-----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, Ta5UnauUI13CntcRZwloTArBGblFQVr1/BDlGB6o3bOom+Ery5A5mSBqexYQG9TN 1m04xrliaMSCuZ6aazi8qA== 0000007623-98-000001.txt : 19980113 0000007623-98-000001.hdr.sgml : 19980113 ACCESSION NUMBER: 0000007623-98-000001 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970531 FILED AS OF DATE: 19980112 SROS: NASD 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: 11-K SEC ACT: SEC FILE NUMBER: 000-05131 FILM NUMBER: 98504989 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 11-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended May 31, 1997 Commission file number 0-5131 Art's Way Manufacturing Co., Inc. 401(k) Savings Plan (Full title of the plan) Art's Way Manufacturing Co., Inc. (Issuer of securities) P.O. Box 288, Armstrong. IA 50514 (Address of principal executive office) Required Information Enclosed are the plan financial statements and schedules as of May 31, 1997 and 1996 and for each of the years in the three year period ended May 31, 1997 prepared in accordance with financial reporting requirements of ERISA. The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. 1/6/98 Art's-Way Manufacturing Co., Inc. 401 (k) Savings Plan (Date) (Name of Plan) /s/ William T. Green Executive Vice President KPMG Peat Marwick LLP Two Central Park Plaza Telephone 402/348-1450 Suite 1501 Telefax 402/348-0152 Omaha, NE 68102 CONSENT OF INDEPENDENT AUDITORS The Board of Directors Art's-Way Manufacturing Co., Inc.: We consent to the use of our report, dated October 10, 1997, on the financial statements of Art's-Way Manufacturing Co., Inc. Savings Plan and the related financial statement schedules as of May 31, 1997 and 1996 and for each of the years in the three-year period ended May 31, 1997 included herein. KPMG Peat Marwick LLP Omaha, Nebraska December 22, 1997 ART'S-WAY MANUFACTURING CO., INC. SAVINGS PLAN Financial Statements and Supplemental Schedules May 31, 1997 and 1996 (With Independent Auditors' Report Thereon) ART'S-WAY MANUFACTURING CO., INC. SAVINGS PLAN INDEX Page Independent Auditors' Report 1 Financial Statements: Statements of Net Assets Available for Benefits 2 Statements of Changes in Net Assets Available for Benefits with Fund Information 3 Notes to Financial Statements: 1. Significant Accounting Policies 6 2. Plan Description 7 3. Plan Termination 9 4. Investments 9 5. Net Assets Available for Benefits 9 Supplemental Schedules: I - Item 27a - Assets Held for Investment Purposes 10 2 - Item 27d - Reportable Transactions 11 KPMG Peat Marwick LLP Two Central Park Plaza Suite 1501 Omaha, NE 68102 Independent Auditors' Report Plan Administrator of Art's-Way Manufacturing Co., Inc. Savings Plan: We have audited the financial statements of Art's-Way Manufacturing Co., Inc. Savings Plan as of May 31, 1997 and 1996, and for each of the years in the three-year period ended May 31, 1997, as listed in the accompanying index. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of Art's-Way Manufacturing Co., Inc. Savings Plan as of May 31, 1997 and 1996, and the changes in net assets available for benefits for each of the years in the three-year period ended May 31, 1997 in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of assets held for investment purposes and reportable transactions are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The Fund Information in the statements of changes in net assets available for benefits is presented for purposes of additional analysis rather than to present the changes in net assets available for benefits of each fund. The supplemental schedules and Fund Information have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. KPMG Peat Marwick LLP October 10, 1997 ART'S-WAY MANUFACTURING CO., INC. SAVINGS PLAN Statements of Net Assets Available for Benefits May 31, 1997 and 1996 1997 1996 Assets: Investments: Principal Mutual Life Insurance Company - deposit contract, at contract value (cost: 1997, $3,838,885; 1996, $3,952,003) $3,838,885 