Ag Services of America Announces 2nd Quarter Results.Business Editors CEDAR FALLS Cedar Falls, city (1990 pop. 34,298), Black Hawk co., N Iowa, on the Cedar River; inc. 1854. It developed as a milling center in the late 19th-century after the coming of the railroad; its name is derived from the cedar tree. , Iowa--(BUSINESS WIRE)--Oct. 1, 2003 Ag Services of America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. , Inc. (NYSE NYSE See: New York Stock Exchange :ASV ASV abbr. Bible American Standard Version ASV n abbr (= American Standard Version) → traduction de la Bible ASV n abbr (Bible) (= ) announced today that net revenues for the second fiscal quarter ended August 31, 2003 decreased to $36.6 million compared to $80.1 million one year ago. As previously discussed, the decline in revenues was directly attributable to the Company's reduced credit facility for the current fiscal year. Net earnings for the second quarter resulted in a loss of $2.1 million compared to net income of $2.5 million one year ago. During the second quarter the Company incurred a one-time charge of $3.8 million related to expenses associated with the terminated American Securities Capital Partners, L.P. (ASCP ASCP American Society of Clinical Pathologists. ) transaction. Also impacting the second quarter was an increase in financing costs compared to the same period one year ago. Excluding the one-time charge, the Company earned approximately $0.5 million of pre-tax income for the second fiscal quarter. Net revenues for the six months ended August 31, 2003, were $84.8 million as compared to $155.4 million for the same period one year ago. The Company's net loss for the first six months of Fiscal 2004 was $2.4 million, or a loss of $0.43 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to net income of $4.7 million, or $0.85 per diluted share, for the same period last year. Net revenues for the first two fiscal quarters decreased as a result of the smaller credit facility available to the Company for 2003 customer loan commitments. The 2003 credit facility limited the Company to approximately $260 million in customer loan commitments, compared to approximately $465 million in customer loan commitments last year. The net loss for the first six months of $2.4 million was caused largely by the reduction in net revenues and the one-time charge for expenses associated with the terminated ASCP transaction. In addition, higher costs were incurred in securing the 2003 credit facility and the additional provision of $1.5 million made to the Company's allowance for doubtful notes during the first quarter, all contributed to the net loss through August 31, 2003. For the first six months ended August 31, 2003, the Company incurred higher than historical financing expenses with cost of funds Cost of Funds The interest rate paid on an outstanding loan. Notes: Money isn't free! Cost of funds is the cost of borrowing money. See also: Interest Rate Cost of funds Interest rate associated with borrowing money. exceeding Prime plus 200 basis points. Last year the Company's financing costs for the same period averaged Prime minus 25 basis points. The increase in costs were attributable to the interim nature of the current credit facility and delays encountered with respect to the now-terminated ASCP transaction. During the second fiscal quarter the Company started realizing the benefit of several cost cutting measures taken earlier in the year, with operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. decreasing from $3.2 million for the first quarter to $2.6 million for the second quarter. As stated on September 4th, Ag Services terminated its Securities Purchase Agreement with ASP/ASA, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , an affiliate of ASCP. Ag Services is now considering various courses of action, one of which is to seek a credit facility that will allow operations to continue at current levels. Ag Services' current credit facility expires in October of 2004 and restricts the Company from making any credit commitments to its customers for the 2004 crop year. At this time there can be no assurances that Ag Services will be able to secure a new credit facility. In the event Ag Services is unable to secure a new credit facility; the Company's best option may be to liquidate To pay and settle the amount of a debt; to convert assets to cash; to aggregate the assets of an insolvent enterprise and calculate its liabilities in order to settle with the debtors and the creditors and apportion the remaining assets, if any, among the stockholders or owners of the . In June 2003, Ag Services estimated that the discounted net present value per share of its common stock in a liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy was between $7.18 and $9.68 per share. Ag Services of America, Inc. is based in Cedar Falls, Iowa Cedar Falls is a city in Black Hawk County, Iowa, United States, and it is home to one of Iowa's three public universities, the University of Northern Iowa. The population was 36,145 at the 2000 census. , and is a leading supplier of crop input financing and agricultural inputs, including seed, chemicals and fertilizers to primarily corn and soybean soybean, soya bean, or soy pea, leguminous plant (Glycine max, G. soja, or Soja max) of the family Leguminosae (pulse family), native to tropical and warm temperate regions of Asia, where it has been growers in the U.S. The Company's one-stop shopping business model