining an assignment of the customer's FSA "Production
Flexibility Contract" payments. While various forms of federal
support programs have been in existence since 1933, federal farm
policies and funding, including support payments under the 1995
Farm Bill, are subject to periodic change, and there can be no
assurance that the FSA or any other federal agency will continue to
provide support programs on an ongoing basis.
Farm Input Pricing and Finance Charges
The Company structures its pricing of farm inputs so that the
net prices paid by its customers who take advantage of the
Company's payment discounts are generally competitive with farm
inputs purchased from another distributor or supplier. The Company
obtains volume discounts for certain farm inputs and may pass all
or a portion of those discounts to its customers. The Company
charges its customers for farm inputs when provided. Finance
charges on credit extended to a customer commence immediately for
cash rents provided by the Company and on the date shipped for
other farm input products sold by the Company to a customer. The
Company establishes and fixes its interest rates each year based on
the Company's estimate of anticipated interest costs over the year.
For fiscal 1998, the Company's customers will be charged interest
at a variable rate note at 0.50% to 3.75% above prime based on the
credit worthiness of the customer. As of May 14, 1997, the current
prime rate is 8.50% per annum as published in the Midwest Edition
of The Wall Street Journal.
Spring customer accounts, including all interest, are due by
January 15th for North accounts and January 31st for South
accounts. The Company currently assesses a 3.0% program fee based
on the customer's established credit limit, and the customer can
earn back all or part of the program fee based on the following
repayment dates for North Spring accounts: 3.0% for customer
accounts paid off by November 30, 2.0% for customer accounts paid
off by December 20 and 1.0% for customer accounts paid off by
January 15th. South Spring accounts, 3.0% for customer accounts
paid off by December 15, 2.0% for customer accounts paid off by
January 5 and 1.0% for customer accounts paid off by January 31st.
Fall customer accounts, including interest, are due by September
15th. Fall customers can also earn back the program fee based on
the following repayment dates: 3.0% for customer accounts paid off
by July 31, 2.0% for customer accounts paid off by August 20 and
1.0% for customer accounts paid off by September 15th.
Customer Support:
The Company provides customers personalized service with his
farm input needs throughout the entire crop growing cycle. The
Company's product specialists provide information on the
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availability and use of various chemicals, fertilizers and seed,
while the ultimate decision of product choice is made by the
customer. The Company's product specialists discuss with customers
the efficient use of farm inputs, cost-effective fertility and weed
control programs, product availability, pricing and delivery. When
orders are received, the Company coordinates the customer's needs
and delivery requirements with the appropriate suppliers. The
Company also generally schedules at least one or two visits to the
customer farms to inspect the growing crop and to discuss harvest
plans and any pertinent problems during the growing cycle. The
Company provides each customer a detailed monthly statement to
simplify the customer's bookkeeping for all farm inputs purchased
from the Company throughout each growing season.
Credit Policy and Customer Notes:
The Company has established a credit policy with procedures
for credit review and approval. Each new customer and customers
from prior years must provide financial and credit information to
the Company. If a customer is approved by the Company for credit,
the Company will generally extend credit of up to 85% of the
insured value of that customer's planned crop, based on his multi-
peril insurance coverage. The Company secures its position
principally by obtaining a lien on the crop and by receiving an
assignment of the farmer's multi-peril crop insurance and
government farm program payments, if available. For certain
customers, the Company's lien on the crop might be subordinate to
one or more prior liens, which would directly reduce the amount of
credit available to that customer. The Company obtains a current
credit report or search to verify the priority of the Company's
lien. The Company also contacts customer references and for larger
accounts the Company may visit the prospective customer's farm to
review farm operations before extending credit.
The Company's principal asset is its notes receivable from
customers who finance their purchase of farm inputs from the
Company throughout the crop growing cycle. At February 28, 1997,
and February 29, 1996: the total number of customer accounts were
1,078 and 759, respectively; the total outstanding customer notes
receivable were $55,571,572 and $42,704,326, respectively. For the
years ended February 28, 1997, and February 29, 1996, there were no
individual customers whose accounts were 5% or more of the
Company's total customer notes receivable at year end.