3,952,003 At fair value (note 1): Money Market Fund (cost: 1997, $66,856; 1996, $34,835) 70,103 35,499 Shares of registered investment companies: Washington Mutual Investment Fund (cost: 1997, $1,403,662; 1996, $1,105,487) 2,246,527 1,641,504 Income Fund of America (cost: 1997, $842,612; 1996, $726,012) 1,044,876 864,975 U. S. Government Fund (cost: 1997, $144,102; 1996, $174,295) 140,097 168,061 Art's-Way Common Stock Fund (cost: 1997, $249,531; 1996, $168,374) 310,904 147,392 Participant loans, at unpaid balance 148,377 93,964 Net assets available for benefits (note 2) $7,799,769 6,903,398 See accompanying notes to financial statements. 2 ART'S-WAY MANUFACTURING CO., INC. SAVINGS PLAN Statements of Changes in Net Assets Available for Benefits with Fund Information Years ended May 31, 1997, 1996 and 1995 Principal Life Ins. Washington Income Art's-Way Co. Money Mutual Fund U. S. Common Deposit Market Inv. of Gov't Stock Loan 1997 Contract Fund Fund America Fund Fund Fund Total Additions to net assets attributed to: Investment income(loss): Net appreciation (depreciation) in fair value of investments $ - - 97,164 1,685 - 83,303 - 182,152 Interest income 244,379 3,192 - - 1,174 - 11,663 260,408 Dividend income - - 47,848 34,582 9,098 - - 91,528 Capital gains - - 347,472 68,058 - - - 415,530 Net investment income (loss) 244,379 3,192 492,484 104,325 10,272 83,303 11,663 949,618 Contributions: Employer - - - - - - - - Employee 90,326 1,881 58,707 33,237 6,382 8,664 - 199,197 Total contributions 90,326 1,881 58,707 33,237 6,382 8,664 - 199,197 Interfund transfers, net (261,576) 42,255 72,277 54,693 (23,907) 73,508 42,750 - Total additions 73,129 47,328 623,468 192,255 (7,253) 165,475 54,413 1,148,815 Deductions from net assets attributed to: Administrative expenses 2,891 48 225 - - - - 3,164 Benefits paid to participants 183,356 12,676 18,220 12,354 20,711 1,963 - 249,280 Total deductions 186,247 12,724 18,445 12,354 20,711 1,963 - 252,444 Net increase (decrease) (113,118) 34,604 605,023 179,901 (27,964) 163,512 54,413 896,371 Net assets available for benefits: Beginning of year 3,952,003 35,499 1,641,504 864,975 168,061 147,392 93,964 6,903,398 End of year $3,838,885 70,103 2,246,527 1,044,876 140,097 310,904 148,377 7,799,769 (Continued) 3 ART'S-WAY MANUFACTURING CO., INC. SAVINGS PLAN Statements of Changes in Net Assets Available for Benefits with Fund Information, Continued Principal Life Ins. Washington Income Art's-Way Co. Money Mutual Fund U. S. Common Deposit Market Inv. of Gov't Stock Loan 1996 Contract Fund Fund America Fund Fund Fund Total Additions to net assets attributed to: Investment income (loss): Net appreciation (depreciation) in fair value of investments $ - - 250,317 85,966 - (22,319) - 313,964 Interest income 261,212 7,801 - - 232 - - 269,245 Dividend income - - 42,621 44,691 12,039 - - 99,351 Capital gains - - 73,196 9,412 - - - 82,608 Net investment income (loss) 261,212 7,801 366,134 140,069 12,271 (22,319) - 765,168 Contributions: Employer 1,339 - 398 284 111 25 - 2,157 Employee 77,978 509 40,165 30,956 12,247 3,831 - 165,686 Total contributions 79,317 509 40,563 31,240 12,358 3,856 - 167,843 Interfund transfers, net 84,024 73,024 (142,639)(148,996)(17,464) 58,087 93,964 - Total additions 424,553 81,334 264,058 22,313 7,165 39,624 93,964 933,011 Deductions from net assets attributed to: Administrative expenses 240 23 - - - - - 263 Benefits paid to participants 252,208 146,362 43,597 11,093 8,958 38 - 462,256 Total deductions 252,448 146,385 43,597 11,093 8,958 38 - 462,519 Net increase (decrease) 172,105 (65,051) 220,461 11,220 (1,793) 39,586 93,964 470,492 Net assets available for benefits: Beginning of year 3,779,898 100,550 1,421,043 853,755 169,854 107,806 - 6,432,906 End of year $3,952,003 35,499 1,641,504 864,975 168,061 147,392 93,964 6,903,398 (Continued) 4 ART'S-WAY MANUFACTURING CO., INC. SAVINGS PLAN Statements of Changes in Net Assets Available for Benefits with Fund Information, Concluded