-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JgS2fYvtZ9dm65hdth3TWVgqauMk37snzRlRMQYCUZ8HffxmsZ4OCr+8L8Gulbub 5/1CqmVBnaLWGbp6sArqKA== 0000007623-06-000007.txt : 20060717 0000007623-06-000007.hdr.sgml : 20060717 20060717165239 ACCESSION NUMBER: 0000007623-06-000007 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20060531 FILED AS OF DATE: 20060717 DATE AS OF CHANGE: 20060717 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARTS WAY MANUFACTURING CO INC CENTRAL INDEX KEY: 0000007623 STANDARD INDUSTRIAL CLASSIFICATION: FARM MACHINERY & EQUIPMENT [3523] IRS NUMBER: 420920725 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-05131 FILM NUMBER: 06965364 BUSINESS ADDRESS: STREET 1: P O BOX 288 CITY: ARMSTRONG STATE: IA ZIP: 50514 BUSINESS PHONE: 7128643131 MAIL ADDRESS: STREET 1: P O BOX 288 CITY: ARMSTRONG STATE: IA ZIP: 50514 10QSB 1 may0610.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________________________________ FORM 10-QSB (Mark One) [x] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended May 31, 2006 [ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ______ to ______ Commission File No. 0-5131 ART'S-WAY MANUFACTURING CO., INC. (Exact Name of Small Business Issuer as Specified in Its Charter) DELAWARE 42-0920725 (State or Other Jurisdiction I.R.S. Employer Identification No. of Incorporation or Organization) Hwy 9 West, Armstrong, Iowa 50514 (Address of Principal Executive Offices) (712) 864-3131 Issuer's Telephone Number, Including Area Code Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the past 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. Yes X No __ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes __ No X Number of common shares outstanding as of July 17, 2006: 1,973,176 Transitional Small Business Disclosure Format (check one): Yes _ No X ART'S-WAY MANUFACTURING CO., INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Year to Date May 31, May 31, May 31, May 31, 2006 2005 2006 2005 Net sales $ 4,111,729 $ 3,799,873 $ 8,413,817 $ 7,391,716 Cost of goods sold 2,822,374 2,776,938 5,749,057 5,113,797 Gross profit 1,289,355 1,022,935 2,664,760 2,277,919 Operating expenses: Engineering 108,858 150,367 199,898 279,287 Selling 192,978 118,231 385,237 335,103 General & administrative 677,356 432,248 1,278,804 810,070 Total expenses 979,192 700,846 1,863,939 1,424,460 Income from operations 310,163 322,089 800,821 853,459 Other expenses: Interest expense 99,969 80,087 182,311 130,294 Other (24,822) (6,510) (41,458) (44,881) Total other expenses 75,147 73,577 140,853 85,413 Income before income taxes 235,016 248,512 659,968 768,046 Income tax expense 81,847 98,754 234,829 275,396 Net income $ 153,169 $ 149,758 $ 425,139 $ 492,650 Net income per share: Basic $ 0.08 $ 0.08 $ 0.22 $ 0.25 Diluted $ 0.08 $ 0.08 $ 0.21 $ 0.25 Common shares and equivalent outstanding: Basic 1,972,796 1,944,385 1,968,451 1,941,280 Diluted 1,979,570 1,966,405 1,977,619 1,965,566 See accompanying notes to condensed consolidated financial statements. ART'S-WAY MANUFACTURING CO., INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) May 31, November 30, 2006 2005 ASSETS Current Assets Cash $ 2,341,217 $ 1,198,238 Accounts receivable-customers, net of allowance for doubtful accounts of $75,066 and $46,385 in May and November, respectively 1,645,561 956,391 Inventories, net 7,510,531 6,525,051 Deferred taxes 709,000 673,000 Other current assets 173,871 128,877 Total current assets 12,380,180 9,481,557 Property, plant and equipment, at cost 12,474,068 12,263,478 Less accumulated depreciation 10,067,180 10,372,818 Net property, plant and equipment 2,406,888 1,890,660 Inventories, noncurrent 136,171 144,871 Deferred taxes 32,000 191,000 Other assets 102,603 74,353 Total Assets $ 15,057,842 $ 11,782,441 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Current portion of long-term debt $ 254,094 $ 223,946 Accounts payable 699,662 530,722 Customer deposits 1,602,534 569,354 Accrued expenses 949,901 736,464 Total current liabilities 3,506,191 2,060,486 Long-term debt, excluding current portion 3,936,992 2,558,273 Total liabilities 7,443,183 4,618,759 Stockholders' Equity Common stock - $.01 par value. Authorized 5,000,000 shares; issued 1,973,176 and 1,963,176 shares in May and in November 19,732 19,632 Additional paid-in capital 1,745,525 1,719,787 Retained earnings 5,849,402 5,424,263 Total stockholders' equity 7,614,659 7,163,682 Total liabilities and stockholders' equity $ 15,057,842 $ 11,782,441 See accompanying notes to condensed consolidated financial statements. ART'S-WAY MANUFACTURING CO., INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Year to Date May 31, May 31, 2006 2005 CASH FLOW FROM OPERATIONS: Net income $ 425,139 $ 492,650 