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 through out the 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 Debentures"). The Debentures were 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 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.
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 30 states. The Company's principal target market is corn and soybean producers in the states of Iowa, Minnesota, Nebraska, Illinois, Ohio, South Dakota, North Dakota, Texas and Indiana.
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. During the year ended February 28, 2001 ("Fiscal 2001"), 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 12.8%, 12.5%, 14.0% and 51.5%, respectively. The balance of the Company's net revenues from continuing operations in Fiscal 2001 was attributed to financing income.
- 4 -
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 thirty-six of its employees, the Company is currently licensed as an insurance agent in 30 states. When customers purchase the insurance through 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 landowner 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.
- 5 -
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 States Department of Agriculture, through its Farm Service Agency ("FSA"), guarantees participating farmers fixed payments on "contract acreage base" for various crops over the next three 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 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 the year ending February 28, 2002 ("Fiscal 2002"), the Company's customers will be charged interest at a variable rate note at prime to 4.0% above prime based on the credit worthiness of the customer. As of April 23, 2001, the current prime rate is 7.50% per annum as published in the Midwest Edition of The Wall Street Journal.
- 6 -
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 accounts: 3.0% for customer accounts paid off by December 1, 2.0% for customer accounts paid off by December 21 and 1.0% for customer accounts paid off by January 15th. South accounts, 3.0% for customer accounts paid off by December 18, 2.0% for customer accounts paid off by January 8 and 1.0% for customer accounts paid off by January 31st.
Customer Support:
The Company provides customers personalized service with their farm input needs throughout the entire crop growing cycle. The Company's product specialists provide information on the 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 80% to 95% 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, 2001 and February 29, 2000: the total number of customer accounts was 1,477 and 1,533, respectively; the total outstanding customer notes receivable were $216,848,000 and $160,607,000, respectively. For the years ended February 28, 2001 and February 29, 2000, there were no individual customers whose accounts were 5% or more of the Company's total customer notes receivable at year end.
- 7 -
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 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, 2001 and February 29, 2000 was $120,779,000 and $84,046,000, respectively. The amount of past due customer notes receivable increased from 28.5% of net revenues from continuing operations in Fiscal 2000 to 34.9% in Fiscal 2001, primarily as a result of increased financing of potato and sugar beet agricultural producers whose crop marketing plans extend from nine to twelve months pas harvest. This increase in past due customer notes receivable was in line with the Company's expectations. The increased 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, 2001 and February 29, 2000, the Company's allowance for doubtful notes were $7,300,000 and $4,550,000, 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 thirty-three full time salaried sales people and one independent sales representative. The sales representatives identify prospective customers and assist in
- 8 -
obtaining customer information for the Company's credit review and approval. After the Company has approved a customer, the Company's employees begin to service the customer's account generally without assistance from the sales representatives.
In Fiscal 2001 and 2000, the Company incurred approximately $1,071,000 and $391,000, respectively, in advertising expenses. The Company plans to spend approximately $1,000,000 on advertising in Fiscal 2002.
Powerfarm:
Powerfarm operates and manages the Company's e-commerce website, Powerfarm.com, which was developed to incorporate Ag Services' business model through the Internet. Powerfarm.com has compiled one of the most comprehensive assortments of agriculture products, services and credit options available on the Internet today. Products currently available include seed, fertilizer and crop protection chemicals, along with headline ag news, market quotes and weather. Growers can shop at their convenience day or night for products and sign up for additional services like crop insurance, grain marketing programs, crop scouting and soil sampling services. Within the Powerfarm Community, growers can post questions for the Company's agronomists and Certified Crop Advisors. The Company continues discussions with additional suppliers serving the $250 billion agriculture industry.
Seasonal Factors:
The sale of farm inputs is seasonal with approximately 75% 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 and commercial paper borrowings 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 of 1997, the Company negotiated an asset backed securitized financing program with a maximum available amount of $135 million, which was increased to $205 million in March of 1998. In June of 1999, the Company amended the asset backed securitized financing program which extended the agreement through fiscal 2004 and increased the borrowing amount under the facility to $275 million. During August of 2000, the Company negotiated a new $30 million five year term loan. The term loan will be due in four equal annual installments beginning in July of 2002 through maturity in July of 2005. The Company also maintains a line of credit with a maximum borrowing capacity of $15.0 million, which combined with the securitized financing program and the term loan should provide the Company adequate financing for Fiscal 2002. 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.
