-----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, CY0xJrIZrI2NjACttZAFdkWep9Pdqxz3lw6xtKyk7EEq91/k8LrHx1nfp/GT7fIS /cKe0O3s0gZVL98kl4Dgig== 0000007623-99-000011.txt : 19991208 0000007623-99-000011.hdr.sgml : 19991208 ACCESSION NUMBER: 0000007623-99-000011 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990531 FILED AS OF DATE: 19991207 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: 1130 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 000-05131 FILM NUMBER: 99769966 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, 1999 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, 1999 and 1998 and for each of the years in the three year period ended May 31, 1999 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. 11/30/99 Art's-Way Manufacturing Co., Inc. 401 (k) Savings Plan (Date) (Name of Plan) /s/ William T. Green Executive Vice President ART'S-WAY MANUFACTURING CO., INC. SAVINGS PLAN Table of Contents 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 6 Schedules: I - Item 27a - Assets Held for Investment Purposes 11 2 - Item 27d - Reportable Transactions 12 KPMG Two Central Park Plaza Suite 1501 Omaha, NE 68102 233 South 13th Street, Suite 1600 Lincoln, NE 68508-2041 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, 1999 and 1998, and for each of the years in the three-year period ended May 31, 1999, as listed in the accompanying table of contents. 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, 1999 and 1998, and the changes in net assets available for benefits for each of the years in the three-year period ended May 31, 1999 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 LLP November 18, 1999 ART'S-WAY MANUFACTURING CO., INC. SAVINGS PLAN Statements of Net Assets Available for Benefits May 31, 1999 and 1998 1999 1998 Assets: Investments: Principal Life Insurance Company - deposit contract, at contract value (cost: 1999, $2,990,836; 1998, $4,157,128) $2,990,836 4,157,128 At fair value: Money Market Fund (cost: 1999, $186,713; 1998, $85,389) 194,665 91,397 Small Company Blend Fund (cost: 1999, $96,811; 1998, $145,963) 89,988 147,070 International Stock Fund (cost: 1999, $22,874; 1998, $10,542) 23,356 11,741 Art's-Way Common Stock Fund (cost: 1999, $207,868; 1998, $97,405) 118,395 146,841 Shares of registered investment companies: Washington Mutual Investment Fund (cost: 1999, $2,215,995; 1998, $1,904,562) 3,449,532 3,258,203 Income Fund of America (cost: 1999, $1,256,115; 1998, $1,114,130) 1,426,875 1,382,527 U. S. Government Fund (cost: 1999, $191,596; 1998, $167,350) 186,523 166,892 Participant loans, at unpaid balance 217,798 193,995 Total investments 8,697,968 9,555,794 Contributions receivable: Employer - 1,908 Employee 3,340 3,838 Total contributions receivable 3,340 5,746 Net assets available for benefits $8,701,308 9,561,540 See accompanying notes to financial statements. ART'S-WAY MANUFACTURING CO., INC. SAVINGS PLAN Statements of Changes in Net Assets Available for Benefits with Fund Information Years ended May 31, 1999, 1998 and 1997 Principal Life Ins. Small Inter- Wash. Income Co. Money Co. national Mutual Fund U.S. Deposit Market Blend Stock Inv. of Government 1999 Contract Fund Fund Fund Fund America Fund Additions to net assets attributed to: Investment income (loss): Net appreciation (depreciation) in fair value of investments $ (4,393) - (13,495) (999) 123,093 (75,908) - Interest income 204,114 10,065 - - - - (4,607) Dividend income - - - - 59,551 69,276 10,806 Capital gains - - - - 247,800 94,138 - Net investment income (loss) 199,721 10,065 (13,495) (999) 430,444 87,506 6,199 Contributions: Employer 47,512 3,244 5,214 1,649 34,302 13,188 3,152 Employee 91,135 5,839 13,853 4,398 90,032 36,935 6,855 Total contributions 138,647 9,083 19,067 6,047 124,334 50,123 10,007 Interfund transfers, net (377,105) 89,336 (49,004) 15,086 187,650 54,358 3,648 Total additions (38,737)108,484 (43,432) 20,134 742,428 191,987 19,854 Deductions from net assets attributed to: Administrative expenses 2,216 238 138 35 - - - Benefits paid to participants 1,125,339 4,978 13,512 8,484 551,099 147,639 223 Total deductions 1,127,555 5,216 13,650 8,519 551,099 147,639 223 Net increase (decrease) (1,166,292)103,268 (57,082) 11,615 191,329 44,348 19,631 Net assets available for benefits: Beginning of year 4,157,128 91,397 147,070 11,741 3,258,203 1,382,527 166,892 End of year $2,990,836 194,665 89,988 23,356 3,449,532 1,426,875 186,523 (Continued Below) Art's-Way Common Stock Loan 1999 Fund Fund Other Total Additions to net assets attributed to: Investment income: Net appreciation in fair value of investments (118,280) - - (89,982) Interest income - 16,882 - 226,454 Dividend income - - - 139,633 Capital gains - - - 341,938 Net investment income (118,280) 16,882 - 618,043 Contributions: Employer 7,635 - (1,908) 113,988 Employee 14,654 - (498) 263,203 Total contributions 22,289 - (2,406) 377,191 Interfund transfers, net 69,110 6,921 - - Total additions (26,881) 23,803 (2,406) 995,234 Deductions from net assets attributed to: Administrative expenses - - - 2,627 Benefits paid to participants 1,565 - - 1,852,839 Total deductions 1,565 - - 1,855,466 Net increase (decrease) (28,446) 23,803 (2,406) (860,232) Net assets available for benefits: Beginning of year 146,841 193,995 5,746 9,561,540 End of year $ 118,395 217,798 3,340 8,701,308 Principal Life Ins. Small Inter- Wash. Income Co. Money Co. national Mutual Fund U.S. Deposit Market Blend Stock Inv. of Government 1998 Contract Fund Fund Fund Fund America Fund Additions to net assets attributed to: Investment income: Net appreciation in fair value of investments $ - - 19,758 1,326 561,412 89,582 - Interest income 256,917 8,372 - - - - 3,544 Dividend income - - - - 42,761 62,047 8,479 Capital gains - - - - 157,281 160,620 2,290 Net investment income 256,917 8,372 19,758 1,326 761,454 312,249 14,313 Contributions: Employer 56,518 2,830 3,725 2,038 37,289 17,404 3,753 Employee 109,860 8,673 19,207 7,322 86,645 38,296 6,647 Total contributions 166,378 11,503 22,932 9,360 123,934 55,700 10,400 Interfund transfers, net 56,149 1,891 104,492 1,055 146,798 (7,166) 2,108 Total additions 479,444 21,766 147,182 11,741 1,032,186 360,783 26,821 Deductions from net assets attributed to: Administrative expenses 2,023 219 112 - 145 - - Benefits paid to participants 159,178 253 - - 20,365 23,132 26 Total deductions 161,201 472 112 - 20,510 23,132 26 Net increase (decrease) 318,243 21,294 147,070 11,741 1,011,676 337,651 26,795 Net assets available for benefits: Beginning of year 3,838,885 70,103 - - 2,246,527 1,044,876 140,097 End of year $4,157,128 91,397 147,070 11,741 3,258,203 1,382,527 166,892 (Continued Below) Art's-Way Common Stock Loan 1998 Fund Fund Other Total Additions to net assets attributed to: Investment income: Net appreciation in fair value of investments 149,519 - - 821,597 Interest income - 14,935 - 283,768 Dividend income - - - 113,287 Capital gains - - - 320,191 Net investment income 149,519 14,935 - 1,538,843 Contributions: Employer 6,226 - 1,908 131,691 Employee 16,267 - 3,838 296,755 Total contributions 22,493 - 5,746 428,446 Interfund transfers, net (336,010) 30,683 - - Total additions (163,998) 45,618 5,746 1,967,289 Deductions from net assets attributed to: Administrative expenses - - - 2,499 Benefits paid to participants 65 - - 203,019 Total deductions 65 - - 205,518 Net increase (decrease) (164,063) 45,618 5,746 1,761,771 Net assets available for benefits: Beginning of year 310,904 148,377 - 7,799,769 End of year $ 146,841 193,995 5,746 9,561,540 Principal Life Ins. Wash. Income Art's-Way Co. Money Mutual Fund U.S. Common Deposit Market Inv. of Govt. Stock Loan 1997 Contract Fund Fund America Fund Fund Fund Total Additions to net assets attributed to: Investment income: Net appreciation 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 244,379 3,192 492,484 104,325 10,272 83,303 11,663 949,618 Contributions: Employee 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 3,952,003 35,499 1,641,504 864,975 168,061 147,392 93,964 6,903,398 of year End of $3,838,885 70,103 2,246,527 1,044,876 140,097 310,904 148,377 7,799,769 year (Continued) See accompanying notes to financial statements ART'S-WAY MANUFACTURING CO., INC. SAVINGS PLAN Notes to Financial Statements May 31, 1999 and 1998 (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. 