Principal Life Ins. Washington Income Art's-Way Co. Money Mutual Fund U. S. Common Deposit Market Inv. of Gov't Stock 1995 Contract Fund Fund America Fund Fund Total Additions to net assets attributed to: Investment income (loss): Net appreciation (depreciation) in fair value of investments $ - - 153,149 66,102 - (68,635) 150,616 Interest income 239,390 11,861 29,470 3,240 - - 283,961 Dividend income - - - - 94 - 94 Capital gains - - 42,473 40,375 12,813 - 95,661 Net investment income (loss) 239,390 11,861 225,092 109,717 12,907 (68,635) 530,332 Contributions: Employer 79,005 31,073 34,815 21,381 405 112 166,791 Employee 110,397 41,154 55,761 33,804 (55) (18) 241,043 Total contributions 189,402 72,227 90,576 55,185 350 94 407,834 Interfund transfers, net (391,801) 30,737 132,639 203,836 (21,814) 46,403 - Total additions 36,991 114,825 448,307 368,738 (8,557) (22,138) 938,166 Deductions from net assets attributed to: Administrative expenses 182 31 - - - - 213 Benefits paid to participants 227,795 55,094 39,511 542 - - 322,942 Total deductions 227,977 55,125 39,511 542 - - 323,155 Net increase (decrease) (190,986) 59,700 408,796 368,196 (8,557) (22,138) 615,011 Net assets available for benefits: Beginning of year 3,970,884 40,850 1,012,247 485,559 178,411 129,944 5,817,895 End of year $3,779,898 100,550 1,421,043 853,755 169,854 107,806 6,432,906 See accompanying notes to financial statements 5 ART'S-WAY MANUFACTURING CO., INC. SAVINGS PLAN Notes to Financial Statements May 31, 1997 and 1996 (1) Significant Accounting Policies (a) Nature of Operations Art's-Way Manufacturing Co., Inc. (the Company) is a manufacturer of specialized farm machinery, equipment, garden and recreational products which it markets under its own and private labels. (b) Basis of Presentation The accompanying financial statements of the Art's-Way Manufacturing Co., Inc. Savings Plan (the Plan) have been prepared on the accrual basis of accounting and present the net assets available for benefits and changes in those net assets in accordance with generally accepted accounting principles. (c) Investment Valuation and Income Recognition Investments in securities (funds) are stated at fair value which is based on quoted market prices. Shares of registered investment companies are valued at quoted market prices, which represent the net asset value of shares held by the Plan at year-end. The Plan entered into a fully benefit-responsive investment contract with Principal Mutual Life Insurance Company (Sponsor). The contract is included in the financial statements at contract value as reported to the plan by the Sponsor because it is fully benefit responsive. The Sponsor maintains the contributions in a pooled account. Contract value represents contributions made under the contract, plus earnings, less Plan withdrawals. The account is credited with earnings based on rates established annually by the Sponsor, and there are no administrative expenses deducted from the investment contract. Purchase and sale of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. (d) Administrative Expenses Substantially all of the administrative fees and expenses of the Plan are paid for by the Company. (e) Payment of Benefits Benefits are recorded when paid. (f) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. (g) Tax Status The Internal Revenue Service has determined and informed the Company by a letter dated August 16,1993 that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code (IRC). The Plan has been amended since receiving the determination letter. However, the Plan administrator believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC. 6 (Continued) ART'S-WAY MANUFACTURING CO., INC. SAVINGS PLAN Notes to Financial Statements (2) Plan Description The following is a summary of the Plan. The more significant Plan provisions are addressed below. Participants should refer to the Plan Agreement for a more complete description of the Plan's provisions. (a) General The Plan is a