Adjustment to reconcile net income to net cash provided by operating activities: Stock compensation expense 2,638 0 (Gain) on sale of equipment (16,238) 0 Depreciation and amortization 132,266 125,612 Deferred income tax 123,000 262,772 Changes in working capital components: (Increase) decrease in: Accounts receivable (689,170) (122,388) Inventories (976,780) (465,127) Other current assets (44,994) (57,054) Other (3,698) 108,883 Increase (decrease) in: Accounts payable 168,940 (18,745) Customer deposits 1,033,180 1,758,302 Accrued expenses 213,437 (32,417) Net cash provided by operating activities 367,720 2,052,488 CASH FLOW FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment (712,427) (75,330) Proceeds from sale of property, plant and equipment 82,689 0 Net cash (used in) investing activities (629,738) (75,330) CASH FLOW FROM FINANCING ACTIVITIES: Principal payments on line of credit 0 (870,071) Proceeds from notes payable 1,500,000 1,000,000 Principal payments on long term debt (91,133) (85,790) Loan origination fees paid (27,070) (18,550) Proceeds from the exercises of stock options 23,200 57,050 Net cash provided by financing activities 1,404,997 82,639 Net increase in cash 1,142,979 2,059,797 Cash at beginning of period 1,198,238 116,001 Cash at end of period $ 2,341,217 $ 2,175,798 Supplemental disclosures of cash flow information: Cash paid during the year for: Interest $ 169,569 $ 104,980 Income taxes $ 24,100 $ 12,624 See accompanying notes to condensed consolidated financial statements. ART'S-WAY MANUFACTURING CO., INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Statement Presentation The financial statements are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim periods. The financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company's Annual Report on Form 10-KSB for the year ended November 30, 2005. The results of operations for the six months ended May 31, 2006 are not necessarily indicative of the results for the fiscal year ending November 30, 2006. 2. STOCK OPTIONS At May 31, 2006, we had two stock-based employee compensation plans, which are described more fully in Note 9 of our 2005 Annual Report to Stockholders. We adopted Statement No. 123 (Revised 2004), Share-Based Payment ("SFAS123R") which replaces SFAS No. 123, Accounting for Stock-Based Compensation and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, effective December 1, 2005. SFAS123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The pro forma disclosures previously permitted under SFAS No. 123 are no longer an alternative to financial statement recognition. Upon adoption, we used the prospective transition method. The prospective method requires that compensation expense be recorded for all non-vested stock options beginning with the first quarter after adoption of SFAS123R. Stock-based compensation expense for the six months ended May 31, 2006 totaled $2,638. Previously, we applied Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations in accounting for these plans. Accordingly, prior to December 1, 2005 no compensation cost had been recognized for stock options in the condensed consolidated financial statements when the options were issued at a price equivalent to the stock price at the time of issuance. Set forth below is a reconciliation of net income and earnings per share information for the six months ended May 31, 2005, as if we had applied the fair value recognition provisions of SFAS 123, Accounting for Stock-based Compensation, to stock-based employee compensation for that period. Three months ended Six months ended May 31, 2005 May 31, 2005 Net income, as reported $ 149,758 $ 492,650 Deduct: Total stock-based compensation expense determined under the fair value method for all awards, net of tax effects ($ 1,755) ($ 3,510) Pro forma net income $ 148,003 $ 489,140 Pro forma basic earnings per share .08 .25 Pro forma diluted earnings per share .08 .25 The fair value of each option grant has been estimated using the Black-Scholes option-pricing model. 