Each customer account is assigned to an employee of the
Company for monitoring the collection of customer accounts during
harvest season, under the supervision of the Company's collection
managers. The Company's employees generally contact their
respective assigned customers biweekly during the harvest season.
Through this process, the Company obtains information from
customers concerning crop yields, marketing strategy, number of
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acres harvested and the location of the customers' stored crops.
If a customer has a claim under his multi-peril crop insurance, the
Company will take steps to assure that the claim has been properly
and timely filed. Under the Company's credit arrangements, when a
customer sells his crop, the customer is required to obtain the
sale proceeds by check, payable to both the customer and the
Company, and forward the check to the Company as endorsed by the
customer. Upon receipt of the check, the Company applies the
proceeds as a payment on the customer's account and forwards any
overpayments to the customer. The Company does not retain customer
funds on deposit. If a customer is to receive all or a portion of
the value of his crop through a multi-peril crop insurance claim or
farm program payment, the collection of that customer's account
could be delayed pending receipt of those payments.
Some customers may wish to store their crops for later sale,
or for other reasons may not pay their accounts in full when due.
The Company monitors and documents its collateral and collection
position on all accounts on an ongoing basis. The Company will
informally extend the payment of a customer's note receivable to
accommodate a customer's crop marketing requirements if the Company
determines that there continues to be sufficient collateral.
Therefore, a customer's note receivable that is past due may not be
past due because of a customer's inability to pay or collateral
impairment. The amount of customer notes receivable that were past
due (including notes extended by the Company) at February 28, 1997
and February 29, 1996, was $29,880,411 and $25,691,609,
respectively. The amount of past due customer notes receivable
decreased from 22.4% of net revenues in fiscal 1996 to 20.2% of net
revenues in fiscal 1997, primarily as a result of the decreased
dollar amount of customer notes receivable informally extended by
the Company in Fiscal 1997. The increase in the dollar amount of
past due customer notes receivable has not had a material adverse
affect on the Company's earnings, and management does not believe
that this increase will have a material adverse affect on earnings
or the Company's ability to supply and finance farm inputs in the
future.
The Company also continually evaluates and classifies each
customer account based on collateral and expected timing of
collection in determining its allowance for doubtful notes. At
February 28, 1997 and February 29, 1996, the Company's allowance
for doubtful notes were $2,237,000 and $2,146,000, respectively.
Sales and Marketing:
The Company markets its program through advertising, including
direct mail and telemarketing, customer solicitation and referrals,
including cooperative marketing efforts with several major seed and
fertilizer suppliers which allow the Company to market its program
through their dealer networks. In addition, the Company employs
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eighteen full time salaried sales people and one independent sales
representative. The sales representatives identify prospective
customers and assist in obtaining customer information for the
Company's credit review and approval. After a customer has been
approved by the Company, the Company's employees begin to service
the customer's account generally without assistance from the
independent sales representatives.
In fiscal 1997 and 1996, the Company incurred approximately
$216,300 and $113,800, respectively, in advertising expenses. The
Company plans to spend approximately $250,000 on advertising in
fiscal 1998.
Seasonal Factors:
The sale of farm inputs is seasonal with approximately 78% of
revenues being generated from March 1 through August 31 of each
year.
Credit Facilities:
Due to the seasonality of the Company's revenues and the terms
of its customer notes receivable, the Company is required to
finance the carrying of its revenues as notes receivable for a
majority of its fiscal year.
The Company's business and its growth are dependent on
adequate credit to finance its sales of farm inputs to farmers.
The Company uses its capital, trade credit and bank line of credit
to finance farm input purchases. The terms of the Company's trade
credit vary for each supplier and type of farm input and may
require a lien on certain assets of the Company.