defined contribution investment plan sponsored and administered by the Company for its employees. Management believes the Plan is in compliance with the requirements of the Employee Retirement Income Security Act of 1974 (ERISA). Under terms of the Plan, an employee becomes eligible to participate after receiving credit for six months of service, as defined. (b) Participant Contributions Upon enrollment in the Plan, a participant may direct employee contributions in any of the six investment options. A participant may make deductible voluntary contributions of not less than 4% under a salary deferral agreement. The Plan also provides for rollovers of lump-sum distributions by participants from certain individual retirement accounts or a qualified 401(k) plan and they may change their investment options quarterly. (c) Employer Contributions The employer will make matching contributions at a discretionary percent and, at its sole discretion, may make discretionary contributions. When the employer makes a matching contribution, it is added to the accounts of those participants who have made voluntary contributions for the year as noted above. The matching contribution under the Plan shall be equal to a discretionary percentage of the participant's salary reductions as determined by the employer. The employer's discretionary contribution is shared by all Plan members, whether or not they have made voluntary contributions, based on the member's compensation compared to all participants' combined compensation and years of service. (d) Participant Accounts Each participant's account is credited with the participant's contributions, the Company's matching contributions and an allocation of the Plan's net increase in net assets available for benefits corresponding to the participant's investment elections. Allocations are based on participant account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account. Forfeitures are credited to participant accounts based on a specified formula. (e) Vesting Participants' voluntary contributions are immediately vested. Vesting in the remainder of their accounts is based on credited years of service, as defined. A participant is 100% vested after six credited years of service. (Continued) 7 ART'S-WAY MANUFACTURING CO., INC. SAVINGS PLAN Notes to Financial Statements (f) Participant Loans Effective April 1, 1996, the Plan allows employees who have at least six months of service to borrow a minimum of $1,000 and up to a maximum equal to the lesser of $50,000 or 50% of their vested account balance. Loans bear interest at a percentage equal to the Sponsor's revolving credit facility plus 1% (9.25% to 9.50% at May 31, 1996), and are valued at the unpaid balance which approximates fair market value. Loans are secured by the participant's account balance and are scheduled for repayment by payroll deduction from one-to-five years. Loan transactions are treated as a transfer to (from) the loan fund from (to) the investment funds. (g) Payment of Benefits During an employees' active career with the Company, part or all of a participant's contributions and fund earnings may be withdrawn due to hardship and based on Plan limitations. Such hardship withdrawals are permitted when conditions as specified by the Plan are met and are subject to limits allowed by law. Upon termination, disability, retirement or death, all amounts attributed to a participant's account may be withdrawn. The accumulated balances are generally distributed in the form of a lump-sum settlement unless an election for installment payments has been made by the employee prior to retirement or death. (h) Investment Options Upon enrollment in the Plan, a participant may direct employee and employer contributions in any of the six investment options: - Principal Life Insurance Company - deposit contract - funds are invested in an investment contract with the Sponsor. The objective of this fund is the preservation of capital. Contributions are guaranteed