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
- 9 -
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 $120,446,000 in commitments to supply farm inputs, there was no material sales backlog as of February 28, 2001.
Government Regulation:
Farm input financing and cash advances are subject to certain state laws governing money brokers, federal and states 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 thirty-six employees with the required insurance agent's license.
Employees:
As of February 28, 2001, the company had 166 full time employees, including thirteen executive positions, four in product specialization and distribution, fifty-nine in credit review and approval, three in multi-peril crop insurance sales, twenty in accounting and administration, six in information systems, one in customer service, fourteen in legal and collection, and thirty-seven 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.
ITEM 2. PROPERTIES
The Company's principal offices, aggregating approximately 35,000 square feet, are located in Cedar Falls, Iowa under two leases, one which expires in February 2002 and another which expires in April 2003 with the option to vacate the leased premises in February 2002 without obligation to pay rent or common area fees for the unexpired lease term.
- 10 -
The current annual rent is approximately $281,000 plus utilities, insurance premiums and interior maintenance expenses. During Fiscal 2001 the Company was granted land by the City of Cedar Falls, Iowa. The Company currently has contracted with a company to construct a building to replace the Company's corporate headquarters. The new facility will have approximately 55,000 to 60,000 square feet of office space with adequate land for future expansion. The construction of the new office facility began in spring of 2001 with an estimated cost of $4.8 million and completion estimated in February of 2002.
ITEM 3.
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.
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.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
The Company's common stock is traded on the New York Stock Exchange ("NYSE"), under the symbol ASV. The market quotations provided by the NYSE appearing on page four of the Annual Report to Shareholders for the year ended February 28, 2001 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, 2001, the Company had 120 stockholders of record and approximately 3,100 stockholders for whom securities firms acted as nominees.
- 11 -
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 current borrowing agreements contain covenants that prohibit the declaration or payment of dividends.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The "Selected Financial Data" for the Company appearing on pages 12 and 13 of the Annual Report to Stockholders for the year ended February 28, 2001 is herein incorporated by reference.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The "Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing on pages 15 through 20 of the Annual Report to Stockholders for the year ended February 28, 2001 is herein incorporated by reference.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
At February 28, 2001 the Company had $147.8 million outstanding in notes payable at an average variable interest rate of 6.64%. The Company has an interest rate swap which effectively converts $30 million of this variable rate debt to a fixed rate instrument. After considering the effect of this swap, the Company has floating rate debt of $117.8 million at a variable interest rate of 5.84%. A 10% increase in the average variable interest rate would increase interest expense by approximately 58 basis points. Assuming similar average variable rate outstanding borrowings for Fiscal 2001 of $183 million, this would increase the Company's interest expense by approximately $1,061,000.
The above sensitivity analysis is to provide information about the Company's potential market risks as they pertain to an adverse change in interest rates. The above analysis excludes the positive impact that increased interest rates would have on financing income as 95% of the Company's notes receivable are variable rate notes.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Financial Statements and Schedules set forth in Item 14.
ITEM 9.
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.
- 12 -
PART III
ITEM 10.
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 2003.
Name Age Position With the Company
Gaylen D. Miller (1) 52 President and Chief Executive Officer Henry C. Jungling, Jr. (1) 54 Chairman of the Board Kevin D. Schipper (1) 41 Chief Operating Officer and Secretary Brad D. Schlotfeldt (1) 37 Senior Executive Officer and Treasurer Shawn R. Smeins (1) 33 Executive Vice President John T. Roth (2) 29 Vice President Finance Todd J. Ryan (1) 38 Vice President Sales and Marketing Eunice M. Schipper (1) 59 Vice President Credit Neil H. Stadlman (1) 55 Vice President Credit Administration Lisa Meester (1) 41 Vice President Information Systems Bruce Nelson (1) 50 Vice President Collections Jamey Ross (1) 29 Vice President Products and Distribution Linda Kobliska (3) 45 General Counsel
(1) These executive officers of the Registrant have been an employee of the Company in varying capacities for more than the past five years.
(2) Mr. Roth has been employed by the Company in varying capacities since October 1998. Before joining the Company, Mr. Roth was a CPA with McGladrey and Pullen, LLP, a public accounting firm, from July 1995 through October 1998. McGladrey and Pullen, LLP is the Company's independent auditor.
