Ag Services of America, Inc. reported record net revenue and earnings for the first quarter ended May 31, 2000. Net revenues for the three months ended May 31, 2000 increased 17% to $155.8 million from $132.9 million during the comparable quarter last year. Net earnings increased 2% to $3.13 million compared to $3.08 million for the first quarter of fiscal 2001. Diluted earnings per share for the first quarter of fiscal 2001 remained steady with the first quarter of fiscal 2000 at $0.57 per share.

Fiscal 2001 first quarter results were impacted by Powerfarm.com, the Company's e-commerce
initiative, reduced credit demand due to record direct government payments to farmers, and sales mix changes as a result of the Company's geographic diversification.

Powerfarm.com was initiated to capitalize on the Company's business model developed over the last 15 years. Powerfarm.com business model includes the support of national agricultural seed and crop protection companies, internal agronomic professionals and input financing. Companies supporting PowerFarm today include American Cyanamid, Asgrow, Bayer, Dekalb, Dow AgroSciences, Garst, Gutwein, Monsanto, Novartis, Stine, Valent, Wilson and Zeneca.

Powerfarm's impact on first quarter earnings resulted in a decline of approximately $0.04 per share on a diluted basis. Powerfarm's results included revenues of approximately $400,000 and expenses related to infrastructure and web site development and the ongoing operations of Powerfarm of $354,000 resulting in a net loss of $221,000 for Powerfarm operations in the first quarter of fiscal 2001.

Powerfarm.com has compiled the most comprehensive assortment 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.

Farmers received an annual average of $8.8 billion in direct payments during 1990 through 1997, but this increased to a yearly average of $17.4 billion for the three year period of 1998 through 2000. The high levels of direct government payments are reducing demand for credit and increasing competition at the commercial banking level. The Company has elected not to sacrifice credit quality for growth in the current competitive environment. The Company believes this strategy will create a financially stronger Company better positioned for future growth and profitability.

Ag Services' geographic diversification also impacted fiscal 2001 first quarter results. Accelerated
growth in the Company's non-traditional crops such as sugar beets and potatoes resulted in a shift in sales mix to lower margin inputs. This sales mix change contributed to net earnings growth at a slower pace than net revenue growth.

Ag Services of America, Inc., which operates Powerfarm.com, is based in Cedar Falls, Iowa, and is a competitive supplier of input financing and agricultural inputs, including seed, chemicals, fertilizer and cash advances to primarily corn and soybean growers in the U.S. ASV's one-stop shopping business model includes competitive and flexible financing packages through its AgriFlex Credit® program combined with the most comprehensive offering of agricultural inputs from national sources such as American Cyanamid, Asgrow, Bayer, Dekalb, Dow Chemical, DuPont, Garst, Monsanto, Novartis, Pioneer Hi-Bred, and Zeneca. ASV finances AgriFlex Credit® with a $275 million securitization program that is structured and guaranteed by MBIA Insurance Corporation. ASV protects its receivables by requiring multi-peril crop insurance, the first lien on the crop, assignment of all government payments and additional collateral (preferably land) if necessary. The Company also provides ancillary services such as crop insurance, crop scouting and grain marketing. 

Company news release
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