In March 1997, the Company negotiated an asset backed
securitized financing program with a maximum available amount of
$135 million. This five year facility replaces the $100 million
line of credit used in fiscal 1997 and should provide the Company
adequate financing for fiscal 1998. If the Company were not able
to maintain a sufficient line of credit or other credit facility,
the Company would not be able to finance sufficient sales of farm
inputs, which would have a material adverse affect on the Company's
business and its growth. Management believes that the financial
resources available to it will be sufficient to finance the
Company's business.
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Competition:
The Company faces competition from many types of suppliers of
farm inputs, including manufacturers' dealers, independent
distributors and suppliers, and farm cooperatives. Farm input
financing is competitive and, in recent years, several large
agricultural supply companies have provided financing for various
farm inputs. Many of the Company's competitors are considerably
larger and better capitalized, and there can be no assurance that
the Company will be able to compete effectively against such
competitors in the future. Within this competitive environment,
the Company competes principally on the basis of its competitive
pricing, broad range of farm inputs offered, and the convenience of
its financing.
Major Customers:
The customer base is sufficiently broad that no customer
accounts for 10% or more of the Company's revenues.
Backlog Orders:
Although the Company had approximately $50,180,000 in
commitments to supply farm inputs, there was no material sales
backlog as of February 28, 1997.
Government Regulation:
Farm input financing and cash advances are subject to certain
state laws governing money brokers, federal and state truth-in-
lending regulations, and state usury laws limiting interest rates
for certain types of customers. Additional laws and regulations
could be implemented in the future governing the Company's
financing activities for the sale of farm inputs and cash advances
or other aspects of the Company's business. Compliance with these
laws and regulations may adversely affect the Company's operations
and costs.
The sale of certain farm inputs, including agricultural
chemicals and pesticides, is subject to certain federal and state
environmental rules and regulations. The Company holds licenses
necessary for the sale of these products. The Company also serves
as an agent for the sale of multi-peril crop insurance and has
thirteen employees with the required insurance agent's license.
Employees:
As of February 28, 1997, the company had 107 full time
employees, including seven executive positions, seventeen in
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product specialization and distribution, twenty-seven in credit
review and approval, four in multi-peril crop insurance sales,
fourteen in accounting and administration, five in information
systems, one in customer service, eleven in legal and collection,
and twenty-one in sales and marketing. None of the Company's
employees are covered by a collective bargaining agreement. The
Company considers its relations with its employees to be good.
ITEM 2. PROPERTIES
The Company's principal offices, aggregating approximately
22,000 square feet, are located in Cedar Falls, Iowa under a lease
which expires in 2000. The current annual rent is $159,545 plus
utilities, insurance premiums and interior maintenance expenses.
ITEM 3. LEGAL PROCEEDINGS
The Company is named in lawsuits in the ordinary course of its
business. Although it is not possible to predict the outcome of
such lawsuits, in the opinion of management the outcomes will not
have a material adverse effect on the financial condition of the
Company. The Company maintains insurance coverage that management
believes is reasonable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders
during the fourth quarter of the fiscal year covered by this
report.
EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning Executive Officers, set forth at Item
10 in Part III hereof, is incorporated in Part I of this report by
reference.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Market Information
In December 1996, the Company moved the trading of its common
stock to the New York Stock Exchange ("NYSE"), under the symbol
ASV, from the National Association of Securities Dealers Automated
Quotation ("NASDAQ"). The market quotations provided by the NYSE
and the over-the-counter market quotations provided by the NASDAQ
appearing on page one of the Annual Report to Shareholders for the
year ended February 28, 1997 are incorporated herein by reference.
These quotations reflect prices without retail markup, markdown or
commissions and may not represent actual transactions.
Stockholders
As of February 28, 1997, the Company had 134 stockholders of
record and approximately 2,200 stockholders for whom securities
firms acted as nominees.