an interest rate for a specified period of time. - Money Market Fund - funds are invested with the Sponsor in a pooled separate account that includes high quality commercial paper. The objective of this fund is the preservation of capital. - Washington Mutual Investment Fund - funds are invested in shares of a registered investment company that invests mainly in common stocks. The fund's objective is current income and capital growth. - Income Fund of America - funds are invested in shares of a registered investment company that invests mainly in common stocks and corporate and government bonds. The fund's objective is current income and, secondarily, growth of capital. - US. Government Fund - funds are invested in shares of a registered investment company that invests mainly in government-backed securities. The fund's objective is current income with a preservation of capital. - Art's- Way Common Stock Fund - funds are invested in common stock of the Company. Participants may change their investment options quarterly and may invest in more than one investment option. The number of employees participating in each investment fund is unavailable from the Sponsor. (Continued) 8 ART'S-WAY MANUFACTURING CO., INC. SAVINGS PLAN Notes to Financial Statements (3) Plan Termination Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100% vested in their accounts. (4) Investments The cost and fair value of the investments maintained by the Plan are as follows: Name of issuer 1997 1996 and title of issue Cost Fair value Cost Fair value Principal Mutual Life Insurance Company - deposit contract $ 3,838,885 3,834,421 3,952,003 3,952,003 Money Market Fund 66,856 70,103 34,835 35,499 American Funds Group: Washington Mutual Investment Fund 1,403,662 2,246,527 1,105,487 1,641,504 Income Fund of America 842,612 1,044,876 726,012 864,975 U.S. Government Fund 144,102 140,097 174,295 168,061 Art's-Way Common Stock Fund 249,531 310,904 168,374 147,392 Participant loans 148,377 148,377 93,964 93,964 $ 6,694,025 7,795,305 6,254,970 6,903,398 (5) Net Assets Available for Benefits The following is a reconciliation of net assets available for benefits according to the financial statements to Form 5500 at May 31, 1997 and 1996: 1997 1996 Net assets available for benefits per the financial statements $ 7,799,769 6,903,398 Decrease in fair value of insurance contract (4,464) (22,654) Net assets available for benefits per Form 5500 $ 7,795,305 6,880,744 9 ART'S-WAY MANUFACTURING CO., INC. Schedule I SAVINGS PLAN Item 27a - Assets Held for Investment Purposes May 31, 1997 and 1996 1997 1996 Cost Fair value Cost Fair value Principal Mutual Life Insurance Company - deposit contract $3,838,885 3,834,421 3,952,003 3,952,003 Money Market Fund 66,856 70,103 34,835 35,499 American Fund Groups: Washington Mutual Investment Fund 1,403,662 2,246,527 1,105,487 1,641,504 Income Fund of America 842,612 1,044,876 726,012 864,975 U.S. Government Fund 144,102 140,097 174,295 168,061 Art's-Way Common Stock Fund* 249,531 310,904 168,374 147,392 Participant loans 148,377 148,377 93,964 93,964 $6,694,025 7,795,305 6,254,970 6,903,398 *Party in interest See accompanying independent auditors' report. 10 ART'S-WAY MANUFACTURING CO., INC. Schedule 2 SAVINGS PLAN Item 27d - Reportable Transactions May 31, 1997 and 1996 Purchase Selling Cost of Net Description of assets price price asset gain (loss) Year ended May 31,1997 Principal Financial Group: Guaranteed Interest Fund $528,991 - 528,991 - Guaranteed Interest Fund - 878,523 878,523 - Washington Mutual Investment Fund 372,586 - 372,586 - Washington Mutual Investment Fund - 115,035 74,412 40,623 Year ended May 31, 1996 Principal Financial Group: Guaranteed Interest Fund $1,308,196 - 1,308,196 - Guaranteed Interest Fund - 1,385,114 1,385,114 - Washington Mutual Investment Fund 246,245 - 246,245 - Washington Mutual Investment Fund - 274,783 195,228 79,555 See accompanying independent auditors' report. -----END PRIVACY-ENHANCED MESSAGE-----