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 Company stock is valued at its quoted market price. Participant loans are valued at cost, which approximates fair value. 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, which approximates fair value, as reported to the Plan by the Sponsor. 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. 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 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. (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 eight investment options. A participant may make deductible 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. (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 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 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' 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. (f) Participant Loans 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% (8.75% to 9.50% at May 31, 1999), 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 eight 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. - Small Company Blend Fund - funds are invested in stocks of smaller, seasoned companies where potential for long-term growth is expected to be above average. - International Stock Fund - funds are invested in common stocks of corporations located outside the United States. Countries and industries are selected after evaluating the economic, social, and political factors of each market. - 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. (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 1999 1998 and title of issue Cost Fair value Cost Fair value Principal Mutual Life Insurance Company - deposit contract $ 2,990,836 2,990,836 4,157,128 4,157,128 Money Market Fund 186,713 194,665 85,389 91,397 Small Company Blend Fund 96,811 89,988 145,963 147,070 International Stock Fund 22,874 23,356 10,542 11,741 American Funds Group: Washington Mutual Investment Fund 2,215,995 3,449,532 1,904,562 3,258,203 Income Fund of America 1,256,115 1,426,875 1,114,130 1,382,527 U.S. Government Fund 191,596 186,523 167,350 166,892 Art's-Way Common Stock Fund 207,868 118,395 97,405 146,841 Participant loans 217,798 217,798 193,995 193,995 $ 7,386,606 8,697,968 7,876,464 9,555,794 ART'S-WAY MANUFACTURING CO., INC. Schedule I SAVINGS PLAN Item 27a - Assets Held for Investment Purposes May 31, 1999 and 1998 199 1998 Cost Fair value Cost Fair value Principal Mutual Life Insurance Company - deposit contract $2,990,836 2,990,836 4,157,128 4,157,128 Money Market Fund 186,713 194,665 85,389 91,397 Small Company Blend Fund 96,811 89,988 145,963 147,070 International Stock Fund 22,874 23,356 10,542 11,741 American Fund Groups: Washington Mutual Investment Fund 2,215,995 3,449,532 1,904,562 3,258,203 Income Fund of America 1,256,115 1,426,875 1,114,130 1,382,527 U.S. Government Fund 191,596 186,523 167,350 166,892 Art's-Way Common Stock Fund* 207,868 118,395 97,405 146,841 Participant loans 217,798 217,798 193,995 193,995 $7,386,606 8,697,968 7,876,464 9,555,794 *Party in interest See accompanying independent auditors' report. ART'S-WAY MANUFACTURING CO., INC. Schedule 2 SAVINGS PLAN Item 27d - Reportable Transactions For the years ended May 31, 1999 and 1998 Purchase Selling Cost of Net Description of assets price price asset gain (loss) Year ended May 31,1999 Principal Financial Group: Guaranteed Interest Fund $ 743,133 - 743,133 - Guaranteed Interest Fund - 2,106,331 2,106,331 - Washington Mutual Investment Fund 716,829 - 716,829 - Washington Mutual Investment Fund - 637,991 405,396 232,595 Income Fund of America 315,228 - 315,228 - Income Fund of America - 195,986 173,244 22,742 Art's-Way Stock Fund 376,504 - 376,504 - Art's-Way Stock Fund - 286,670 266,040 20,630 Year ended May 31, 1998 Principal Financial Group: Guaranteed Interest Fund $1,350,639 - 1,350,639 - Guaranteed Interest Fund - 1,266,380 1,266,380 - Washington Mutual Investment Fund 543,311 - 543,311 - Washington Mutual Investment Fund - 73,961 42,411 31,550 Income Fund of America 363,022 - 363,022 - Income Fund of America - 112,379 91,503 20,876 Art's-Way Stock Fund 52,075 - 52,075 - Art's-Way Stock Fund - 365,657 204,200 161,457 See accompanying independent auditors' report. -----END PRIVACY-ENHANCED MESSAGE-----