3. INVENTORIES Major classes of inventory are: May 31, November 30, 2006 2005 Raw material $ 3,629,737 $ 2,820,591 Work-in-process 319,258 455,077 Finished goods 3,697,707 3,394,254 Total $ 7,646,702 $ 6,669,922 Less inventories classified as noncurrent 136,171 144,871 Inventories, current $ 7,510,531 $ 6,525,051 4. ACCRUED EXPENSES Major components of accrued expenses are: May 31, November 30, 2006 2005 Salaries, wages and commissions $ 431,432 $ 371,680 Accrued warranty expense 167,487 131,832 Income taxes 93,431 5,702 Other 257,551 227,250 Total $ 949,901 $ 736,464 5. PRODUCT WARRANTY The Company offers limited warranties of various lengths to its customers depending on the specific product and terms of the customer purchase agreement. The average length of the warranty period is one year from date of purchase. The Company's warranties require it to repair or replace defective products during the warranty period at no cost to the customer. The Company records a liability for estimated costs that may be incurred under its warranties. The costs are estimated based on historical experience and any specific warranty issues that have been identified. Although historical warranty costs have been within expectations, there can be no assurance that future warranty costs will not exceed historical amounts. The Company periodically assesses the adequacy of its recorded warranty liability and adjusts the balance as necessary. Changes in the Company's product warranty liability for the three and six months ended May 31, 2006 and 2005 are as follows: Three Months Ended Six Months Ended May 31, May 31, May 31, May 31, 2006 2005 2006 2005 Balance, beginning $84,440 $155,934 $131,832 $119,912 Settlements made in cash or in-kind (36,906) (224,556) (147,319) (248,253) Warranties issued 119,953 184,615 182,974 244,334 Balance, ending $167,487 $115,993 $167,487 $115,993 6. LOAN AND CREDIT AGREEMENTS The Company has a revolving line of credit for $3,500,000 with advances funding the working capital, letter of credit and corporate credit card needs that will mature on April 30, 2007. The interest rate is West Bank's prime interest rate, adjusted daily. Monthly interest only payments are required and the unpaid principal is due on the maturity date. Collateral consists of a first position on assets owned by the Company including, but not limited to inventories, accounts receivable, machinery and equipment. As of May 31, 2006 and November 2005, the Company had no borrowings against the line of credit. Other terms and conditions of the debt with West Bank include providing monthly internally prepared financial reports including accounts receivable aging schedules and borrowing base certificates and year-end audited financial statements. The borrowing base shall limit advances from the line of credit to 60% of accounts receivable less than 90 days, 60% of finished goods inventory, 50% of raw material inventory and 50% of work-in-process inventory plus 40% of appraisal value of machinery and equipment. J. Ward McConnell, Jr. was required to personally guarantee the debt with West Bank on an unlimited and unconditional basis. The guarantee of the term debt shall be reduced after the first three years to a percentage representing his ownership of the Company. Mr. McConnell's guarantee shall be removed from the term debt in the event that his ownership interest in the Company is reduced to a level less than 20% after the first three years of the loan. The Company compensates Mr. McConnell for his personal guarantee at an annual percentage rate of 2% of the outstanding balance to be paid monthly. Guarantee fee payments to Mr. McConnell were approximately $31,000 and $24,000, for the six months ended May 31, 2006 and 2005, respectively. A summary of the Company's term debt is as follows: May 31, November 30, 2006 2005 West Bank loan payable in monthly installments of $17,776 including interest at Bank's prime rate plus 1.5%, due March 31, 2023 (A) (B) $ 1,724,904 $ 1,754,866 West Bank loan payable in monthly installments of $10,000 including interest at Bank's prime rate plus 1.5%, due March 31, 2015 (A) (B) $ 956,928 $ 974,356 West Bank loan payable in monthly installments of $22,000 including interest at Bank's prime rate plus 1.0%, due April 30, 2016 (A) (B) $ 1,493,040 $ 0 State of Iowa Community Development Block Grant promissory notes at zero percent interest, maturity September 2006, with quarterly principal payments of $11,111 $ 11,111 $ 33,334 State of Iowa Community Development Block Grant local participation promissory notes at 4% interest, maturity September 2006, with quarterly payments of $7,007 $ 5,103 $ 19,663 Total term debt $ 4,191,086 $ 2,782,219 Less current portion of term debt $ 254,094 $ 223,946 Term debt, excluding current portion $ 3,936,992 $ 2,558,273 (A) Notes are supported by a guarantee issued by the United States Department of Agriculture (USDA) for 75% of the loan amount outstanding. Collateral for these loans are primarily real estate with a second position on assets securing the line of credit. The USDA subordinates collateral rights in all assets other than real estate in an amount equal to West Bank's other credit commitments. (B) Covenants include, but are not limited to, restrictions on payment of dividends, debt service coverage ratio, debt/tangible net worth ratio, current ratio, limitation on capital expenditures, and tangible net worth. During the second quarter ended May 31, 2006, the Company did not comply with covenant limitations on capital expenditures and the disposal of assets. The bank waived the limitations. 