includes competitive and flexible financing packages through its AgriFlex Credit(R) program combined with a comprehensive offering of agricultural inputs from national sources such as Asgrow, BASF BASF Bar Association of San Francisco (since 1872; San Francisco, California) BASF Badische Anilin und Soda Fabrik (German chemical products company) BASF Builders Association of South Florida , Dekalb, Dow AgroSciences Dow AgroSciences LLC is a wholly owned subsidiary of the Dow Chemical Company specializing in not only agricultural chemicals such as pesticides, but also seeds and biotechnology solutions. The company is based in Indianapolis, Indiana, in the United States. , DuPont, Garst, Monsanto, Syngenta and Pioneer Hi-Bred Pioneer Hi-Bred is one of the largest U.S. companies which produces hybrid seeds for agriculture. History In 1926, farm journal editor and future U.S. Vice President Henry A. Wallace, along with a group of Des Moines, Iowa businessmen, started the "Hi-Bred Corn Company". . The Company also administers additional financing programs for various suppliers, manufacturers and distributors in the agricultural industry and provides ancillary Subordinate; aiding. A legal proceeding that is not the primary dispute but which aids the judgment rendered in or the outcome of the main action. A descriptive term that denotes a legal claim, the existence of which is dependent upon or reasonably linked to a main claim. services such as crop insurance and grain marketing. The Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 provides a "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " for forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . This release contains forward-looking statements based on current expectations that involve a number of risks and uncertainties. The factors that could cause actual results to differ materially include the following: general economic conditions within the agricultural industry; competitive factors and pricing pressures; changes in agricultural regulations; unknown risks; ability to obtain a satisfactory 2004 crop season credit facility; ability to obtain long term financing; changes in financial condition, assumptions or other circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or that may affect the Company's liquidation analysis or ultimate liquidation value Liquidation value Net amount that could be realized by selling the assets of a firm after paying the debt. and the risks described from time to time in the Company's SEC reports. AgriFlex Credit is a registered trademark of Ag Services of America, Inc. All other trademarks or product names are the property of their respective owners. For more information visit www.agservices.com
Income Statement Three Months Ended Six Months Ended
(Unaudited): --------------------- ---------------------
(Dollars in thousands, August 31, August 31, August 31, August 31,
except per share amounts) 2003 2002 2003 2002
---------- ---------- ---------- ----------
Net revenues:
Farm inputs $30,402 $70,001 $71,794 $135,801
Financing income 5,833 9,087 11,231 15,403
Customer fees 289 514 1,458 3,000
Other 63 536 271 1,179
---------- ---------- ---------- ----------
Net revenues $36,587 $80,138 $84,754 $155,383
---------- ---------- ---------- ----------
Cost of revenues:
Farm inputs $28,439 $64,603 $66,681 $125,239
Financing expense 3,943 4,467 7,674 7,849
Provision for doubtful
notes 1,108 2,828 4,622 6,905
---------- ---------- ---------- ----------
Net cost of revenues $33,490 $71,898 $78,977 $139,993
---------- ---------- ---------- ----------
Gross margin $3,097 $8,240 $5,777 $15,390
Selling, general &
administrative expenses 2,605 4,172 5,782 7,815
Terminated ASCP transaction
costs 3,838 - 3,838 -
---------- ---------- ---------- ----------
Total operating expenses $6,443 $4,172 $9,620 $7,815
---------- ---------- ---------- ----------
Income (loss) before
income taxes ($3,346) $4,068 ($3,843) $7,575
Income taxes (benefit) (1,272) 1,566 (1,460) 2,916
---------- ---------- ---------- ----------
Net income ($2,074) $2,502 ($2,383) $4,659
========== ========== ========== ==========
Earnings per share
Basic ($0.38) $0.46 ($0.43) $0.85
Diluted ($0.38) $0.45 ($0.43) $0.85
Weighted average shares:
Basic 5,479,514 5,476,961 5,479,514 5,475,125
Diluted 5,479,514 5,501,575 5,479,514 5,507,416
Income Statement Information
(Unaudited):
Three Months Three Months Six Months Six Months
Ended 8/31/03 Ended 8/31/02 Ended 8/31/03 Ended 8/31/02
-------------- -------------- -------------- ---------------
Net
revenue:
Seeds 7,537 20.6% 22,141 27.6% 23,093 27.2% 44,913 28.9%
Chemicals 13,644 37.3% 30,841 38.5% 25,039 29.5% 50,053 32.2%
Ferti-
lizers 9,221 25.2% 17,019 21.2% 23,662 27.9% 40,835 26.3%
Financing 5,833 15.9% 9,087 11.3% 11,231 13.3% 15,403 9.9%
Customer
fees 289 .8% 514 .6% 1,458 1.7% 3,000 1.9%
Other 63 .2% 536 .8% 271 .4% 1,179 .8%
-------------- -------------- -------------- ---------------
Total
net
revenue$36,587 100.0% $80,138 100.0% $84,754 100.0% $155,383 100.0%
============== ============== ============== ===============
Balance Sheet Information (Unaudited): 8/31/03 8/31/02
--------- ---------
Notes receivables, net $338,636 $544,520
All other assets 19,819 19,711
--------- ---------
Total assets $358,455 $564,231
========= =========
Liabilities $282,722 $487,955
Equity 75,733 76,276
--------- ---------
Total liabilities and equity $358,455 $564,231
========= =========
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