Dividends
The holders of common shares are entitled to receive dividends
when and as declared by the Board of Directors. However, other
than dividends paid prior to September 1989 to its then parent
corporation, which was subsequently merged into the Company, the
Company has not paid a cash dividend on its common stock. The
Company does not anticipate payment of any cash dividends in the
foreseeable future. The Company presently intends to retain
earnings to finance growth. The Company's borrowing agreements
contain covenants that prohibit the declaration or payment of
dividends.
ITEM 6. SELECTED FINANCIAL DATA
The "Selected Financial Data" for the Company appearing on
pages 10 and 11 of the Annual Report to Stockholders for the year
ended February 28, 1997 is herein incorporated by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The "Managements Discussion and Analysis of Financial
Condition and Results of Operations" appearing on pages 12 through
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20 of the Annual Report to Stockholders for the year ended February
28, 1997 is herein incorporated by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Financial Statements and Schedules set forth in
Item 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no disagreements on accounting and financial
disclosure with the Company's independent public accountants.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Executive Officers
The name, age and office(s) held by each of the Registrant's
executive officers are shown below. Each of the executive officers
listed below serves at the pleasure of the Board of Directors,
except Messrs. Jungling, Miller and Schipper who have entered into
employment agreements with the Registrant effective through June
2000.
Name Age Position With the Company
Gaylen D. Miller (1) 48 President & Chief Executive Officer
Henry C. Jungling Jr (1) 50 Chairman of the Board
Kevin D. Schipper (1) 37 Chief Operating Officer
Todd J. Ryan (1) 34 Vice President Sales and Marketing
Brad D. Schlotfeldt (1) 33 Vice President Finance and Treasurer
Eunice M. Schipper (1) 55 Vice President Credit
Neil H. Stadlman (1) 51 Vice President Credit Administration
(1) Each of Registrant's executive officers has been an employee
of the Company in varying capacities for more than the past
five years.
The balance of the information regarding directors and
executive officers of the Company is set forth in the Company's
definitive Proxy Statement for the Annual Meeting of Stockholders
to be held August 6, 1997 on pages 3 to 5, under the heading
"Election of Directors," and is incorporated herein by reference.
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ITEM 11. EXECUTIVE COMPENSATION
Information required by this item is set forth in the
Company's definitive Proxy Statement for the Annual Meeting of
Stockholders to be held August 6, 1997 on page 3, under the heading
"Election of Directors," on pages 5 and 6, under the heading
"Election of Directors - Compensation Committee Interlocks and
Insider Participation," and on pages 7 to 14, under the heading
"Executive Compensation and Other Related Information," and is
incorporated herein by reference. However, the "Board Report on
Executive Compensation" and the "Performance Graph," on pages 9 to
11 and page 15, respectively, are specifically not incorporated by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
Information required by this item is set forth in the
Company's definitive Proxy Statement for the Annual Meeting of
Stockholders to be held August 6, 1997 on page 6, under the heading
"Security Ownership of Certain Beneficial Owners and Management,"
and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by this item is set forth in the
Company's definitive Proxy Statement for the Annual Meeting of
Stockholders to be held August 6, 1997 on pages 4 and 5, under the
heading "Election of Directors," and is incorporated herein by
reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
Page
(a)(1) - Financial Statements 16
(a)(2) - Financial Statement Schedules 16
(a)(3)and(c) - Exhibits 16
(b) - Reports on Form 8-K
No reports on Form 8-K were filed in the last quarter of the period
covered by this Form 10-K.