7. RELATED PARTY TRANSACTIONS J. Ward McConnell, Jr. owns and operates Adamson Global. During the first six months ended May 31, 2006 Adamson sold Art's-Way Vessels, Inc., certain raw material and equipment for an aggregate price of approximately $171,000. Adamson also purchased pressurized vessels from Art's-Way Vessels, Inc. in the first six months, for an aggregate price of approximately $84,000. The Company believes that the transactions were done in accordance with prevailing market terms and conditions. 8. SEGMENT INFORMATION On October 4, 2005, the Company purchased certain assets of Vessels Systems, Inc. which created a separate operating segment. Prior to the date of this acquisition the Company operated in one reportable segment. Our reportable segments are strategic business units that offer different products. They are managed separately because each business requires different technology and marketing strategies. There are two reportable segments: agricultural products and pressurized vessels. The agricultural products segment fabricates and sells farming products as well as replacement parts for these products throughout the United States. The pressurized vessel segment produces pressurized tanks. The accounting policies applied to determine the segment information are the same as those described in the summary of significant accounting policies. Currently interest expense on long-term debt is all located within the agricultural products segment with no interest being charged to the pressurized vessels segment related to intercompany borrowings. Intersegment sales and transfers, if any, are accounted for at historical cost. Management evaluates the performance of each segment based on profit or loss from operations before income taxes, exclusive of nonrecurring gains and losses. Approximate financial information with respect to the reportable segments is as follows. The agricultural products and the pressurized vessels segment information is for the three and six months ended May 31, 2006. Three Months Ended May 31, 2006 Agricultural Products Pressurized Vessels Consolidated Revenue from external customers $3,301,000 $811,000 $4,112,000 Income from operations 106,000 204,000 310,000 Income before tax 24,000 211,000 235,000 Segment profit 22,000 131,000 153,000 Total Assets 14,512,000 546,000 15,058,000 Capital expenditures 361,000 17,000 378,000 Depreciation & Amortization 69,000 10,000 79,000 Six Months Ended May 31, 2006 Agricultural Products Pressurized Vessels Consolidated Revenue from external customers $6,929,000 $1,485,000 $8,414,000 Income from operations 584,000 217,000 801,000 Income before tax 433,000 227,000 660,000 Segment profit 284,000 141,000 425,000 Total Assets 14,512,000 546,000 15,058,000 Capital expenditures 681,000 31,000 712,000 Depreciation & Amortization 111,000 21,000 132,000 Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and notes thereto appearing elsewhere in this report. Management's discussion and analysis contains forward-looking statements that involve risks and uncertainties, including but not limited to, quarterly fluctuations in results; customer demand for our products; economic conditions; the achievement of lower costs and expenses; the continued availability of financing in the amount and on the terms required to support future business; and other risks detailed from time to time in our other Securities and Exchange Commission filings. Actual results may differ materially from management's expectations. (a) Plan of Operation In the current fiscal year we plan to continue growth through new product development and when appropriate acquisition. We continue to look for new and better ways to improve our product offerings for our end users. We persist in our attempt to improve our efficiencies, through the implementation of lean manufacturing processes. (b) Management's Discussion and Analysis of Financial Condition and Results of Operations (i) Critical Accounting Policies Our critical accounting policies involving the more significant judgments and assumptions used in the preparation of the financial statements as of May 31, 2006 have remained unchanged from November 30, 2005. These policies involve revenue recognition, inventory valuation and income taxes. Disclosure of these critical accounting policies is incorporated by reference under Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operation" in our annual report on Form 10-KSB for the year ended November 30, 2005. (ii) Results of Operations Our 2006 consolidated net sales for the six months end were $8,414,000, representing a 14% increase compared to the same period one year ago. A majority of this increase was due to the inclusion of Art's-Way Vessels, Inc.'s, net sales of $1,485,000, for the six months just ended. Art's-Way Vessels, Inc., was acquired October 4, 2005 and therefore was not included in last year's same six month period. Art's-Way Manufacturing had revenues totaling $6,929,000 for the first six months, compared to $7,392,000 for the same period in 2005. Art's-Way Manufacturing's consolidated gross profit of 32% year to date has remained stable compared to the same period one year ago of 31%. Art's-Way Manufacturing's gross profit is down from 31% to 29% year to date. This slight decline is due to a reduction in sales of grinder mixers which have a slightly higher margin than some of our other product offerings. Art's-Way Vessel's had a gross profit of 45% year to date. When we purchased Art's-Way Vessel's orders that were already booked were at a much lower profit margin than we are currently charging. This, coupled with the additional expenses of getting shop supplies and repairs and maintenance, drove our gross margin down in the first quarter of 2006. Operating expenses for the six months increased $439,000 compared to 2005. Of this amount $451,000 relates directly to the addition of Art's-Way Vessels. Engineering expenses were down $79,000 for the six months of 2006 as compared to 2005. In 2005 we hired an outside engineering firm to aid in the development of an exportable beet harvester. In the first half of 2006 our overall engineering cost savings was offset by expenses of an engineering consultant, who is helping to bring the export harvester to production and is expected to complete his work by the end of July. Selling expenses were up for the first six months of 2006 by $50,000 over the same period one year ago. This increase is mainly due to an increase in advertising and show expenses. Advertising expenses were up by approximately $10,000 as we have tried to reach new customers. Show expense was also up by approximately $25,000 due to machine enhancement for show purposes. Income from operations had decreased year to date from $853,000 in 2005 to $800,000 in 2006. Art's-Way Manufacturing's income from operation was $584,000, representing a $269,000 decrease year to date compared to 2005, which is due to the decrease in sales of 6% year to date compared to 2005 and the slight decrease in our gross profit margin. Art's-Way started fiscal year 2005 with a backlog over a milion dollars, for our new model 5165 grinder mixers. Once we manufactured our first run of the new model our sales increased significantly to fulfill the build up of orders. While sales have decreased from 2005 to 2006 the cause is due to the extaordinary year we had in fiscal year 2005. Art's-Way Vessel's income from operations was $217,000 year to date. We experienced an increase in interest expense of $52,000 in the first six months of 2006 as a result of a rise in the prime interest rate over the past 18 months and an additional borrowing of $1,500,000 during the second quarter. The order backlog as of May 31, 2006 was $ 5,790,000 compared to $3,042,000 one year ago. Art's-Way Manufacturing's order backlog as of May 31 was $3,099,000 while Art's-Way Vessel's was $2,691,000. Gehl, one of our main competitors in the grinder mixer market, announced in April, that they were ceasing operation of their ag product lines. We feel that we are in an excellent position to capture some of this market share and are optimistic that this will increase our grinder mixer sales. (iii) Liquidity and Capital Resources Accounts receivable increased $689,000 during the first six month period. This is due primarily to sales of OEM products. Our customer deposits also increased by $1,033,00 as our beet programs offer discounts to our customers for making downpayments on their orders. Our inventory level increased $977,000 over November 2005. This is due to the production of our beet harvesting equipment. We expect to see our inventory levels drop back down by the end of the third quarter when the majority of our beet equipment will have been shipped. In late 2005 we entered into an agreement to purchase a new Bystronic laser, used to cut metal, which called for three payments totaling approximately $627,000. We made the second and third payments in the first half of 2006. In April of 2006 we obtained additional long term financing through West Bank of $1,500,000. This money will be used for future acquisitions and asset purchases, and has not been drawn upon to date. See footnote 6 of the notes to the condensed consolidated financial statements for further discussion of our credit facilities. Item 3 CONTROLS