(3) Ms. Kobliska has been employed by the Company in varying capacities since January 1998. Before joining the Company, Ms. Kobliska was a self-employed legal researcher, from 1997 through 1998. Prior to that, Ms. Kobliska was employed in the sales division at McLeod USA from 1996 through 1997.
- 13 -
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 1, 2001, on pages 5 and 6, under the heading "Election of Directors," and is incorporated herein by reference.
ITEM 11.
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 1, 2001, on page 3, under the heading "Election of Directors," on page 5, under the heading "Election of Directors - Compensation Committee Interlocks and Insider Participation," and on pages 6 to 16, 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 10 to 11 and page 15, respectively, are specifically not incorporated by reference.
ITEM 12.
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 1, 2001, on page 8, under the heading "Security Ownership of Certain Beneficial Owners and Management," and is incorporated herein by reference.
ITEM 13.
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 1, 2001, on pages 5 and 6, under the heading "Election of Directors," and is incorporated herein by reference.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
Page (a)(1) - Financial Statements 15 (a)(2) - Financial Statement Schedules 15 (a)(3) and (c) - Exhibits 15 (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.
- 14 -
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 Consolidated balance sheets, February 28, 2001 and February 29, 2000 22 Consolidated statements of income, years ended February 28, 2001, February 29, 2000 and February 28, 1999 23 Consolidated statements of stockholders' equity, years ended February 28, 2001, February 29, 2000 and February 28, 1999 24 Consolidated statements of cash flows, years ended February 28, 2001, February 29, 2000 and February 28, 1999 25 Notes to consolidated financial statements 26 - 46
FINANCIAL STATEMENT SCHEDULES Report of Independent Public Accountants 16 Schedule II - Valuation and Qualifying Accounts 17
EXHIBITS See Index of Exhibits on pages 18, 19 and 20.
The Financial Statements listed in the above index are included in the Company's Annual Report to Stockholders for the year ended February 28, 2001, 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, 2001 is not deemed filed as a part of this report.
- 15 -
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 consolidated 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 consolidated financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic consolidated financial statements taken as a whole.
/s/ McGladrey & Pullen, LLP McGladrey & Pullen, LLP
Des Moines, Iowa April 10, 2001
- 16 -
- 17 -
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 under-signed, thereunto duly authorized.
(Registrant) AG SERVICES OF AMERICA, INC.
By(Signature and Title) \s\ Gaylen D. Miller Gaylen D. Miller President and Chief Executive Officer (Principal Executive Officer)
\s\ Brad D. Schlotfeldt Brad D. Schlotfeldt Senior Executive Officer and Treasurer (Principal Financial & Accounting Officer) Date May 10, 2001
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 10, 2001
By:/s/ Gaylen D. Miller Gaylen D. Miller President and Chief Executive Officer and Director Date: May 10, 2001
By:/s/ Kevin D. Schipper Kevin D. Schipper Chief Operating Officer and Director Date: May 10, 2001
By:/s/ James D. Gerson James D. Gerson Director Date: May 10, 2001
- 18 -
By:/s/ Michael Lischin Michael Lischin Director Date: May 10, 2001
By:/s/ Ervin J. Mellema Ervin J. Mellema Director Date: May 10, 2001
- 19 -
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)
- 20 -
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)
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)
10.21 Amendment No. 1 to Third Amended and Restated Loan Agreement (9)
10.22 Amendment No. 2 to Third Amended and Restated Loan Agreement (9)
10.23 Amendment No. 3 to Third Amended and Restated Loan Agreement (9)
10.24 Amendment No. 1 to Credit Agreement (9)
10.25 Master Trust Indenture and Security Agreement (10)
10.26 Employee Agreement with Kevin D. Schipper (11)
10.27 Employee Agreement with Gaylen D. Miller (11)
10.28 Employee Agreement with Henry C. Jungling (11)
13.1 Form of Annual Report to Stockholders for the year ended February 28, 2001 (12)
21.1 Subsidiaries of the Registrant (12)
99.1 Fourth quarter and year end results press release (12)
- 21 -
(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 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) - 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, 1997.
(9) - 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, 1998.
(10) - 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, 1999.
(11) - Pursuant to Rule 12(b)-32, this exhibit is incorporated by reference under the same exhibit number to the exhibits file with the Company's Form 10-Q for the quarter ended November 30, 2000.
(12) - Filed herewith
- 22 -