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INDEX TO FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
The following index is submitted in response to Item 14:
Page Reference
Annual Report
10-K to Stockholders
FINANCIAL STATEMENTS
Report of Independent Public
Accountants 21
Balance sheets, February 28, 1997
and February 29, 1996 22
Statements of income, years ended
February 28, 1997, February 29,
1996 and February 28, 1995 23
Statements of stockholders' equity,
years ended February 28, 1997,
February 29, 1996 and February
28, 1995 24
Statements of cash flows, years
ended February 28, 1997, February
29, 1996 and February 28, 1995 25
Notes to financial statements 26 - 43
FINANCIAL STATEMENT SCHEDULES
Report of Independent Public
Accountants 17
Schedule II - Valuation and
Qualifying Accounts 18
EXHIBITS
See Index of Exhibits on pages 20, 21
and 22
The Financial Statements listed in the above index are
included in the Company's Annual Report to Stockholders for the
year ended February 28, 1997, are herein incorporated by reference.
With the exception of the pages listed in the above index and the
information incorporated by reference included in Items
5,6,7,10,11,12 and 13, the Annual Report to Stockholders for the
year ended February 28, 1997 is not deemed filed as a part of this
report.
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MCGLADREY & PULLEN, LLP RSM
Certified Public Accountants and Consultants International
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors
Ag Services of America, Inc.
Cedar Falls, Iowa
Our audits were made for the purpose of forming an opinion on
the basic financial statements taken as a whole. The supplemental
schedule II is presented for purpose of complying with the
Securities and Exchange Commission's rules and is not a part of the
basic financial statements. This schedule has been subjected to
the auditing procedures applied in our audits of the basic
financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements
taken as a whole.
Waterloo, Iowa
April 24, 1997
201 Tower Park Drive, Suite 103
P. O. Box 2656
Waterloo, Iowa 50704-2656
(319) 235-7091 Fax (319) 235-7476
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AG SERVICES OF AMERICA, INC.
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
Column A Column B Column C Column D Column E
- - ----------------------------------- ------------ ------------------------ ----------- -----------
Description Balance at Additions Deductions-- Balance at
Beginning (1) (2) Describe End of
of Period Charged to Charged to Period
Costs and Other
Expenses Accounts--
Describe
- - ----------------------------------- ------------ ------------------------ ----------- -----------
Year ended February 28, 1997:
Reserves and allowances deducted
from asset accounts:
Allowance for doubtful notes $2,146,000 $2,290,388 $2,199,388 (1)$2,237,000
Reserve for discounts $519,000 $2,471,888 (2)$2,462,888 (3) $528,000
Year ended February 29, 1996:
Reserves and allowances deducted
from asset accounts:
Allowance for doubtful notes $2,105,000 $1,862,726 $1,821,726 (1)$2,146,000
Reserve for discounts $458,000 $1,728,136 (2)$1,667,136 (3) $519,000
Year ended February 28, 1995:
Reserves and allowances deducted
from asset accounts:
Allowance for doubtful notes $1,717,000 $1,408,918 $1,020,918 (1)$2,105,000
Reserve for discounts $357,000 $4,174,573 (2)$4,073,573 (3) $458,000
(1) Uncollectible customer notes receivable written off, net of recoveries.
(2) Provision for discounts as a reduction of revenues.
(3) Cash discounts taken.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
(Registrant) AG SERVICES OF AMERICA, INC.
By(Signature and Title) \s\ Henry C. Jungling, Jr.
Henry C. Jungling, Jr.
Chairman
(Principal Executive Officer)
\s\ Gaylen D. Miller
Gaylen D. Miller
President and Chief Executive Officer
(Principal Financial & Accounting Officer)
Date May 15, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated:
By:/s/Henry C. Jungling, Jr.
Henry C. Jungling, Jr.