AND PROCEDURES Senior management, including the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (a) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure; and (b) recorded, processed, summarized and reported, within the time specified in the SEC's rules and forms. Since that evaluation process was completed there have been no significant changes in our disclosure controls or in other factors that could significantly affect these controls. There were no changes in our internal control over financial reporting, identified in connection with this evaluation that occurred during the period covered by this report that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Part II - Other Information ITEM 1. LEGAL PROCEEDINGS During the period covered by this report, we were not a party to any legal action or claim which was other than routine litigation incidental to our business. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At our annual meeting of stockholders held April 27, 2006, the following individuals were elected to our Board of Directors to hold office until the next annual meeting or until their successors are elected and qualified, with the following votes in favor of election: FOR WITHHELD David R. Castle 1,717,190 121,974 Fred W. Krahmer 1,716,390 122,774 James Lynch 1,717,171 121,993 Douglas McClellan 1,717,190 121,974 J. Ward McConnell, Jr. 1,717,190 121,974 Marc H. McConnell 1,716,869 122,295 Thomas E. Buffamante 1,717,188 121,976 The stockholders also ratified the selection of McGladrey & Pullen, LLP as independent public accountants for the year ending November 30, 2006. Total number of shares voted in favor: 1,832,842 Total number of shares voted against: 600 Total number of abstentions: 625 Total number of broker non-votes: 0 ITEM 6. EXHIBITS See exhibit index on page 15. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ART'S-WAY MANUFACTURING CO., INC. By: _________________________________ By:_________________________ Carrie L. Majeski Carrie L. Majeski Interim Chief Executive Officer Chief Financial Officer Date:____________________________ Date:____________________ Exhibits Index 31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14(a). 31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14(a). 32.1 Certification of Chief Executive Officer under 18 U.S.C. Section 1350. 32.2 Certification of Chief Financial Officer under 18 U.S.C. Section 1350. EX-32 2 cfo321my.txt Exhibit 31.2 CERTIFICATIONS I, Carrie L. Majeski, certify that: 1. I have reviewed this report on Form 10-QSB of Art's-Way Manufacturing Co., Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have: (a) Designed such disclosure controls and procedures, or caused such disclosure control and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has most recent fiscal affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Date: July 17, 2006 /s/ Carrie L. Majeski - ---------------------------- Chief Financial Officer EX-32 3 ceo321my.txt Exhibit 31.1 CERTIFICATIONS I, Carrie L. Majeski, certify that: 1. I have reviewed this report on Form 10-QSB of Art's-Way Manufacturing Co., Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have: (a) Designed such disclosure controls and procedures, or caused such disclosure control and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has most recent fiscal affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Date: July 17, 2006 /s/ Carrie L. Majeski - ------------------------ Interim Chief Executive Officer EX-31 4 exhbt321.txt Exhibit 32.1 CERTIFICATION OF FINANCIAL STATEMENTS Pursuant to 18 U.S.C. 63 1350, the Interim President/Chief Executive Officer of Art's-Way Manufacturing Co., Inc. (the "Company"), hereby certify that this Form 10-QSB and the financial statements thereto fully comply with the requirements of Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-QSB and the financial statements thereto fairly present, in all material respects, the financial condition and results of operations of the Company. By: /s/ Carrie L. Majeski Name: Carrie L. Majeski Interim President and Chief Executive Officer Date 4/17/06 EX-31 5 exhbt322.txt Exhibit 32.2 CERTIFICATION OF FINANCIAL STATEMENTS Pursuant to 18 U.S.C. 63 1350, the Chief Financial Officer of Art's-Way Manufacturing Co., Inc. (the "Company"), hereby certify that this Form 10-QSB and the financial statements thereto fully comply with the requirements of Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-QSB and the financial statements thereto fairly present, in all material respects, the financial condition and results of operations of the Company. By: /s/ Carrie L. Majeski Name: Carrie L. Majeski Chief Financial Officer Date 07/17/06 -----END PRIVACY-ENHANCED MESSAGE-----