Chairman and Director
Date: May 15, 1997
By:/s/Gaylen D. Miller
Gaylen D. Miller
President and Chief Executive Officer and Director
Date: May 15, 1997
By:/s/Kevin D. Schipper
Kevin D. Schipper
Chief Operating Officer and Director
Date: May 15, 1997
By:/s/James D. Gerson
James D. Gerson
Director
Date: May 15, 1997
By:/s/Michael Lischin
Michael Lischin
Director
Date: May 15, 1997
By:/s/Ervin J. Mellema
Ervin J. Mellema
Director
Date: May 15, 1997
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INDEX TO EXHIBITS
Exhibit
Number Exhibit
3.1 Articles of Restatement of the Company (1)
3.2 Amended and Restated Bylaws of the Company (3)
3.3 Articles of Amendment (2)
4.1 Form of stock certificate evidencing common stock,
without par value, of the Company (2)
4.2 Form of Indenture between Ag Services of America, Inc.
and Norwest Bank Minnesota, N.A., as Trustee (4)
4.3 Form of 7% convertible Subordinated Debentures due 2003
(included in Exhibit 4.2) (4)
10.1 Loan Agreement dated April 15, 1996 (7)
10.2 Form of Employment Agreement effective July 1, 1991
between the Company and Henry C. Jungling, Jr. (1)
10.3 Form of Employment Agreement effective July 1, 1991
between the Company and Gaylen D. Miller (1)
10.4 Form of Employment Agreement effective July 1, 1991
between the Company and Kevin D. Schipper (1)
10.5 Lease dated August 1992 between the Company and 145
Associates, Ltd., as amended (4)
10.6 1991 Stock Option Plan and form of Stock Option Agreement
(1)
10.7 April 12, 1996 Amendment to lease agreement (Exhibit
10.5) (7)
10.8 1993 Stock Option Plan (4)
10.9 Form of Indemnification Agreement between the Company and
each officer and director (2)
10.10 Commercial Notes dated April 15, 1996 (7)
10.13 April 5, 1995 form of Amendment to Employment Agreements
(Exhibit 10.2, 10.3 and 10.4) (6)
10.14 Form of Amendment to 1993 Stock Option Plan (6)
10.15 Retirement and Savings Plan (4)
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10.16 Amendment to Retirement and Savings Plan (6)
10.17 Form of 1995 Stock Purchase Plan (6)
10.18 Amended and Restated Loan Agreement dated march 12, 1997
(8)
10.19 Credit Agreement dated March 12, 1997 (8)
10.20 Purchase and Contribution Agreement dated March 12, 1997
(8)
11.1 Statement re computation of per share earnings (8)
13.1 Form of Annual Report to Stockholders for the year ended
February 28, 1997 (8)
21.1 Subsidiaries of the Registrant (8)
27.1 Financial Data Schedule (8)
99.1 Fourth quarter and year end results press release (8)
(1)- Pursuant to Rule 12(b)-32, this exhibit is incorporated by
reference under the same exhibit number to the exhibits filed with
the Registration Statement on Form S-1 on May 31, 1991 as
Commission File No. 33-40981.
(2)- Pursuant to Rule 12(b)-32, this exhibit is incorporated by
reference under the same exhibit number to the exhibits filed with
Pre-Effective Amendment No. 1 to the Registration Statement on Form
S-1 on July 12, 1991 as Commission File No. 33-40981.
(3)- Pursuant to Rule 12(b)-32, this exhibit is incorporated by
reference under the same exhibit number to the exhibits filed with
Pre-Effective Amendment No. 2 to the Registration Statement on Form
S-1 on July 24, 1991 as Commission File No. 33-40981.
(4)- Pursuant to Rule 12(b)-32, this exhibit is incorporated by
reference under the same exhibit number to the exhibits filed with
the Registration Statement on Form S-1 on March 31, 1993 as
Commission File No. 33-60358.
(5)- Pursuant to Rule 12(b)-32, this exhibit is incorporated by
reference under the same exhibit number to the exhibits filed with
the Company's Form 10-K for the year ended February 28, 1994.
(6)- Pursuant to Rule 12(b)-32, this exhibit is incorporated by
reference under the same exhibit number to the exhibits filed with
the Company's Form 10-K for the year ended February 28, 1995.
(7)- Pursuant to Rule 12(b)-32, this exhibit is incorporated by
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reference under the same exhibit number to the exhibits filed with
the Company's Form 10-K for the year ended February 29, 1996.
(8)- Filed herewith
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